Weekly Credit Tracker
Credit ratings are not currently available for public cannabis companies leaving companies, lenders and investors with a gap of information. The Viridian Cannabis Credit Tracker fills this gap. The model uses 11 market and financial statement variables to discern 4 key credit factors: Liquidity, Leverage, Profitability, and Size, to provide credit/liquidity analysis for over 370 public Cannabis/Hemp companies.
Weekly Credit Report – Fifteen U.S. and Canadian Cultivation & Retail Companies with over $50M Market Cap Ranked by Credit Quality
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- We filtered for U.S. and Canadian cultivation and retail sector companies with a market capitalization greater than $100M and ran them through the Viridian Credit Tracker Credit model to achieve a ranking.
- Six of the top ten credits were Canadian, including #2 Cronos, which achieves this ranking based on tremendous liquidity and low leverage.
- Green Thumb continues to place as the best credit of the group, but interestingly, it neither has the lowest leverage nor the best liquidity. Top-of-class profitability and size lift GTI to the top.
- We are surprised at how poorly some of the largest U.S. MSOs rank. Cresco (#9), Verano (#11), Curaleaf (#12), and TerrAscend (#15) are all in the bottom half of the group, primarily due to high market leverage. Only GTI, Trulieve, and Glass House are in the top half of the group.
- The Canadians generally trail in terms of profitability, but they excel in balance sheet and market leverage stats.
- The ranking is an eye-opener for credit investors. Debt of Canadian companies is clearly worth a closer look.
Credit Tracker By Sector
Credit ratings are not currently available for public cannabis companies leaving companies, lenders and investors with a gap of information. The Viridian Cannabis Credit Tracker fills this gap. The model uses 11 market and financial statement variables to discern 4 key credit factors: Liquidity, Leverage, Profitability, and Size, to provide credit/liquidity analysis for over 370 public Cannabis/Hemp companies.
Weekly Sector Credit – Cultivation & Retail Credit Buttressed by Continued Asset Value Coverage
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- The cultivation and retail sector has clearly been battling significant headwinds, including price compression, slowing growth, and competition from hemp; however, the asset value coverage of liabilities remains strong. The median total liabilities to market capitalization ratio of 2.3x indicates an asset value coverage of liabilities of 1.3x, based on our option-theoretic methodology.
- While the median debt-to-2025 EBITDA ratio of 3.84x continues to be above the sustainable level in a 280E environment, companies are maintaining reasonable liquidity by accruing and not paying their 280E taxes. We don’t know how that will all work out, but in the near term, it is producing some surprisingly good cash flow from operations numbers.
- We are encouraged by what we view as strong execution on Ascend’s $50M add-on, which is evidence that an appetite exists for credits that aren’t pristine.
- Investors should be hedging their equity exposure with some debt investments. Credit spreads are wide relative to high-yield debt, and the senior secured debt of our top ten credit picts is still strong.
Weekly Sector Credit – Cultivation & Retail Credit Buttressed by Continued Asset Value Coverage
-
- The cultivation and retail sector has clearly been battling significant headwinds, including price compression, slowing growth, and competition from hemp; however, the asset value coverage of liabilities remains strong. The median total liabilities to market capitalization ratio of 2.3x indicates an asset value coverage of liabilities of 1.3x, based on our option-theoretic methodology.
- While the median debt-to-2025 EBITDA ratio of 3.84x continues to be above the sustainable level in a 280E environment, companies are maintaining reasonable liquidity by accruing and not paying their 280E taxes. We don’t know how that will all work out, but in the near term, it is producing some surprisingly good cash flow from operations numbers.
- We are encouraged by what we view as strong execution on Ascend’s $50M add-on, which is evidence that an appetite exists for credits that aren’t pristine.
- Investors should be hedging their equity exposure with some debt investments. Credit spreads are wide relative to high-yield debt, and the senior secured debt of our top ten credit picts is still strong.
