OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS

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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 What’s happening with net debt?

  • There are many different ways to view leverage; Viridian utilizes four metrics to access leverage in the Viridian Credit Model (Total Liabilities/ Mkt Cap, Assets/Liabilities, FFO/Total Liab, and adj Debt/2025 EBITDA). We favor Total Liabilities to market cap for reasons we have expounded on previously in depth. Chief among these is the fact that it can be transformed via option valuation into a market-based assessment of asset coverage of liabilities.
  • Our favorite leverage indicator has shown significant deterioration for the group, as liabilities remained relatively constant while market caps plummeted.
  • But how about a simpler view? The graph below shows the percent change in net debt for 15 MSOs. Note, for graphing purposes, we removed Grown Rogue, which eliminated net debt over the period.
  • In an environment where growth is essentially stalled, and market caps are at all-time lows, can we use a more straightforward measure of credit like the percentage increase or decrease in net debt over the last twelve months?
  • It’s not a metric without issues. For example, Cannabist has had the most significant decrease in net debt through asset sales, and yet not many credit observers would suggest its credit quality has meaningfully improved. Verano is the opposite case, with a significant increase in net debt but several newly acquired assets to go with it.
  • Still, GTI’s performance looks all the more impressive when viewed this way. It reduced net debt by 12% while also paying all of its 280e taxes. Trulieve had a similar improvement in net debt but did so by deferring taxes.
  • Had everyone known how the macro and political environment would play out, would companies have pulled in their horns more sharply? We think the answer is probably yes.

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 Ag Tech

    • Ag Tech has yet to see the dramatic turnaround that we expect the removal of 280e on the sector’s key customers might produce. But leverage metrics are not that bad. The median Debt/2025 EBITDA is only 4.44x, which is not horrible when you factor in that the sector is not subject to 280e taxes. Similarly, the median total liabilities to market cap is only .95x, which indicates a market belief of significant asset value coverage of liabilities.
    • The issue is still liquidity. Viridian’s free cash flow adjusted current ratio, which takes into account both balance sheet liquidity and cash burn, has a median value of only .46x, indicating a pressing need for financing for over half of the sector’s 14 companies.

Weekly Sector Credit Ag Tech

    • Ag Tech has yet to see the dramatic turnaround that we expect the removal of 280e on the sector’s key customers might produce. But leverage metrics are not that bad. The median Debt/2025 EBITDA is only 4.44x, which is not horrible when you factor in that the sector is not subject to 280e taxes. Similarly, the median total liabilities to market cap is only .95x, which indicates a market belief of significant asset value coverage of liabilities.
    • The issue is still liquidity. Viridian’s free cash flow adjusted current ratio, which takes into account both balance sheet liquidity and cash burn, has a median value of only .46x, indicating a pressing need for financing for over half of the sector’s 14 companies.

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