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 – A Brutal Month for Cannabis Stocks and Implied Asset Value Coverage of Liabilities
- The Chart below shows the market-implied asset value coverage of total liabilities at the end of October (top of the red bar) compared to 11/19/25.
- We use option valuation via the Black Scholes pricing formula, modeling the equity value of the company as an option on the asset value with a strike price of the liabilities, a time to maturity of the average length of the debt, an assumed volatility of 30% and a risk-free rate of 4%. The one input into the BS formula that is not observable is the asset value, so we iterate our calculations until all the values agree with the BS calculation of market cap.
- The Chart clearly shows that the largest magnitude changes occurred among companies with plenty of coverage to spare. So, for example, GTI’s coverage dropped from 3.1x to 2.6x, and although that is a significant move, it doesn’t change our view of the credit.
- The more interesting moves are for credits that were just above 1x at the end of October and have now dipped below 1x. That change means the equity is now trading as an out-of-the-money option, and lenders in the liability stack are taking on some equity risk. The two that meet that criterion are IAnthus and Ascend.
- Ascend is particularly interesting to us because the Viridian Credit Model does not rank it as particularly risky, at #12/25. Furthermore, Ascend has largely refinanced its maturities until 2029, and we do not see any upcoming default triggers. When we see a situation like this, our thought process is that either the credit is worse than we understand or that the equity is trading much worse than it should. We are inclined to believe the undervaluation story about Ascend.
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 and Retail Sector
- The Chart below shows the credit metrics for the Cultivation and Retail sector.
- Several key aspects jump out:
- The last of the 3rd quarter financial results weakened our liquidity measures. The median free cash flow-adjusted current ratio of 0.93x is down from 1.03x last week. It indicates that more than half of the 74 companies lack sufficient liquidity to pay all their short-term liabilities without additional funding. Importantly, however, the lowest quartile figure of 0.25x indicates that at least ¼ of the companies (19 companies) have serious liquidity issues and will require asset sales or new funding to survive the next 12 months.
- The median total liabilities to market cap ratio of 1.68x is up from 1.52x last week, but still shows an implied 1.52x asset value coverage (see discussion above)
- There continues to be a leverage problem, with over 25% of the sample having debt/2025 EBITDA of more than 4.18x (up from 4.07x last week), a number that is not sustainable even post-S3. The hope is that S3 will raise stock prices sufficiently to allow a re-equitization of the sector.
- We also note that the median Funds from Operations / Assets of 0.00x shows that only ½ of the companies are cash flow positive after interest and taxes.
Weekly Sector Credit – Cultivation and Retail Sector
- The Chart below shows the credit metrics for the Cultivation and Retail sector.
- Several key aspects jump out:
- The last of the 3rd quarter financial results weakened our liquidity measures. The median free cash flow-adjusted current ratio of 0.93x is down from 1.03x last week. It indicates that more than half of the 74 companies lack sufficient liquidity to pay all their short-term liabilities without additional funding. Importantly, however, the lowest quartile figure of 0.25x indicates that at least ¼ of the companies (19 companies) have serious liquidity issues and will require asset sales or new funding to survive the next 12 months.
- The median total liabilities to market cap ratio of 1.68x is up from 1.52x last week, but still shows an implied 1.52x asset value coverage (see discussion above)
- There continues to be a leverage problem, with over 25% of the sample having debt/2025 EBITDA of more than 4.18x (up from 4.07x last week), a number that is not sustainable even post-S3. The hope is that S3 will raise stock prices sufficiently to allow a re-equitization of the sector.
- We also note that the median Funds from Operations / Assets of 0.00x shows that only ½ of the companies are cash flow positive after interest and taxes.
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