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

Credit Tracker By Industry Sector

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.

Week ended 10/18/2024

Weekly Sector Credit Agriculture Technology

  • The Ag Tech sector has begun to show some signs of sustainability. Liquidity continues to be poor, with a median free cash flow adjusted current ratio of .34x, indicating a likely immediate need for additional funding to meet current liabilities. Likewise, cash flow, as measured by funds from operation, continues to be negative. But the median 2025 EBITDAR/ Net adjusted Debt of .21x implies that the market believes the asset value of the median company is over 5x its liabilities! This is a better number than the cultivation sector enjoys, although one of the key differences is that ag tech is not burdened by 280e tax liabilities.
  • We are also encouraged to see median debt/ 2024 EBITDA at 3.37x, which isn’t too much worse than the cultivation sector median of 3.08x. Somewhat offsetting this is the fact that the 3rd quartile number of 14.97x clearly indicates that over ¼ of the sector companies are still struggling.
  • The equity market seems to be looking ahead to better days in 2025 and beyond, when the sector’s key customers, the cultivators, will presumably enjoy some 280e relief.

Week ended 10/18/2024

Weekly Sector Credit Agriculture Technology

  • The Ag Tech sector has begun to show some signs of sustainability. Liquidity continues to be poor, with a median free cash flow adjusted current ratio of .34x, indicating a likely immediate need for additional funding to meet current liabilities. Likewise, cash flow, as measured by funds from operation, continues to be negative. But the median 2025 EBITDAR/ Net adjusted Debt of .21x implies that the market believes the asset value of the median company is over 5x its liabilities! This is a better number than the cultivation sector enjoys, although one of the key differences is that ag tech is not burdened by 280e tax liabilities.
  • We are also encouraged to see median debt/ 2024 EBITDA at 3.37x, which isn’t too much worse than the cultivation sector median of 3.08x. Somewhat offsetting this is the fact that the 3rd quartile number of 14.97x clearly indicates that over ¼ of the sector companies are still struggling.
  • The equity market seems to be looking ahead to better days in 2025 and beyond, when the sector’s key customers, the cultivators, will presumably enjoy some 280e relief.

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