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 10/27/2023

Liquidity and leverage in the cultivation and retail sectors remain a concern. Thirty-two companies have sell-side analyst coverage, and the median debt/ 2024 EBITDA for the group is 2.95x, a level that may be sustainable post 280e but is too high with current taxes. The third quartile statistic of 4.3x indicates that 25% of the group has leverage that will be difficult to support even in a post-280e environment. (See our weekly Viridian Insights for further explanation). We have been expecting that companies would be able to extend their debt maturities and reduce leverage through small equity issues. The likelihood of these equity issues was somewhat diminished by the cataclysmic price decline for the week ending 10/20/23.

Furthermore, the recently announced AYR restructuring and extension of debt maturities has made clear that the price for lender forbearance might be quite dear. The largest refinancing need we see on the horizon (relative to the company’s market cap) is now Jushi. It will be interesting to see if they roll the dice and hope for better equity issuance opportunities or take dramatic action like AYR.

Week ended 10/27/2023

Liquidity and leverage in the cultivation and retail sectors remain a concern. Thirty-two companies have sell-side analyst coverage, and the median debt/ 2024 EBITDA for the group is 2.95x, a level that may be sustainable post 280e but is too high with current taxes. The third quartile statistic of 4.3x indicates that 25% of the group has leverage that will be difficult to support even in a post-280e environment. (See our weekly Viridian Insights for further explanation). We have been expecting that companies would be able to extend their debt maturities and reduce leverage through small equity issues. The likelihood of these equity issues was somewhat diminished by the cataclysmic price decline for the week ending 10/20/23.

Furthermore, the recently announced AYR restructuring and extension of debt maturities has made clear that the price for lender forbearance might be quite dear. The largest refinancing need we see on the horizon (relative to the company’s market cap) is now Jushi. It will be interesting to see if they roll the dice and hope for better equity issuance opportunities or take dramatic action like AYR.

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