OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS
OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS
Home » Week of 12/26/22-12/30/22
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.
The Viridian Credit Tracker utilizes 11 different bespoke credit ratios to evaluate four aspects of credit quality: Liquidity, Leverage, Profitability, and Size. We see significant distress indicators in this chart at year-end 2022. For example, in the Agricultural Technology sector (a non-plant touching business segment that is technically open to bank lending), we note that the bottom quartile of companies had debt/market caps of 4.53x, up from .47x last year. Levels over 3x have typically indicated financial distress, and we are more closely looking at these companies for potential liquidity issues. The sector has a median current ratio of 1.5x but only .08x on a free cash flow adjusted basis. This sector will likely be impacted by the belt-tightening plans of nearly every major MSO.
The Viridian Credit Tracker utilizes 11 different bespoke credit ratios to evaluate four aspects of credit quality: Liquidity, Leverage, Profitability, and Size. We see significant distress indicators in this chart at year-end 2022. For example, in the Agricultural Technology sector (a non-plant touching business segment that is technically open to bank lending), we note that the bottom quartile of companies had debt/market caps of 4.53x, up from .47x last year. Levels over 3x have typically indicated financial distress, and we are more closely looking at these companies for potential liquidity issues. The sector has a median current ratio of 1.5x but only .08x on a free cash flow adjusted basis. This sector will likely be impacted by the belt-tightening plans of nearly every major MSO.
*Marijuana remains illegal under federal law. The Federal Government does not recognize marijuana to have any medicinal values. Marijuana cultivation, possession, consumption, sales, and distribution are illegal under federal laws and also certain state laws. Please note that there are differences in marijuana laws from one state, county, or city to another.
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