OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS
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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 06/21/2024
Weekly Sector Credit
- Is the overall Cultivation and Retail sector turning the corner credit-wise? First of all, there is a natural selection event going on. At the end of last year, we had 92 companies in our cultivation and retail sector, whereas today we have 83. Where did they go? Some failed (MedMen, Fire & Flower, etc.) Some got bought (Hexo etc.) And some just shrank into irrelevance. However, one would think that the remaining companies might be more robust. Our metrics seem to point in that direction principally. Leverage is better: at the beginning of the year, the median total liabilities to market cap was 2.7x vs. 2.65x. But maybe more importantly, the 3rd quartile number shrank from 8.4x to only 5.95x. Debt 2024 EBITDA improved from 2.97x to 2.33x. These are undeniable signs of progress.
- Remember, however, this group is composed of both Canadian and U.S. companies of all sizes. It somewhat obscures the fact that our weekly deal tracker shows that 12/17 companies on our scatter plot have more than 3x net adjusted debt to 2024 EBITDA.
- Overall, metrics for the sector are getting stronger, but there is still a leverage problem at the large U.S. MSO level that is not going away.
Week ended 06/21/2024
Weekly Sector Credit
- Is the overall Cultivation and Retail sector turning the corner credit-wise? First of all, there is a natural selection event going on. At the end of last year, we had 92 companies in our cultivation and retail sector, whereas today we have 83. Where did they go? Some failed (MedMen, Fire & Flower, etc.) Some got bought (Hexo etc.) And some just shrank into irrelevance. However, one would think that the remaining companies might be more robust. Our metrics seem to point in that direction principally. Leverage is better: at the beginning of the year, the median total liabilities to market cap was 2.7x vs. 2.65x. But maybe more importantly, the 3rd quartile number shrank from 8.4x to only 5.95x. Debt 2024 EBITDA improved from 2.97x to 2.33x. These are undeniable signs of progress.
- Remember, however, this group is composed of both Canadian and U.S. companies of all sizes. It somewhat obscures the fact that our weekly deal tracker shows that 12/17 companies on our scatter plot have more than 3x net adjusted debt to 2024 EBITDA.
- Overall, metrics for the sector are getting stronger, but there is still a leverage problem at the large U.S. MSO level that is not going away.
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