Weekly Sector Credit – Cultivation and Retail

• • Optimism is again afoot in the cannabis equity market, and the Q2 earnings reports so far have been better than expected.
  • Median Debt to 2026 EBITDA is 2.02x as of 8/1/25, compared to 2.20x as of 7/25/25, a significant move based mainly on analysts’ upward revisions after company coaching. This figure continues to show that over ½ of the companies have sustainable leverage even in a continuing 280E environment.
  • The median total liabilities to market capitalization ratio is now 1.92 times, indicating that more than half of the companies have an asset value coverage of liabilities of over 1.1 times, according to our option pricing model. However, the upper quartile of 7.11x indicates that more than a quarter of the 75 companies have less than 1x asset coverage of liabilities. See the Viridian Credit Sector Report for more details.
  • We continue to be surprised by the low liquidity of the sector. Our bespoke, free cash flow-adjusted current ratio has a median value of only 0.93x, indicating that more than half of the 71 companies we were able to measure will require additional funding during the next twelve months. This ratio is likely to deteriorate further toward the end of 2025 as 2026 debt maturities become current liabilities.