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 08/23/2024
Weekly Sector Credit
- Declining equity values and lack of any significant balance sheet repair have caused some deterioration in the credit metrics for the cultivation and retail sector.
- Median debt/2024 EBITDA for the 31 analyst-ranked companies is now 2.98x, matching our cutoff point for debt sustainability in a 280e world. The highest quartile metric of 4.59x tells us that a quarter of these companies have higher leverage than we view as sustainable, even in the absence of 280e.
- Another metric that continues to cause some concern is the median free cash flow adjusted current ratio of .70x, which indicates that more than half of the 81 companies where that measure was calculated are likely to need additional financing during the next twelve months. Recently, the debt markets have shown some openings, but at current levels, equity issuance is expected to remain severely constrained.
- The importance of S3 and legislative events like the SAFER Act is that it will hopefully boost equity prices and allow for meaningful re-equitization of the sector. In the meantime, well-capitalized credits ranked highly by the Viridian Credit Model will enjoy a decided advantage in attracting and deploying capital.
Week ended 08/23/2024
Weekly Sector Credit
- Declining equity values and lack of any significant balance sheet repair have caused some deterioration in the credit metrics for the cultivation and retail sector.
- Median debt/2024 EBITDA for the 31 analyst-ranked companies is now 2.98x, matching our cutoff point for debt sustainability in a 280e world. The highest quartile metric of 4.59x tells us that a quarter of these companies have higher leverage than we view as sustainable, even in the absence of 280e.
- Another metric that continues to cause some concern is the median free cash flow adjusted current ratio of .70x, which indicates that more than half of the 81 companies where that measure was calculated are likely to need additional financing during the next twelve months. Recently, the debt markets have shown some openings, but at current levels, equity issuance is expected to remain severely constrained.
- The importance of S3 and legislative events like the SAFER Act is that it will hopefully boost equity prices and allow for meaningful re-equitization of the sector. In the meantime, well-capitalized credits ranked highly by the Viridian Credit Model will enjoy a decided advantage in attracting and deploying capital.
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