OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS
Debt Capital Raises
Debt Transaction Chart
Viridian publishes weekly data and analysis on debt capital raises in the Cannabis/CBD/Psychedelic industries. This data includes information about the company issuing debt (public/private, state/country location), deal size, deal structure, pricing, warrants, and credit data.
Week ended 03/31/2023
Week ended 03/31/2023
Debt Commentary
Week ended 03/31/2023
- Debt accounted for 87% of trailing 4-week capital raises propelled upward by the $100M Madison Sweet Leaf raise, the second largest debt deal YTD. We expect this ratio to be volatile because of the limited capital raise activity. With cannabis stocks trading at or near their 52-week lows, we expect debt to continue to account for more than 50% of capital raises. Since year-end, debt costs have significantly increased because of higher treasury rates and risk spreads. We expect continued increases in equity-linked structures.
The Week’s Largest Debt Raise:
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- On March 30, 2023, Sweet Leaf Madison Capital (Private), a provider of equipment financing, real estate loans, and senior secured term loans to middle market cannabis companies, closed a $100M Senior Secured debt financing.
- The investor was a “global institutional special situations asset manager.” Our long-held thesis is that cannabis lenders provide attractive entry points for institutional lenders to enter the cannabis market without the reputational risk/ legal risk of direct lending. Institutional lenders can obtain greater than traditional BDC portfolio credit spreads with relatively low risk.
- We do not have direct visibility into the Sweet Leaf portfolio. Still, based on the public companies in the space, such as Chicago Atlantic (REFI: Nasdaq), we expect to see IRRs in the mid-20 % range from a middle-market cannabis lending portfolio.
- Cannabis lenders have attracted around $2.8B of capital over the last several years, and 2023 is on a pace to hit about $400M for the whole year.
Week ended 03/31/2023
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Weekly Credit Tracker
Each week, Viridian highlights a specific industry sector and provides a deep dive into credit metrics and comparable company credit rankings for public companies operating in that 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 03/31/2023
This week’s credit tracker focuses on the 7 Canadian Cultivation & Retail sector companies with market caps between $50M and $500M in the Viridian Value Tracker database in order to make the case that Auxly had a good reason to sell assets, even at prices significantly below its cost: The firm is over levered and needs to sell assets to reduce debt. The Viridian Credit tracker ranking system shows Auxly near the bottom of the peer group in terms of credit quality.
- Week ended 03/31/2023
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Additional content is available to Premium and Enterprise users. Please purchase a higher tier membership to see more.
This Chart is Only Available to Higher Tier Memberships
Please Purchase a Premium or Enterprise membership to see more.
Viridian publishes weekly insights on debt capital raises in the Cannabis/CBD/Psychedelic industries. These insights typically highlight the most interesting/meaningful debt transactions of that week, and commentary on market conditions, debt deal structures, and lenders.