Weekly Valuation Tracker
Viridian highlights a specific industry sector and provides a deep dive into valuation metrics and comparable company valuations for public companies operating in that sector. The Weekly Valuation Tracker provides proprietary, actionable valuation data.
Weekly Valuation Report – Do The Relative Increases in US and Canadian Stock Prices Make Sense?
- The chart below shows the percentage increase in the stock price of the top 7 US and Canadian cannabis operators by market cap, since the day before Trump’s announcement that he was considering rescheduling.
- Are these price gains justified? Absolutely, and if S3 actually happens, we would expect significantly larger gains. Remember, most of these stocks still need to gain more than 300% from their current levels to return to their 2021 highs.
- We aren’t convinced that reaching those highs is a reasonable expectation:
- Growth is slowing because most big pop states (except Texas, Pennsylvania, and Florida) have already converted to Recreational Use.
- Wholesale price compression, which is the central dynamic in virtually every cannabis market, was an unknown term in 2021.
- Large-scale MSO/MSO mergers are unlikely due to the issue of territory overlap and the difficulty of unloading unwanted locations.
- However, regardless, we believe that at least another 100-200% gains are available with rescheduling, particularly if, as we expect, S3 begins the log rolling for even bigger gains, similar to those fostered by SAFER banking, uplistings, and credit care usage.
- Do the relative gains make sense? Verano, Curaleaf, Trulieve, and Cresco achieved the largest gains in the US. Of these, all but Cresco still need to refinance a proverbial boatload of 2026 maturing debt. S3 and the attendant better market psychology that accompanies it increase the odds of these refinancings materially. This impact can clearly be seen in the better price quotes on the debt of these companies this week versus last. They are now trading like one-year maturity paper with a strong likelihood of refinancing, whereas previously, a discount for refinancing risk was clearly visible.
- Does it make sense that GTI and Vireo had the lowest gains on the US side? We are less convinced. Perhaps the market is saying that S3 will give less stable companies an extended runway and reduce or slow the ability of stronger companies to consolidate the industry?
- The real headscratcher to us is the magnitude of gains on the Canadian cannabis side. Why in the world does it make any sense for Tilray to be up at all, let alone up 80%+? It seems that there is a naïve narrative, fostered by Tilray’s Chairman, that rescheduling will allow Canadian companies to operate in the US. This is not the case. S3 does nothing to fix the issue of federal illegality, which causes Nasdaq not to accept US cannabis companies. We do not expect S3 to allow US companies to uplist to Nasdaq, and any Canadian company that buys a US operator risks losing its Nasdaq listing. If anything, S3 will strengthen US competitors and make Canadian/US acquisitions less likely.
- The main reason for the surge in Canadian cannabis companies is that many US investors cannot directly own US cannabis stocks; therefore, Canadian stocks are the closest alternative. But that is where the logic ends.
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Valuation Tracker By Sector
The Viridian Value Tracker is the most comprehensive valuation product in the industry.
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- A broad set of 12 valuation measures assures applicability, regardless of whether the company has analyst coverage or revenues. The typically presented EV/ Projected Revenues and EV/ Projected EBITDA are available for less than 1/3 of the cannabis companies we track.
- Most valuation studies present only the average valuation measures, while the Tracker goes one step further and shows the distribution of values (the quartiles, median, and dispersion) for each measure. This gives users a more complete view of how companies in the cohort group are valued.
Sector Valuation Report – Cultivation & Retail
- The MSOS ETF has increased by 67% over the last month, and the cultivation and retail sector metrics reflect this improvement. Much of this gain has occurred in the previous week since the August 10 Trump announcement that his administration was actively considering S3. For the overall cultivation & retail sector:
- Median EV/ 2026 EBITDA has improved to 5.83x vs 3.93x a month ago.
- Similarly, our bespoke valuation ratio of adjusted EV to 2025 EBITDAR is up to 8.51x, compared to 6.4x a month ago. This metric includes the impact of all leases and accrued 280E tax liabilities in the enterprise value.
- Valuation metrics still have a long way to go. Investors are optimistic, but still somewhat skeptical that the long-promised reform will actually happen.
- Also, our credit piece yesterday highlighted the uncertainty surrounding “uncertain tax liabilities”, the accrued but unpaid 280E taxes that now aggregate to around $ 2.4 billion for just the top 12 companies.
- Finally, we note that the sector still trades at only a 0.69x market-to-book ratio. This suggests a market expectation that future asset write-downs are likely. Given the low ROICs that we have been calculating, it’s hard to make a counterargument.
- The bottom line is that a new optimism is now filling the market. Obviously, that spells an increased risk if the best-case scenario of rapid S3 adoption does not occur. Still, we can look at cannabis stock prices without fear or revulsion again, and we are grateful for that at least.
This Chart is Only Available to Higher Tier Memberships
Please Purchase a Premium or Enterprise membership to see more.
Sector Valuation Report – Cultivation & Retail
- The MSOS ETF has increased by 67% over the last month, and the cultivation and retail sector metrics reflect this improvement. Much of this gain has occurred in the previous week since the August 10 Trump announcement that his administration was actively considering S3. For the overall cultivation & retail sector:
- Median EV/ 2026 EBITDA has improved to 5.83x vs 3.93x a month ago.
- Similarly, our bespoke valuation ratio of adjusted EV to 2025 EBITDAR is up to 8.51x, compared to 6.4x a month ago. This metric includes the impact of all leases and accrued 280E tax liabilities in the enterprise value.
- Valuation metrics still have a long way to go. Investors are optimistic, but still somewhat skeptical that the long-promised reform will actually happen.
- Also, our credit piece yesterday highlighted the uncertainty surrounding “uncertain tax liabilities”, the accrued but unpaid 280E taxes that now aggregate to around $ 2.4 billion for just the top 12 companies.
- Finally, we note that the sector still trades at only a 0.69x market-to-book ratio. This suggests a market expectation that future asset write-downs are likely. Given the low ROICs that we have been calculating, it’s hard to make a counterargument.
- The bottom line is that a new optimism is now filling the market. Obviously, that spells an increased risk if the best-case scenario of rapid S3 adoption does not occur. Still, we can look at cannabis stock prices without fear or revulsion again, and we are grateful for that at least.