OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS
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Valuation Tracker By Industry Sector
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.
Week ended 01/31/2025
Sector Valuation – Cultivation & Retail – Which is the right multiple?
- The Weekly Sector Valuation report illustrates why Viridian has updated our valuation metrics. The median for the standard EV/2025 EBITDA multiple is now 4.21x, a surprisingly low value that appears to give virtually no credence to any hope for rescheduling, let alone any discussions of SAFE.
- The metric is seriously flawed, however, for two reasons: it does not give any effect to the significant accrued but unpaid tax liabilities that companies have parked in “uncertain tax liability” accounts in the long-term liability section of their balance sheets. While we are OK with a standard tax accrual of around 90 days, many of these are much larger, and accordingly, we now treat them as debt. Similarly, we treat operating leases as debt. Our preferred valuation measure has become Adjusted EV/ 2025 EBITDAR. If you are considering leases as part of EV, it is essential to use EBITDAR in the denominator since EBITDA has lease expenses taken out.
- The median value on our bespoke ratio is 6.02x, making clear that cannabis operators are not trading nearly as cheaply as orthodox measures make it seem.
Week ended 01/31/2025
Sector Valuation – Cultivation & Retail – Which is the right multiple?
- The Weekly Sector Valuation report illustrates why Viridian has updated our valuation metrics. The median for the standard EV/2025 EBITDA multiple is now 4.21x, a surprisingly low value that appears to give virtually no credence to any hope for rescheduling, let alone any discussions of SAFE.
- The metric is seriously flawed, however, for two reasons: it does not give any effect to the significant accrued but unpaid tax liabilities that companies have parked in “uncertain tax liability” accounts in the long-term liability section of their balance sheets. While we are OK with a standard tax accrual of around 90 days, many of these are much larger, and accordingly, we now treat them as debt. Similarly, we treat operating leases as debt. Our preferred valuation measure has become Adjusted EV/ 2025 EBITDAR. If you are considering leases as part of EV, it is essential to use EBITDAR in the denominator since EBITDA has lease expenses taken out.
- The median value on our bespoke ratio is 6.02x, making clear that cannabis operators are not trading nearly as cheaply as orthodox measures make it seem.
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