viridian chart of the week

It is no secret that 2022 was unkind to cannabis. Many of the tier one and two MSOs are trading at multi-year lows. The environment is unlikely to improve anytime soon, and investors must have a long-term horizon. Neither SAFE, Rescheduling/Descheduling, or any 280e relief is likely in 2023....

Debt has represented approximately 94% of all capital raised by U.S. Cultivation & Retail in 2022, significantly greater than in any previous year in cannabis history. Equity issuance for cultivators has come to a virtual halt, with less than $80M of equity raised in 2022 compared to...

With the MSOS ETF down 68% YTD vs. an 18% decline on the S&P, we decided to reexamine the potential for buybacks, recaps, or LBOs. With a recession of unknown magnitude bearing down on us, we don’t think these actions are prudent, but we wanted to let the numbers speak for themselves...

The widespread belief that financing has dried up for U.S. Cultivation & Retail sector companies is not entirely true. Equity issuance was down sharply to only $104M YTD in 2022 from $2.1B in 2021, but luckily, debt issuance has not been as affected. The graph shows cannabis debt issuance...

Over the last four weeks, the total enterprise values of the tier-one MSOs shown in the graph have increased by 20.5% due to sharp increases in stock prices. Total enterprise values are now down approximately 20% from the beginning of 2021. The chart depicts the enterprise value to next twelve...

Participants at the recent MJBIZ conference discussed cash flow far more regularly than growth. A broad range of companies discussed instituting cost controls, tightening working capital management, and adopting stricter capital budgeting. This change of focus makes great sense given the...

The graph reviews the attractiveness of the top 14 MSO stocks for which analyst estimates are available for 2023 EBITDA. In ranking stocks, investors need to balance low multiples with relative safety. Stocks that trade at attractive multiples sometimes do so because they present higher credit...

The graph shows 2023 EBITDA consensus estimate revisions since 9/1/22 for 18 cannabis companies. The chart decomposes 2023 EBITDA revisions into the portion attributable to lower revenues (blue bars) and the portion attributable to lower EBITDA margins (red bar). Estimate cuts range from a...

The six largest U.S. MSOs combined accounted for approximately $5.0B (20%) of cannabis industry revenue in 2021. No single competitor represented as much as 5% of the total. Approximately 9,900 small companies with average revenues of around $1.6M accounted for over 60% of total industry sales....

Over the last two weeks, TerrAscend (OTC: TRSSF), Verano (OTC: VRNOF), and Acreage (OTC: ACRDF) have obtained new credit agreements with interest rates in the low teens, demonstrating that Tier one MSOs still have solid, albeit expensive, access to the credit markets. Smaller public and private...

The cannabis equity capital market is highly challenging: For the first 42 weeks of 2022 only $72.5M of equity issues were closed by the U.S. Cultivation & Retail sector compared to $2.03B for the same period in 2021. We screened the 61 companies in the Viridian Credit Tracker database...

Nine of the ten largest debt raises ever completed for U.S. Cultivation & Retail companies were closed in 2021 and, to a much lesser extent, YTD 2022. Over $3.8B of debt was sold over this period, far more than in any similar period in U.S. Cannabis history. Investors should be paying close...

Biden's announcement of federal cannabis pardons and a review of the CSA scheduling of cannabis produced a whopping 32.4% pop in the MSOS ETF for the week, easily the largest gain since the ETF was created. After a 10-point retracement, MSOs remain over 20% higher. The pullback signals a...

Faced with challenging industry dynamics, economic headwinds, and unresolved doubts regarding any federal regulatory reform, investors have become less willing to pay for rosy EBITDA growth projections. The chart is based on data from 253 companies, arranged into ten industry groups. Several...

Investors are rightfully concerned about cannabis company liquidity in the face of a constricting capital market. To dig into this, we compared adjusted cash balances to current loan and lease obligations. Focusing on the 114 companies in the Viridian Value Tracker database with market caps...