Viridian Capital Advisors Archives - Green Market Report

Debra BorchardtJanuary 13, 2023
stockmarket.jpg?fit=960%2C576&ssl=1

3min10030

There are many ways to look at who is a leading company in the cannabis industry. This week, Viridian Capital Advisors crunched the numbers in four different metrics to see which companies came out on top with regard to credit quality. Viridian only reviewed companies that have over a $100 million market cap. They used 11 different variables to measure four factors of credit quality: liquidity, leverage, profitability, and size.

Green Thumb Industries (OTC: GTBIF) came out on top based on all four factors. However, it really stood out for profitability based on high scores in projected EBITDA margins and funds from operation to assets. The company also scored highly for leverage. Viridian wrote in its note, “The most highly weighted of these ratios is total liabilities/market cap. GTI’s .36x is significantly better than the 1st quartile measure of .78x. GTI also scores well on the other three leverage indicators, which include a balance sheet ratio, a ratio based on funds from operation from the cash flow statement, and consensus projected debt/EBITDA.”

When it came to liquidity, Planet 13 Holdings (PLTH: OTC) came out at the top. Viridian analysts wrote that “based on its 6.4x current ratio and 5.5x on Viridian’s free cash flow adjusted current ratio. The latter augments the traditional current ratio by adding or subtracting annualized free cash flow to the numerator.”

The big kahuna for size went to Curaleaf (OTC: CURLF) which ranked number one in size based on both assets and market cap. Viridian wrote that “Size is positively correlated to credit quality for several reasons: Larger companies have typically been in existence longer and have more established business positions; they tend to be more diversified; and they tend to have more saleable assets to buffer unexpected cash flow shortfalls.”

Trulieve had a good showing coming in at second place for size and credit ranking. Coming in at the bottom of the chart was iAnthus (OTC: ITHUF). The beleaguered cannabis company that has been in a legal fight with shareholders was ranked last for liquidity and almost last for profitability and credit. While it wasn’t at the bottom of the list, Jushi also had a poor showing with a bottom ranking for leverage and credit.

 


Jenel Stelton-HoltmeierOctober 21, 2022
money-man.jpg?fit=960%2C640&ssl=1

4min9160

It’s been a rough news week for the cannabis industry. Two separate Canadian producers (The Flowr Corp. and Flower One) filed for creditor protection from the courts, and a cannabis information and education website cut more than one-fifth of its staff.

On top of that, long-beleaguered company CannTrust said it was making a proposal to creditors that could result in the company fully dissolving by the end of November.

But it’s also a cautionary tale for other companies who have been chasing growth at all costs, expecting the revenue to eventually cover all the costs. You have a business to run, so make sure you’re running it like a business.

Here are some expert tips on things you can do today to improve the health of your company tomorrow:

  • Make sure you’re keeping accurate and complete records of all aspects of your business operations. “If you can’t prove something in writing, it might as well not exist,” cannabis accountant Zach Gordon recently told KayaPush. It might sound tedious, but it’s up to you to keep track of where all the dollars and cents are going in your company to make sure you can continue to meet your obligations. This is particularly important for publicly traded companies.
  • Don’t overextend your business too much. Raising capital via debt transactions has become more popular as more institutions have become more willing to provide loans to cannabis companies. According to Viridian Capital Advisors, debt accounted for 93% of all capital raised in cannabis through Oct. 14. But that money has risks that equity raises don’t – in particular, a repayment schedule. If you’re not careful, that monthly obligation can be steep. For example, High Times found itself owing $100,000 every month; this week, the cannabis brand this week announced it had entered into a settlement agreement with the lender after it defaulted on the obligation.
  • Don’t wait until it’s too late to change. It’s tempting to try and hold out for the better days you “know” are coming, but if you wait until the tough times to adjust your operations, you might find yourself in a position where you have to cut so deep it can be near impossible to recover. Flowr cut roughly 40% of its staff earlier this year (alongside divesting noncore operations), but the savings didn’t amount to enough to help it avoid bankruptcy. You can be hopeful, but always look at the finances with a cautious lens and position your company so that it can be nimble when things aren’t rosy.

These tips aren’t magic bullets; they won’t solve all the challenges of operating a cannabis company. But they offer a great place to start to make sure your financial house is in order.


Adam JacksonAugust 19, 2022
money2-2.jpg?fit=960%2C721&ssl=1

6min4840

XS Financial closed on a $24 million line of credit with Needham Bank committing $20 million and acting as the administrative agent. XS Financials’ existing $4 million line of credit with an FDIC-insured bank will be retired, and the same bank will contribute $4 million in the new loan.

“With many capital sources in the industry experiencing a near-term pullback in financing, we are thrilled to continue funding our target borrowers at scale for their critical expansion projects,” XSF CEO David Kivitz said.

XSF fully retired its $15 million line of credit with the Garrington Group concurrently with the closing of this loan.

The new loan has a term of two years, expiring in August 2024. Loans made under the line of credit will bear interest at an annual rate equal to the Wall Street Journal Prime rate plus 1%, with a floor of 6%, and may be prepaid with no penalty at any time.

This credit facility is a strong indication of James’ and our lenders’ ability to offer credit solutions tailored to the unique needs of a company and underscores the strength of our nationwide banking platform in the fast-growing cannabis market,” Needham Bank CEO Joseph Campanelli said.

IM Cannabis issues financing 

IM Cannabis also said that it will issue $5 million worth of nonbrokered financing – similar to a stock split. The company intends to use the proceeds from the offering for general working capital purposes.

Following the deal, the company may issue up to 10 million common shares at a price of 50 cents per common share. The deal is expected to close on or about Aug. 22.


Choose Your News

Subscribe to the Green Market Report newsletter that gives you original content delivered straight to your inbox.

 Subscribe

By continuing I agree to your Privacy Policy and consent to receive relevant newsletters and other email communications on events, editorial features, and special partner offers from Green Market Report. I can unsubscribe or change my email preferences at any time.


About Us

The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


READ MORE



Recent Tweets

@GreenMarketRpt – 16 hours

Georgia Medical Cannabis Program Rules Delayed over Technicality

@GreenMarketRpt – 17 hours

Illinois Cannabis Sales Bolstered by New Stores in January

@GreenMarketRpt – 17 hours

Bright Green Attempts to Lure Investors to Its $500 Million Offering

Back to Top

Choose Your News

Subscribe to the Green Market Report newsletter that gives you original content delivered straight to your inbox.

 Subscribe

By continuing I agree to your Privacy Policy and consent to receive relevant newsletters and other email communications on events, editorial features, and special partner offers from Green Market Report. I can unsubscribe or change my email preferences at any time.