
No deals have closed yet this year.
No deals have closed yet this year.
Agrify believes the moves will save the company upwards of $7 million over the year.
Small and midsize companies will see the most activity.
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.
Tighter capital management and budgeting come as cash becomes more expensive and harder to grab.
Formation of Canopy USA will trigger previously announced acquisitions of three companies.
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:
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.
The launch of analyst coverage of psychedelics is a sign of how big the industry could become and why it is worth watching more closely now.
Updates from Ignite Brands, Green Organic Dutchman, Viridian Capital Advisors and Glass House Brands.
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.
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Georgia Medical Cannabis Program Rules Delayed over Technicality https://t.co/2yIzbsYYGs
Illinois Cannabis Sales Bolstered by New Stores in January https://t.co/GXsvqSr8hc
Bright Green Attempts to Lure Investors to Its $500 Million Offering https://t.co/8DeeRxhDtr
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