May 17, 2024 – Joe Biden confirmed on Thursday, May 16th, that the DEA will be pursuing a rule to reschedule cannabis. Following Biden’s video, the Department of Justice confirmed it had sent a proposed rule to the federal register. Once the proposed rule is made public in the federal register, a 60-day public comment period is triggered.
Cannabis equities jumped to sizable gains immediately after the news, but by the end of the day, most of the gains had drifted away.
How Are Cannabis Stocks Valued Now?
This week’s Viridian Value Tracker data filtering investigates the valuation metrics of the sixteen U.S. Cultivation and Retail companies with market caps over $100M.
The group now trades at a median EV/2024 Revenues multiple of 1.77x, up slightly from 1.70x on 9/10/23.
The group now trades at a median EV/2024 EBITDA multiple of 7.77x, compared 7.33x on 9/10/23.
So what happened? After the thrill of the political theater dissipated, market participants realized again that the White House is not entirely in control of the process, which could still take months to years to conclude. The announcement did seem to at least put to bed any doubts about whether the DEA will indeed recommend S3, and we are a bit perplexed by the ho-hum market response.
Check out the Viridian Valuation Tracker to See Our Complete Analysis of Valuations for the Public MSOs
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About Viridian Capital Advisors, LLC
Launched in 2014, Viridian Capital Advisors was one of the first and now leading, corporate finance, advisory and M&A practices in the legal Cannabis/CBD industries, and now in the Psychedelics sector. We represent companies, investors, lenders, buyers and sellers. Our advisory practice is meant to help “institutionalize” our clients before they go to market for capital or M&A – by helping to build a professional Board of Directors, sophisticated financial models and valuation analyses, exit strategies and strategic advisory services. Our investment banking practice raises capital and executes M&A transactions through our New York City based broker-dealer, Bradley Woods & Co. Ltd.
Viridian is widely recognized as the industry leader in research and capital markets data/market intelligence through the Viridian Deal Tracker. Launched in January 2015, the Viridian Deal Tracker is a proprietary data service that monitors and analyzes investment, M&A activity and capital markets trends in the Cannabis, Hemp and Psychedelics industries. We’ve tracked and analyzed more than 6,500 transactions totaling more than $70 billion in transaction value. We know where equity investors invest, where lenders lend and where acquirers acquire. The Deal Tracker is received and read every day by thousands of leading industry players on a global basis, becoming a trusted and valuable source for companies, investors, lenders and sellers/acquirers to make informed capital allocation decisions.
Marijuana remains illegal under federal law. The federal government does not recognize marijuana to have any medicinal value. Marijuana cultivation, possession, consumption, sales, and distribution are illegal under federal laws and also certain state laws. Investors in cannabis may be subject to law enforcement actions. Please note that there are differences in marijuana laws from one state to another. Furthermore there are substantial risks associated with investing in cannabis companies, including, without limitation, changes in laws, rules, and regulations, risks associated with the economy, capital markets, and a company’s ability to execute on its business plan.
