May 10, 2024 – This week’s Viridian Valuation Tracker focuses on the seven U.S. MSOs with over $500M market cap. Experience tells us that these companies are likely to be the first to benefit from new money entering the market as they are better known and perceived to be safer with better stock liquidity.
The group trades at media EV/2024 Revenues of 2.38x, up from 1.93x on 9/1/23, the first Friday after the HHS news hit. Similarly, the group now trades at median EV/2024 EBITDA of 10.11x, compared to 7.31x on 9/1/23.
The bottom line is that valuations are up significantly on multiple bases but not nearly as much as we thought they would be with an actual DEA agreement to S3. We believe that the chief two causes are a realization that this could take quite a while to actually work its way through the system and a deep sense of wariness from investors who have been fooled too many times. Other possibilities include worries that it won’t get done in time to avoid being reversed by a new administration and concerns about how it will actually dovetail with existing state programs.
Nonetheless, it’s hard to imagine a time when so many shots on goal are available, and valuations have not reflected it. We also note that the first earnings reports are in, and as we expected, generally better than analysts’ expectations. We will review the upcoming revisions for next week’s tracker report.
Check out the Viridian Valuation Tracker to See Our Complete Analysis of Valuations for the Top Public MSOs
Check Here to See Our Complete Analysis of Valuations for Our 12 Industry Sub-Sectors
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.
