Credit Check: What Does DEA Rescheduling Mean For Cannabis Credit Ratings? Big Companies' Risk-Return Profiles
Portfolio Pulse from Nicolás Jose Rodriguez
The DEA's rescheduling of cannabis to Schedule III has caused significant market volatility for multi-state operators (MSOs), with the MSO index initially surging by 25% and then dropping by 15%. Viridian Capital Advisors highlights the impact on MSOs' credit ratings and financial health, noting Green Thumb Industries' favorable deal, Trulieve's balanced risk-return profile, and the high yields but high risks for companies like Ascend Wellness, Verano, Cresco, and Curaleaf.
May 03, 2024 | 3:57 pm
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POSITIVE IMPACT
Green Thumb Industries secured a deal with a 7% return by April 2025, improving its position in Viridian's credit rankings despite higher costs.
The favorable deal indicates a strong financial position and investor confidence, likely leading to a positive short-term impact on GTBIF's stock price.
CONFIDENCE 90
IMPORTANCE 75
RELEVANCE 80
POSITIVE IMPACT
Trulieve's current yield at 8.7% suggests a more balanced risk-return profile, potentially attracting cautious investors.
The balanced risk-return profile indicated by the 8.7% yield could make TCNNF an attractive option for investors, possibly driving up its stock price in the short term.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 70
NEUTRAL IMPACT
Cresco's trading yields in the 11-11.5% range highlight its risk profile and investment attractiveness.
Cresco's yield range indicates a higher risk investment, which could influence its stock price through investor perception.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 60
NEUTRAL IMPACT
Curaleaf's yields in the 11-11.5% range suggest a higher risk but potentially rewarding investment.
The yield range for Curaleaf suggests a higher risk profile, which could lead to a more volatile stock price in the short term.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 60
NEUTRAL IMPACT
Verano trades yields in the 11-11.5% range, indicating a higher risk and potentially more volatile investment.
The high yield range suggests a riskier investment profile, which could lead to increased volatility in VRNOF's stock price.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 60
NEGATIVE IMPACT
Ascend Wellness faces high risk with a 13.7% yield on its $275M loan, constrained by high liabilities relative to its market cap.
The high yield reflects significant risk, and the high liabilities relative to market cap could restrain stock performance, indicating a potential short-term price decline.
CONFIDENCE 90
IMPORTANCE 85
RELEVANCE 90