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Capital raises this year may have improved over 2023, but according to Viridian Capital Advisors it’s still the second-worst capital raise year since 2018. Year-to-date capital raises for plant-touching companies are up 141% to $972 million versus just $403 million for the same period in 2023.

But when you drill down into the numbers, the improvements are less than stellar.

Almost all – 98% – of the raises this year have been in the form of debt, and 75% of those have been  refinancing of existing debt. Viridian noted that three large debt raises of more than $100 million accounted for more than half of all the capital raised.

On top of that, the report highlights that the top 14 multistate operators have a combined $2.38 billion of debt coming due in 2026. At some point, the debt well will surely run dry.

Equity dreams vanish

It’s no surprise that equity raises are mostly nonexistent. In just the last few weeks, Slang Worldwide (CSE: SLNG) has gone into receivership and its stock is essentially worthless, while a creditor of Flora Growth (Cboe: GRAM) (OTC: GRAM) formally requested a receiver be appointed for that California-based company.

Canopy Growth told investors this week that it had essentially zeroed out the value of the Acreage Holdings shares as it closes the acquisition transaction. In a statement, Acreage wrote, “…it is anticipated that the current holders of fixed shares will receive zero value upon closing of the acquisitions.”

Earlier this year, MedMen went bankrupt, leaving shareholders and lenders equally empty-handed.

And the list goes on. Even companies that have performed well have seen stock valuations plunge. The exchange traded fund (ETF) AdvisorsShares Pure U.S, Cannabis (MSOS) has declined by 40% over the past year, while the AdvisorShares MSOS Daily Leveraged ETF announced a 1-for-20 reverse split to drive up the share price.

“As an investor, the natural inclination is to think that any company that wants to raise equity at these prices must be desperate,” Viridian wrote.

Statehouse Holdings (OTC: STHZF) is also in receivership and its numerous holdings are being sold off in parts rendering its shares worthless. On top of that, Statehouse reported $27 million in revenue in the last quarter, but that still wasn’t enough to make its debt payments. So even debt isn’t safe.

Waiting on Washington

What’s the solution? Viridian says the market is dependent on lawmakers now.

Rescheduling has been pushed to 2025, and it isn’t clear if the new administration is backing these efforts. If it does happen, it would certainly boost the industry.

Then there’s the federal Farm Bill that is set to expire at the end of the year. If intoxicating hemp is allowed to continue its legal status, it will siphon off more regulated cannabis sales. At the same time, the SAFER Banking Act, which could open the capital spigots, has also stalled.

Once again the industry is in wait-and-see mode. Some of the proposed members of the new Trump administration are pro-cannabis, while others are decidedly against it. In the meantime, cannabis companies hope they can survive until the smoke lifts and the picture becomes clearer for legalization.