Ten Predictions For US Cannabis In 2022: Valuations, MSOs, Consolidation, Software, Debt And More

  • With just eleven days remaining in 2021, we make ten predictions for US Cannabis in 2022
  • Valuations to remain depressed with the potential for further compression.
  • New out year multiples highlight longer term upside potential for investors.
  • The largest MSOs will lose share to smaller operators.
  • Consolidation to accelerate.
  • Significant legislative progress at the state level including rec in populous states. It will not matter for stock returns.
  • Declining flower pricing to be a problem. Pressure presents opportunities for brands and service providers.
  • Software plays continue to garner main stream institutional investment. Institutional interest represents a harbinger of what will come for plant-touching operators post banking legislation.
  • Debt becomes cheaper for even smaller operators. Capital access fuels growth and M&A.
  • International opportunities become a focus for US operators.
  • Smart operators to hedge on interstate sales opportunity.

Investment Highlights:

  • Valuations to remain depressed in ’22 with possible further declines. Upside of >2X is reasonable in next few years on ’24 valuation multiples.
  • 2022 outperforming stocks will be of companies that best execute on growth initiatives and beneficiaries of M&A.
  • More accessible lower cost debt supports growth outlook.
  • Continue to favor smaller and medium sized players over more expensive peers. In many cases are better positioned for growth and margin expansion but priced at relative discount.
  • Multiple factors align for consolidation in ’22. Of covered companies believe Cansortium and Goodness are most likely takeouts. Each offers significant value at current levels.
  • Expect California to be a target for M&A as large operators see value in challenged operators and seek a hedge on future interstate sales.


Viridian Capital Advisors
Jonathan DeCourcey
Director of Equity Research
(781) 724 - 6869

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