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The cannabis sector has seen its share of turbulence, highlighted by a 15.24% drop in the MSOS ETF (NYSE:MSOS) following the DEA’s decision to delay the rescheduling of cannabis until December 2nd. This delay adds to the uncertainty in an already volatile market, particularly as the U.S. approaches a presidential election where candidates hold sharply opposing views on cannabis policy. Amidst the market backdrop, a few cannabis penny stocks, priced lower than one of McDonald’s (NYSE:MCD) classic Big Macs, have shown resilience.
According to Viridian Capital Advisors, the broader cannabis sector shows a median debt-to-EBITDA ratio of 2.98 times across analyzed companies, aligning with thresholds for debt sustainability despite the ongoing challenges posed by regulatory frameworks like the 280e tax code.
However, the upper quartile of these companies exhibits leverage ratios considered unsustainable in the long term, pointing to a sector still in financial flux.
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Among the companies showing improvements are those with lower liquidity and trading volumes, demonstrating how strategic financial management can leverage market conditions:
While some companies thrived, others like TerrAscend (OTC:TSNDF), AYR Strategies (OTC:AYRWF), and MariMed (OTC:MRMD) experienced downgrades in their credit scores. Additionally, firms like Red White & Bloom (CSE:RWB), Acreage (OTC:ACRDF) and Slang Worldwide (CSE:SLNG) reported distressing total liabilities to market cap ratios exceeding 10, which typically signal financial distress.
Read Next: Does Size Matter? These Two Small-Cap Cannabis Stocks Are Masters Of Cash Flow And Credit Management
Posted In: ACRDF AYRWF CSE:RWB CSE:SLNG CXXIF ITHUF MCD MRMD MSOS SLNG TSNDF VEXT