Big Cannabis Faces Debt Crunch as Billions Come Due by 2026

A financial storm is brewing for some of the largest cannabis companies in the industry. With approximately $1.83 billion in debt maturing by 2026, giants like Curaleaf, Cresco Labs, and Trulieve Cannabis are staring down massive financial obligations. While some companies have started taking steps to address the looming debt, others remain on the sidelines, weighing their options.

Early Movers Take Action to Tackle Debt

A few industry leaders aren’t waiting around to see how things unfold.

For instance, Ascend Wellness Holdings was facing a hefty $275 million debt due in August 2025, which accounted for a staggering 89% of its total debt. To get ahead of the issue, Ascend completed a private placement of $235 million of 12.75% senior secured notes due in 2029. This move allowed them to pay down at least $215 million of their impending 2025 debt.

Similarly, Green Thumb Industries had $225 million in senior secured debt maturing on April 30, 2025. In a proactive move, they secured a $150 million five-year syndicated credit facility led by Valley National Bank in September. This new financing enabled them to retire the looming debt.

Emily Paxhia from Poseidon Asset Management noted, “These companies have bought themselves some time. The Green Thumb deal was particularly noteworthy as it was the first truly syndicated bank financing in the sector.”

Giants Still Grappling with Imminent Debt

While some have acted, several major players haven’t addressed their upcoming financial hurdles.

Curaleaf Holdings has a substantial $475 million in 8.0% senior secured notes due in December 2026. Despite paying down $15 million of its debt in the second quarter, they still owe significant amounts:

• $25 million due in 2024
• $87 million due in 2025
• $460 million due in 2026

Cresco Labs is looking at $400 million in senior secured term loans maturing in August 2026. With their CFO, Dennis Olis, set to retire soon, incoming CFO Sharon Schuler will have the challenging task of navigating this financial landscape.

Trulieve Cannabis faces $350 million in notes split into two tranches, both maturing in October 2026. However, they’re sitting on $200 million in cash and project $1 billion in sales for 2024, which might give them some breathing room.

The Banking Perspective: Caution and Skepticism

Banks are scrutinizing the assets and financial health of these cannabis companies more than ever.

Emily Paxhia mentioned, “Banks are being meticulous in their assessments. They’re under pressure to ensure the underwriting process is solid because they’re putting their balance sheets at risk with these syndicated deals.”

For companies with stronger financials, like Green Thumb, refinancing seems more attainable. “Green Thumb stands out as the most underwriteable among the major players,” Paxhia added.

However, for others, the road to refinancing might be rocky. Banks are keen on understanding the true value of company assets and their marketability, especially in a climate where selling such assets isn’t guaranteed.

The Clock is Ticking: What’s Next for the Industry?

With billions in debt maturing soon, the cannabis industry is at a crossroads.

Companies that have taken early action might have set themselves up for smoother sailing. Those that haven’t will need to formulate strategies quickly, whether that’s refinancing, asset sales, or other financial maneuvers.

Investors and stakeholders are watching closely. The decisions made in the next few years will likely reshape the industry’s landscape, determining who thrives and who struggles to stay afloat.