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friends,

There hasn’t been much cannabis news this week, but what we did learn was kind of surprising. Cannabist, which sold one of its Virginia businesses to Verano for $90 million in 2024, announced the sale of its remaining Virginia assets to Curaleaf. Cannabist’s press release disclosed the price, while Curaleaf did not. Cannabist rallied and sold off and is now down 13.9% this week and down 39.9% year to date. The company is extremely difficult, in my opinion, and doesn’t really hold much value for investors given its low market cap and small trading volumes. Creditors are the ones who care.

Curaleaf, on the other hand, rallied on Wednesday after pulling back on Tuesday after announcing a pending $110 million buyout. It’s up 6.9% this week and is set to rise 56.4% in 2025. This is much better than the Global Hemp Stock Index, which is down 11.5% year-to-date at 6.09. MSOS, which carries most of Curaleaf, is down 3.2% in 2025.

I downgraded Curaleaf to Strong Sell at Seeking Alpha in April when it was $0.98 and yesterday it closed at $2.44. I remain very bearish on stocks and today I share an updated outlook. The main problems I see are that the valuation is too high relative to peers, the company has huge debt and MSOS has a lot.

Curaleaf’s rating is high compared to peers

While the current value of 7.8X projected adjusted EBITDA for 2026 may seem low, it is a large premium to its peers;

Curaleaf outperformed the major MSOs in 2025, driving this high relative valuation;

Curaleaf’s balance sheet is poor

The balance sheet is bad and getting worse. Net debt was $436 million at the end of 3Q, but most of the debt is due at the end of 2026, an amount that far outweighs cash. Management said on a conference call that it will replace it soon. That debt is currently realized at 8 percent cost. The company reported a current ratio of 1.5X. but that large debt due in 2026 will become current instead of long-term at the end of Q4 and this ratio will drop to 0.6X. The Virginia purchase would reduce it further.

Of course, the company can roll over the debt, but lenders should consider negative tangible equity as of Q3 of $853.6 million. This includes huge tax liabilities of $759 million. It is possible that the company will get a new loan, but investors should expect the interest rate to be potentially higher than the current 8%. The company may also sell some shares.

MSOS owns a lot of Curaleaf

MSOS controls 74.47 million shares of Curaleaf, its largest position. The Curaleaf has a thin flame compared to its peers and this further reduces it. Curaeaf’s shares are 678 million, so MSOS’s stake is more than 10% of the company’s outstanding subordinated shares, which trade over the counter in the US and on the TSX in Canada. I add the multiple voting shares as well as the RSUs and PSUs and some cash options to get a total stock dilution of 803 million, so MSOS has a 9.3% stake in the company.

If MSOS receives repayments again, it will likely need to sell more Curaleaf. Most investors remember the large number of ETF shares that redeemed in late 2022 and 2023. There were further redemptions in early 2025 and then again in November, when the number of shares fell 2%. Yesterday, shares fell by 0.5% due to another redemption. Despite this decline, the number of shares expanded by 41% in 2025. Curaleaf shares controlled by MSOS are up 54% year over year, compared to 32% for Trulieve and 2% for GTI. Curaleaf now holds the largest position at 26.7%, while Trulieve has 21.6% and Green Thumb Industries has 21.3%.

When MSOS received redemptions in November, it reduced Curaleaf shares it controlled by 2%, and then again yesterday. If the ETF receives more redemptions, it will likely sell more CURLF. This could be a problem if the ETF receives redemptions after bad news regarding 280E taxation emerges, as there are fewer buyers in that scenario.

Conclusion

Curaleaf traded at $0.84 on June 30 and rose to $2.04 on August 8, just ahead of the potential restructuring news. It’s unclear to me why Curaleaf is doing so well compared to its peers and other cannabis stocks. Cannabis stocks have been very volatile. Two that I have not liked at all over the past few years, Canopy Growth and Tilray Brands, have fallen so much and sold off the stock so much that I am now neutral on both. The demise of the 280E, if it happens, would be great for Curaleaf, but there are others that would benefit greatly as well. Investors looking to buy an MSO have better options than Curaleaf, which is quite risky.

Sincerely,

Alan:

New Cannabis Ventures publishes curated articles as well as exclusive news. Here is what we published last week.

Exclusives

Hemp stocks extend decline in November

M&A:

Cannabist to sell Virginia assets to Curaleaf

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Based in Houston, Alan leverages his experience as an online community founder 420 Investorthe first and still the largest due diligence platform focused on publicly traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. time New Cannabis Ventureshe is responsible for content development and strategic alliances. Before turning his attention to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst with more than two decades of research and portfolio management experience. A prolific writer, with over 650 articles published since 2007 Looking for Alphawhere he has 70,000 followers, Alan is a frequent speaker at industry conferences and frequent source Media including the NY Times, Wall Street Journal, Fox Business and Bloomberg TV. Contact Alan. Twitter: |: Facebook |: LinkedIn: |: El