Business
Analysis: Cannabis MSOs could borrow nearly $2 billion – if they want to
The nation’s largest marijuana multistate operators collectively could tap into nearly $2 billion worth of debt – should any want to borrow money to expand capacity, make acquisitions or buy back stock.
This finding underscores our previous assertion that the major MSOs are in reasonably good shape to withstand the current tumultuous economic environment – one where rising inflation and interest rates are fanning fears that the economy might be headed toward a recession.
Stock prices, meanwhile, have swooned, making it more difficult for cannabis companies to issue shares to raise money.
The lower stock prices, however, make it more attractive for the MSOs to buy back their own shares if they have available funding from other sources, such as debt financing.
Let’s dig into the numbers.
Strong cash positions
In the case of the big MSOs, their cash positions are strong. And they are expected to be free cash-flow positive in 2023.
Our conservative calculations indicate that the group of 12 companies shown in the chart above have an aggregate of about $1.9 billion of untapped debt capacity.
We wanted to take an extra conservative view of the MSOs’ ability to raise additional funding through debt financing in our analysis here.
We looked at the 12 MSOs with more than $300 million in market capitalization.
We calculated the incremental, or additional, debt capacity of each company based on consensus analyst estimates of EBITDA, tax expenses and capital spending.
We calculated the free cash flow available to pay interest expense on debt from these.
We then took this free cash flow and divided it by a desired interest-coverage ratio to calculate the amount of interest expense that each company could pay.
The interest-coverage ratio determines how easily a company can pay interest on its outstanding debt.
We used two times coverage for this exercise, recognizing that this is conservative for an industry such as cannabis, which is growing and relatively recession-resistant.
We then took this interest expense and divided it by an estimate of a reasonable interest rate for this group of companies.
We used 12% as a conservative number, recognizing that a number of the companies on our list borrowed at less than 10% rates in 2021.
Untapped debt capacity
The resulting figures gave us the total debt that we believe the company’s cash flow would currently justify – in other words, that $1.9 billion of untapped debt capacity.
Finally, from this number, we subtracted each company’s net debt (debt minus cash) to arrive at the additional debt capacity for each company.
The chart above shows the results of this exercise.
Note that the incremental debt for several companies, including Jushi Holdings (CSE: JUSH), 4Front Holdings (CSE: FFNT) and Ascend Wellness (CSE: AAWH) is negative, mainly because these companies have recently had extensive capital spending projects that will come online at the end of 2023 and in 2024.
As these projects come closer to fruition and are incorporated into analyst estimates, we expect the calculated debt capacity of these firms to expand.
On the other side of the spectrum, Planet 13 Holdings (CSE: PLTH), Green Thumb Industries (CSE: GTII), Ayr Wellness (CSE: AYR.A) and Verano Holdings (CSE: VRNO) each appear to have more than $150 million of additional debt capacity.
The chart takes this analysis one step further.
Suppose a company has additional debt capacity based on its cash flow and its stock is trading below intrinsic value.
In that case, it is natural to consider the possibility of a stock buyback.
In addition to incremental debt capacity, the chart shows what percentage of the current market cap of each company could be repurchased using the firm’s additional debt capacity.
Four companies appear to have the ability to buy back more than 10% of their shares: Planet 13, Green Thumb, Ayr and Verano.
Note that, based on these figures, both Ayr and Planet 13 appear to be able to do substantial recapitalization transactions. Investors should note this in their valuation calculations.
In the current unsettled economic environment, however, we don’t expect many of these firms to originate stock-buyback programs.
But at current prices, if you are confident in your cash flows, it certainly has to be tempting.
Source: https://mjbizdaily.com/cannabis-multistate-operators-could-borrow-nearly-2-billion-if-they-want-to/
Business
Jio’s 1,600-Satellite LEO Constellation Gets Technical Green Light
Reliance Jio has crossed a significant milestone in its space connectivity ambitions after its proposal to deploy a Low Earth Orbit (LEO) satellite constellation of around 1,600 satellites received a positive technical assessment from the Indian National Space Promotion and Authorisation Centre (IN-SPACe).
The evaluation, conducted jointly by IN-SPACe, the Indian Space Research Organisation (ISRO), and the Wireless Planning and Coordination (WPC) wing of the Department of Telecommunications, reportedly concluded that Jio’s proposed system meets the required technical standards and is comparable to leading global satellite broadband networks.
India’s Indigenous LEO Satellite Vision
Under the proposal, Reliance Jio plans to deploy between 1,600 and 1,650 satellites in Low Earth Orbit at an altitude of around 650 kilometres.
The planned constellation is expected to provide high-speed satellite connectivity across India, with approximately 32 satellites visible from any location at a given time. The company aims to roll out the network within the next two to three years, subject to regulatory approvals.
According to industry estimates, the satellite system could deliver 4.5 to 5 terabits per second (Tbps) of total data capacity, making it one of the largest satellite broadband projects proposed in India.
The project is expected to require an investment of $10–15 billion (approximately ₹95,000 crore to ₹1.42 lakh crore), reflecting the scale of infrastructure needed for satellite manufacturing, launches, ground stations, and user terminals.
Regulatory Process Moves Forward
Following the successful technical review, the proposal is expected to move into the next phase of regulatory approvals.
The government may now assist Jio in securing orbital slots, coordinating spectrum usage, and filing applications with the International Telecommunication Union (ITU), the global body responsible for managing satellite orbit and frequency allocations.
Obtaining orbital rights remains a critical step, as Low Earth Orbit has become increasingly competitive due to the growing number of satellite broadband projects being planned worldwide.
Officials also indicated that the proposed satellite architecture has been designed to coexist with future Indian LEO constellations, allowing multiple domestic operators to share orbital resources efficiently.
Broadband, Mobile Connectivity, and Strategic Applications
Jio plans to use the satellite network to provide a range of communication services, including satellite broadband, mobile backhaul, enterprise connectivity, and direct-to-device (D2D) satellite communication, particularly in remote and underserved regions where conventional telecom infrastructure is limited.
The company also intends to establish 20 to 22 ground stations across India to support network operations.
Apart from commercial telecommunications, officials have highlighted the project’s potential strategic importance. A domestically developed satellite constellation could strengthen India’s communication infrastructure, reduce dependence on foreign satellite operators, and support national security requirements.
Reports suggest preliminary discussions are underway regarding the possibility of integrating defence-related payloads into some satellites, enabling both civilian and strategic use.
Major Step for India’s Space and Telecom Sectors
Industry analysts view the technical clearance as an important milestone in India’s expanding private space ecosystem. If Jio secures the remaining regulatory approvals and international orbital clearances, the project could become the country’s first large-scale indigenous LEO satellite broadband network.
The initiative also aligns with India’s broader efforts to expand digital connectivity while strengthening its presence in the global satellite communications market.
Business
Alleged Crores Pharma Scam Mastermind Arrested from Surat
After evading law enforcement for nearly 13 years, an accused linked to a large-scale pharmaceutical fraud case has been arrested by Delhi Police from Surat, Gujarat. The suspect is alleged to have orchestrated a series of financial scams involving fake identities, forged documents, and dishonoured cheques used to procure high-value pharmaceutical raw materials.
Authorities say the accused, identified as Himmat Singh Lodha, is believed to have defrauded multiple pharmaceutical companies in Delhi of goods worth approximately ₹98 lakh before disappearing and remaining underground for years.
Fake Business Deals and Dishonoured Cheques Used in Fraud
Investigators claim the accused posed as a legitimate pharmaceutical trader and placed bulk orders for expensive drug ingredients, offering post-dated cheques as payment security.
In one documented case from 2013, he allegedly obtained around 550 kilograms of Gliclazide, a diabetes-related pharmaceutical ingredient, valued at over ₹26 lakh. When suppliers attempted to encash the cheques, they were reportedly returned with the remark “account closed.”
Following the transaction, the accused allegedly vacated his office and rented residence and disappeared without settling payments. He was later declared a proclaimed offender in 2016 after repeatedly failing to appear before court proceedings. Authorities had also issued a reward for information leading to his arrest.
Multiple Identities and Repeated Fraud Pattern
Police investigations further link the accused to another cheating case dating back to 2012, where he allegedly used a fake identity, “Kailash Jain,” to obtain a large consignment of Ambroxol HCL, a pharmaceutical compound used in cough medications. The value of that consignment was estimated at around ₹72 lakh.
Officials believe the accused followed a consistent modus operandi—posing as a credible businessman, securing high-value goods on deferred payment terms, and then disappearing after delivery while shutting down business operations.
Investigators suspect that forged business records, fake company credentials, and fabricated financial histories were used to build trust with suppliers and gain access to expensive raw materials.
Multi-State Surveillance Leads to Arrest in Surat
A special Crime Branch team tracked the accused through coordinated surveillance efforts across multiple cities, including Mumbai, Ahmedabad, and Surat. After nearly a month of technical monitoring and intelligence gathering, officials located and arrested him from a residential area in Surat.
Authorities also revealed that the accused had been involved in property-related activities while staying under the radar to avoid detection.
Growing Threat of Corporate Identity Fraud
The case highlights a rising trend of organised financial fraud targeting industries that rely heavily on trust-based transactions and deferred payments. Experts note that criminals increasingly exploit gaps in corporate verification systems by using fake GST registrations, temporary offices, and forged documentation to appear legitimate.
Cybercrime and financial fraud specialists warn that such schemes are becoming more complex with the widespread availability of digital business tools, making it easier to create convincing but fraudulent corporate identities.
Experts Urge Stronger Due Diligence in High-Value Transactions
Experts, including former IPS officer and cybercrime specialist Prof. Triveni Singh, emphasize the need for stricter verification procedures in commercial dealings. He noted that relying solely on paperwork or digital business profiles can expose companies to significant financial risk.
Authorities and industry experts recommend physical verification of business operations, bank account validation, and detailed background checks before engaging in high-value or deferred-payment transactions—particularly in sectors like pharmaceuticals, where single consignments can involve transactions worth crores.
Business
EU Pressure Builds on Google as Regulators Face Calls for Massive Fine Over Search Practices
A growing coalition of European industry groups is intensifying pressure on regulators to take decisive action against Google over allegations of unfair search practices that could reshape competition rules across the region’s digital economy.
Investigation Under Digital Markets Act Gains Momentum
The case is being examined by the European Commission under the European Union’s landmark Digital Markets Act (DMA), introduced to curb the dominance of major technology platforms and ensure fair competition.
Launched in March 2024, the investigation focuses on whether Google has been prioritising its own services in search results, potentially disadvantaging rival businesses that rely on online visibility to reach customers.
Industry Groups Demand Swift Action
Several prominent European organizations have jointly urged regulators to conclude the probe without further delay. They argue that prolonged investigations allow alleged anti-competitive practices to continue, putting European companies—especially startups—at a disadvantage.
Signatories include the European Publishers Council, the European Magazine Media Association, the European Tech Alliance, and EU Travel Tech.
In a joint statement, these groups warned that delays in enforcement are affecting innovation, profitability, and growth prospects for regional businesses competing in digital markets.
Google Denies Allegations
Google has rejected claims of bias, stating that its search algorithms are designed to deliver the most relevant and useful results to users. The company has also proposed adjustments to address regulatory concerns.
However, critics argue that these changes are insufficient and fail to address the core issue of market dominance.
Potential Billion-Euro Penalties
If found in violation of the DMA, Google could face significant financial penalties. Under EU rules, fines can reach a substantial percentage of a company’s global turnover, potentially amounting to billions of euros.
Regulators may also impose corrective measures requiring changes to business practices, which could have long-term implications for how digital platforms operate in Europe.
Wider Implications for Big Tech
The case highlights ongoing tensions between European regulators and major U.S. technology firms. In recent years, the EU has taken a more aggressive stance in enforcing competition laws, aiming to create a level playing field for local businesses.
A final ruling against Google could set a major precedent, influencing future enforcement actions and shaping the regulatory landscape for global tech companies operating within Europe.
As scrutiny intensifies, the outcome of the investigation is expected to play a critical role in defining the future of digital competition across the European Union.
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