No Reason to Own Curaleaf

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Friends,

There wasn’t much cannabis business news this week, but what we learned was kind of surprising. Cannabist, which sold one of its Virginia businesses to Verano in 2024 for $90 million, announced the sale of its remaining Virginia assets to Curaleaf. The Cannabist press release revealed the price, while the Curaleaf one did not. Cannabist gapped up and sold off and is now down 13.9% this week and down 39.9% year-to-date. The company is extremely challenged, in my view, and does not really matter much to investors given its low market cap and thin trading volumes. It’s the debt-holders that care.

Curaleaf, on the other hand, rallied Wednesday after pulling back on Tuesday, when the $110 million pending purchase was announced. It is up 6.9% this week and has gained 56.4% in 2025. This is a lot better than the Global Cannabis Stock Index, which, at 6.09, has dropped 11.5% year-to-date. MSOS, which holds a lot 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 it closed yesterday at $2.44. I remain very negative on the stock, and today I am sharing an updated perspective. The main issues that I see are that the valuation is very high relative to peers, the company has a tremendous amount of debt, and MSOS owns a lot.

Curaleaf’s Valuation Is High Relative to Peers

While the current enterprise value to projected adjusted EBITDA for 2026 may appear low at 7.8X, that is a big premium to its peers:

Curaleaf has outperformed the large MSOs in 2025, driving this high relative valuation:

The Curaleaf Balance Sheet Is Bad

The balance sheet is bad and getting worse. Net debt was $436 million at the end of Q3, but a large part of the debt outstanding is due in late 2026, an amount that far exceeds the cash. Management said on the conference call that it would roll it over soon. That debt is currently carried at an 8% 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 will make this ratio fall to 0.6X. The Virginia purchase will lower it even more.

Of course, the company could roll over the debt, but the lenders  must consider negative tangible equity of -$853.6 million as of Q3. This captures the massive tax-related liabilities that total $759 million. Perhaps the company will get a new loan, but investors should expect the rate to be potentially higher than the current 8%. The company could also sell some stock.

MSOS Owns a Lot of Curaleaf

MSOS controls 74.47 million shares of Curaleaf, which is its largest position. Curaleaf has a thin float relative to its peers, and this reduces it further. Curaeaf’s share-count is 678 million, so the MSOS stake is more than 10% of the company’s outstanding subordinated shares that trade in the U.S. over-the-counter and in Canada on the TSX. I add the multiple voting shares as well as RSUs and PSUs and some in-the-money options to get a fully-diluted in-the-money share-count of 803 million, so MSOS has a 9.3% stake in the company.

If MSOS gets redemptions again, it will likely need to sell more Curaleaf. Most investors recall the large number of shares of the ETF that were redeemed in late 2022 and into 2023. There were redemptions again in early 2025, and then again in November, when the share-count fell by 2%. Yesterday, shares fell by 0.5% due to another redemption. Despite this drop, the share-count has expanded by 41% in 2025. The number of Curaleaf shares controlled by MSOS has increased 54% year-to-date, which compared to a 32% increase in the number of shares of Trulieve and a 2% increase in the number of shares of GTI. Curaleaf is now the biggest position at 26.7%, while Trulieve is at 21.6% and Green Thumb Industries is at 21.3%.

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

Conclusion

Curaleaf was trading at$0.84 on June 30th and rallied to $2.04 on August 8th, just ahead of the potential rescheduling news. It’s not clear to me why Curaleaf has done so well relative to its peers and to 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 so much stock that I am now neutral on both. 280E vanishing, if it happens, would be great for Curaleaf, but there are others that would benefit a lot too. Investors who want 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 this past week:

Exclusives

Cannabis Stocks Extend Decline in November

M&A

Cannabist to Sell Virginia Assets to Curaleaf

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