The Cannabis Investing Podcast · Seeking Alpha

How retail investors should evaluate cannabis stocks

·58 min·3 clips

Jerry calls tangible book value “an absurd metric” for companies like Organigram and Planet 13.

1. The Cannabis Investing Podcast episode “How retail investors should evaluate cannabis stocks” focuses on how to value cannabis companies when disclosures are thin and metrics are unstable. 2. Host Rina Sherbel interviews Jerry Dereviani, a partner at Bengal Capital and manager of the Bengal Catalyst Fund, because he writes the fund letter and invests in cannabis. 3. The episode asks what retail investors should use instead of standard valuation screens when cannabis stocks are moving on Schedule III, 280E, debt, and state-level operating differences. 4. Jerry says there are “no good metrics” for a fast read on these companies because many businesses release “really threadbare disclosures.” 5. He walks through the evolution from funded capacity in Canada to TAM battles in the United States, then to EV/EBITDA and cash flow screens. 6. Jerry says market-cap-to-EBITDA is wrong because EBITDA should be compared with enterprise value, not equity value alone. 7. He argues that EV/EBITDA can mislead when debt levels are large and when upcoming maturities change the economics of the equity. 8. Jerry rejects tangible book value as a screen and names Organigram and Planet 13 as examples of companies where the metric breaks down. 9. He says greenhouse assets worth hundreds of millions of dollars can later trade for pennies on the dollar, so book value overstates reality. 10. Jerry explains that MSOs operating in Massachusetts, Illinois, or 16 markets have very different margin profiles, capital needs, and future cash flow paths. 11. He uses TerrAscend as an example of a company whose Maryland and New Jersey exposure changed its financial profile. 12. Jerry says investors often overread Schedule III and miss that the change may be more pro-debt than pro-equity. 13. He says 280E would go away by operation of law if the DEA moves cannabis to Schedule III, rather than being replaced by a simple excise-tax offset. 14. Jerry puts his own Schedule III odds at 70% to 80% by the end of 2025, while one partner at Bengal Capital assigns a 95% chance. 15. He says anti-cannabis forces can mount a narrow but intense fight that investors may underestimate. 16. Jerry says companies like GTI may not disclose state-level splits because they do not feel pressure to do so and their current performance already looks good. 17. He says retail-dominated ownership reduces institutional pressure for “table stakes” disclosure that would be standard in other industries. 18. The conversation stays analytical and candid, with Rina Sherbel pressing for examples and Jerry answering in a skeptical, framework-driven style. 19. Investors who follow cannabis balance sheets, state-level operating data, and Schedule III risk would get the most from this episode. 20. Investors looking for simple valuation ratios or a bullish cannabis trade would likely skip it.

As heard by us

A grounded look at cannabis stocks where quick screens and tax strategy are not enough.

This is a grounded look at cannabis stocks, where quick screens do not get you very far because the disclosures are thin and the businesses are hard to read at a glance.

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Why you'd press play

A blunt filter for cannabis stocks when the numbers stay murky.

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