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Jushi Holdings Revs Up, Unleashing Torque In Pennsylvania And Virginia’s Cannabis Expansion Jushi Holdings: Paving the Road to Growth in Pennsylvania and Virginia

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dalle jushi holdings zuanic feb2024 va pa

A comprehensive analysis by senior analyst Pablo Zuanic of Zuanic & Associates highlights Jushi Holdingsโ€™ (JUSHF) potential for significant market cap upside, particularly in Pennsylvania and Virginiaโ€™s expanding cannabis landscape.

Financial Fortunes

Jushiโ€™s current enterprise value (EV) is calculated at $414 million, trading below the MSO average at 1.5x EV to current sales. Yet, the undervaluation fails to account for the substantial upside in Pennsylvania and Virginia, suggesting an imminent rerate as regulatory clarity comes to light.

Zuanicโ€™s analysis also delves into Jushiโ€™s financial maneuvers and strategic positioning, highlighting debt management and market expansion strategies, painting a cautiously optimistic outlook for the companyโ€™s future.

Bull vs. Bear Scenarios

Zuanic advocates a bullish outlook, envisioning a fivefold increase in Jushiโ€™s EBITDA if Pennsylvania and Virginia usher in recreational sales. Such a surge could propel the company to lofty valuations, making it an appealing acquisition target.

The contrasting bear case suggests limited downside due to Virginiaโ€™s burgeoning medical program and operational efficiencies, despite challenges in other markets.

The Promise of Pennsylvania

Jushi stands to witness a market cap surge of over 250% if Pennsylvania transitions to recreational cannabis sales. The state, with its robust medical marijuana market generating sales exceeding $1.5 billion, offers the potential for a substantial uptick in Jushiโ€™s valuation.

Zuanic projects an EBITDA upside, anticipating a potential market cap increase of over 200% for Jushi, outpacing competitors like AYRWF, CRLBF, and TSNDF.

Virginiaโ€™s Potential

Virginia presents an even more compelling upside, with a projected market cap increase for Jushi surpassing 500% if the state embraces recreational sales. Despite the current modest $145 million medical market size, the potential expansion to recreational sales could result in a staggering 6-8x growth.

With one of the four vertical licenses in VA, Jushi is primed to capitalize on this growth, alongside CBSTF and GTBIF.

Adaptation in Challenging Times

Jushi Holdings has not been immune to sales plateaus and market pressures, with sales hovering around $65 million for three consecutive quarters. However, the companyโ€™s strategic shifts, including operational streamlining and enhanced efficiencies, have led to a remarkable increase in EBITDA margins and an improvement in cash flow.

While the balance sheet reflects strain, Jushiโ€™s ongoing debt reduction efforts and financial management are reassuring. These include potential waivers from litigation, asset sales, and securing funds from the Employee Retention Tax Credit program.

Jushiโ€™s contestation of tax liabilities, classification adjustments, and impending debt refinancing exemplify a proactive approach to navigating the ever-evolving market landscape.

Looking ahead, Jushi is proactively addressing its debt obligations, with a sharp eye on potential refinancing, especially if Pennsylvania and Virginia initiate recreational sales by the end of 2024.

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Photo: AI-Generated Image.

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