Adjusted EBITDA (Cannabis)
Earnings before interest, tax, depreciation, and amortization — heavily adjusted in cannabis reporting and frequently misleading without 280E context.
Definition
EBITDA — Earnings Before Interest, Taxes, Depreciation, and Amortization — is the industry-standard operating profitability measure. In cannabis, 'Adjusted EBITDA' is more commonly reported, with operators excluding: stock-based compensation, M&A and restructuring costs, fair-value inventory adjustments, biological-asset revaluations (Canadian LPs), and one-time legal or impairment charges. Because 280E sits in tax expense — below the EBITDA line — Adjusted EBITDA in cannabis can look healthy while net income and cash flow are deeply negative.
Also known as: Adjusted EBITDA, EBITDA
Why It Matters for Investors
Reading cannabis Adjusted EBITDA without modeling 280E tax drag and capital intensity produces misleading valuation conclusions. Most institutional MSO models reconcile from Adjusted EBITDA down to cash flow using a tax-impact bridge, not a straight EV/EBITDA multiple. Always cross-check Adjusted EBITDA against operating cash flow.
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