Cresco Labs Archives - Green Market Report

Debra BorchardtDebra BorchardtJanuary 8, 2020
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3min3140

As the cannabis industry faces pressure, the valuation retractions have caused several proposed deals to unravel. The lastest is between Bhang Inc. (CSE: BHNG) (OTCQX: BHNGF) and CannaRoyalty Corp. d/b/a Origin House (CSE: OH) (OTCQX: ORHOF). Bhang and its wholly-owned operating subsidiary, Bhang Corporation has terminated its agreement with Origin House and its wholly-owned subsidiary, Kaya Management, Inc.

With regards to the termination agreement, Bhang will get royalty payments, input materials, manufacturing equipment, Bhang-branded finished goods, and Origin House shares, collectively valued at approximately $1.1 million.

Bhang has said that it will use Trava, Inc. and Herban, Inc. to make Bhang-branded products in California. In addition, Bhang said that it has also contracted Shelf-Life Distributing to distribute these Bhang-branded products across California. The company stated that moving from a licensing model to a direct-to-retail model will allow it to control the use of its brand while substantially increasing its footprint throughout California and realizing operations-derived revenue rather than royalties.

Last month,  the company said that Jamie L. Pearson, Bhang’s Interim President, would assume the role of President & CEO, overseeing day-to-day management and strategic initiatives

Origin House

Earlier this week, Origin House said that it had received a final order from the Ontario Superior Court of Justice approving the plan for Cresco Labs Inc. to buy all of the shares of Origin House. The company said it expected to close the deal soon. Originally announced in April, this deal was valued at C$1.1 billion or C$12.68 per Origin House Share (based on the Exchange Ratio and the closing price of Cresco Labs Shares on March 29). The deal looked to be the largest public company acquisition in the history of the U.S. cannabis industry.

The combined company will be one of the largest vertically-integrated multi-state cannabis operators in the U. S.; a leading North American cannabis company, by footprint; and one of the largest cannabis brand distributors.

Origin House has not made a comment regarding the termination of the deal with Bhang.


Kaitlin DomangueKaitlin DomangueJanuary 2, 2020
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5min9391

The highly anticipated adult-use cannabis program in Illinois rolled out yesterday morning. The maximum amount of dispensaries allowed in the state for 2020 is 185, though only 43 licenses were approved at the time of the state’s new industry launch. Six of these approved licenses were not able to begin sales on the 1st for various reasons. 

The open dispensaries hosted a huge turnout for those hoping to be among the first to purchase recreational cannabis products in Illinois. Chicago based Cresco Labs expected as such and rented out an entire nearby coffee shop for patrons to take shelter from the cold while they wait. Among one of the first to purchase was Julia Stratton, lieutenant governor of Illinois. She told the Chicago Tribune she purchased gummies at the Sunnyside dispensary in Chicago.

Cannabis giant, Green Thumb Industries opened a store called Rise Joliet in Illinois. Rise Joliet brings GTI’s total store count to 40 nationwide. Founder and CEO Ben Kovler says, “January 1 was a historic day in Illinois as adult-use cannabis sales launched in Illinois, and we’re honored that Rise Joliet is part of that history. Our stores that sell to all adults 21+ – Rise Mundelein, Rise Canton, Rise Joliet, and 3C Joliet – have served thousands of people so far and the energy and enthusiasm from new customers has been overwhelming.”

Cresco Labs announced that they served 3,145 people at its five Sunnyside Dispensaries located in Lakeview, Elmwood Park, Champaign, Buffalo Grove and Rockford, Illinois on the first of the year. They sold 9,258 cannabis products, including Cresco’s house of brands and items from other Illinois suppliers, with the average ticket price being $135.

Though Illinois voted yes to this program with great enthusiasm, many are not impressed with the taxes. This receipt a customer shared from yesterday’s rollout shows the high taxes in Illinois on adult-use cannabis. There were seven different taxes on this purchase, the medical standard tax, local sales tax, local excise tax, Illinois sales tax, Illinois recreational tax on a product with less than 25% THC, Illinois recreational tax on an infused product, and Illinois recreational tax on a product with greater than 35%. The total tax on this purchase added up to $75.85. 

There is also concern that the state is putting profits above its citizens who are medical cardholders. Illinois medical marijuana program launched in 2014. Illinois had one of the strictest medical cannabis laws in the state, but until the adult-use cannabis program patients usually had no problems obtaining their medicine. 

Darren Miller, cannabis advocate, patient, and entrepreneur credits his life to cannabis. He was denied his medicine two days before the rollout of the adult-use program. The dispensary where he has purchased his medicine for years without issue, claimed low supply when he went to purchase it. On January 1st, thousands of folks got their recreational product without issue. Miller says, “They went from about 50 kinds of cannabis flower to three overnight. Then the recreational thing starts and all of a sudden they have no problem finding product to sell for major money markup. All of the patients who have been going there for four years, we actually saw this coming. We called it, and now we are witnessing it.”

The adult-use market in Illinois has been projected by Marijuana Business Daily to potentially generate up to $2.5 billion annually, depending on how many tourists take part in purchasing cannabis products. 

 


William SumnerWilliam SumnerDecember 12, 2019
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5min2070

It’s time for your Daily Hit of cannabis financial news for December 12, 2019.

On the Site

Cresco Labs Shores Up Its Balance Sheet, Sells Property for $50 Million

The Illinois-based Cresco Labs (CSE: CL) (OTCQX: CRLBF) is looking to shore up its balance sheet by selling off one of its properties. Today the company announced that it would sell its Lincoln, Illinois cultivation facility to GreenAcreage Real Estate Corp. (GreenAcreage), for $50 million. Though Cresco is technically selling the property, which is still under construction, the company has entered into a triple-net lease agreement with GreenAcreage and will continue operating on the property as a licensed medical & recreational cannabis cultivation and processing facility.

Industry Power Women Awards Three During MJBiz Conference

The women’s cannabis networking organization known as Industry Power Women joined forces with Accelerate Cannabis during the 2019 MJ Biz Conference to recognize three individuals and their efforts within the cannabis industry. During the Mid-Atlantic Mixer, Saphira Galoob, Erica Daniels and Kristin Jordan each received engraved crystal awards in recognition of their work.

In Other News

MedMen Enterprises

MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) announced the execution of several financing agreements. First, the company executed a term sheet for a non-brokered offering of subordinate voting shares worth $27 million, which is expected to close on or around December 18, 2019. MedMen also announced an amendment to the terms of a senior secured convertible credit facility arranged by Gotham Green Partners, securing an additional $10 million in funding. In addition to the two financing agreements, the company executed a binding term sheet in respect of certain amendments to the definitive agreements for the $78 million senior secured term loan, which is expected to mature on January 31, 2022.

Canopy Growth

Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) announced the launch of a hemp-based line of CBD products. Dubbed “First & Free,” the new line of products will include a variety of formats such as soft gels, oil drops, and creams. The products will be made available through the company’s new e-commerce site www.firstandfree.com.

Columbia Care

Columbia Care Inc. (NEO: CCHW) (OTCQX: CCHWF) (FSE: 3LP) today signed a definitive agreement for its first sale-leaseback with NewLake Capital, valued at $35 million. The agreement involves six properties across three states (California, Illinois, and Massachusetts), and totals approximately 127,000 square feet of space. The transaction includes a dispensary in San Diego, California; a dispensary in Chicago, Illinois; dispensaries in Greenfield and Lowell, Massachusetts; and two cultivation and manufacturing facilities in Lowell, Massachusetts and Aurora, Illinois. “As our markets come on-line and mature, we intend to demonstrate the power and scale of our economic model by generating positive cashflow at the individual product, facility and market levels, as well as on a consolidated basis,” said Nicholas Vita, Chief Executive Officer of Columbia Care.


William SumnerWilliam SumnerDecember 12, 2019
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3min5850

The Illinois-based Cresco Labs (CSE:CL) (OTCQX:CRLBF) is looking to shore up its balance sheet by selling off one of its properties. Today the company announced that it would sell its Lincoln, Illinois cultivation facility to GreenAcreage Real Estate Corp. (GreenAcreage), for $50 million.

“This Agreement is representative of the comprehensive approach to capital planning that we anticipate will ensure our future success, while enabling us to grow our footprint both rapidly and responsibly,” says Charlie Bachtell, Cresco Labs CEO and Co-founder. “We have several opportunities right in front of us, including in our home market of Illinois, which will be moving forward with adult-use legalization on January 1st and is projected to reach $2 billion to $4 billion in annual sales at maturity.”

Though Cresco is technically selling the property, which is still under construction, the company has entered into a triple-net lease agreement with GreenAcreage and will continue operating on the property as a licensed medical & recreational cannabis cultivation and processing facility. Once completed, the facility will be around 220,000 feet and help the company maintain its considerable share of the Illinois medical cannabis market.

“We are confident that today’s announcement, together with the measured steps we continue to take to strengthen our capital position and continue investing in strategic U.S. cannabis markets, will generate significant returns for our shareholders, our employees and the communities in which we operate,” added Bachtell.

Over the last quarter, the company has been making moves to strengthen its finances through a number of similar deals. Last month Cresco announced a sale-and-leaseback agreement for its Marshall, Michigan and Yellow Springs, Ohio facilities, which totals $38 million. Cresco was also forced to amend its $800 million merger with Origin House, due to a combination of market forces and falling stock prices. After making some changes to the merger, which included an Origin House equity financing worth around $30 million, the value of the deal fell to roughly $416 million.


Debra BorchardtDebra BorchardtDecember 9, 2019
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2min6090

Cresco Labs (CSE:CL) (OTCQX:CRLBF) has completed its first harvest from its expanded cultivation facility in Lincoln, IL. The state will begin sales of legal adult-use cannabis on January 1 and is projected to be a $2-4 billion dollar market once it has matured and is expected to be one of the largest cannabis markets in the country.

Cresco has an advantage in the marketplace as the only operator in the state with three cultivation facilities and currently has 25% of the share in the medical market. It has 35,000 square feet of cultivation space across the three facilities.

“Cresco Labs has worked tirelessly to bring additional capacity to the Illinois cannabis market. The beneficial changes in the medical law created a rapid increase in demand that has recently outpaced supply. With this first harvest out of the expanded Lincoln facility, we are thrilled to bring this additional capacity to the patients of Illinois and the consumers in the soon to launch adult-use program,” said Charlie Bachtell, Cresco Labs CEO and Co-founder. “With the scale of this expansion phase, additional incremental production from the expansion areas will gradually increase ramping up for market distribution starting now and accelerating late Q1 through Q2. The ability to restock shelves reliably to ensure customers always have access to product is key to both generating solid financial results and building long term customer loyalty with medical patients and adult-use consumers.”

According to the company’s statement, “The company embarked on an ambitious expansion plan that will bring the total area under cultivation to approximately 243,000 square feet by year-end. At the Lincoln location alone, Cresco has created the largest cultivation facility in Illinois at roughly 224,000 sqft and added over 140,000 sq ft of additional indoor and greenhouse cultivation space. Cresco is legally entitled to expand its three facilities to have an aggregate total of 630,000 sqft of flowering canopy – the largest capacity footprint in the state.”


Debra BorchardtDebra BorchardtDecember 3, 2019
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4min6760

Cresco Labs Inc.  (CSE:CL) (OTCQX: CRLBF) said that it has entered into an equity distribution agreement with Canaccord Genuity Corp. in which the company may sell up to C$55 million of subordinate voting shares. Cresco Labs said that it will use the money “for general corporate purposes (including funding ongoing operations and/or working capital requirements), to repay indebtedness outstanding from time to time, discretionary capital programs and potential future acquisitions.”

The deal is called at “At The Market” since the shares will be distributed at trading prices at the time of the sale, prices may vary between purchasers and during the period of distribution. The company said that the volume and timing of sales, if any, will be determined at the sole discretion of the company’s management and in accordance with the terms of the Equity Distribution Agreement.

While such a deal could bring in additional capital, it will also dilute existing shareholders.

Earnings

Cresco recently released its earnings as the company reported on November 26 that its third-quarter revenues were $36.2 million, up 184% year-over-year and 21% quarter-over-quarter. Still, the company delivered a third-quarter net loss of $8.6 million, compared to net income of $1.2 million in the prior-year period.

With regards to the balance sheet, Cresco said it had total assets of $416.5 million, including cash and cash equivalents of $73.7 million and a working capital position of $144.6 million with zero debt on the balance sheet. The company also announced a sale-and-leaseback agreement for its Marshall, Michigan and Yellow Springs, Ohio facilities for $38 million which is expected to close within 30 days.

“In Q3, our team delivered another quarter of positive adjusted EBITDA while growing top-line revenue 21% over Q2 on an identical asset base, demonstrating the value of our long-term strategy of going deep, in the most populous states, and capturing significant market share through wholesale,” said Charles Bachtell, Co-founder and CEO of Cresco Labs. “Subsequent to the end of Q3, we closed the acquisition of Valley Agriceuticals, giving us four dispensaries in New York, one of the most significant hubs of consumer influence in the world. In California, the other market that has an outsized influence on U.S. and global consumer behavior, our wholesale revenue more than doubled in the quarter. We are making meaningful progress on our objective of creating the first national cannabis brand.”

Illinois

With Illinois poised to begin recreational sales in 30 days, the company is ready to seize on its market advantage in the state. Bachtell added, ” One of the best short-term opportunities is in Cresco’s backyard, as Illinois transitions to adult-use legalization in January of 2020. We are well-positioned in the state and will continue to rapidly expand our cultivation and processing footprint, to ensure Cresco will have a strong first-mover advantage. Our brand portfolio has already proven to be popular in Illinois, capturing the largest share of the market, and we are well-positioned to maintain our market share and grow it through the adult-use transition and beyond. Illinois is a perfect example of the success of our strategy to get into prospective markets, go deep, build strong brands and capture disproportionate market share. As we move into 2020, we are set to repeat this model across our platform.”


Debra BorchardtDebra BorchardtNovember 27, 2019
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6min6690

The bear market for the cannabis industry is leading to the unwinding of deals that had great promise. Cannabis companies are no longer willing to write big checks with fingers crossed that the market will just continue to boom. Two of these deals were terminated after great fanfare.

Cresco Labs

Cresco Labs (CSE:CL) (OTCQX:CRLBF)  said it was ending its plan to acquire Florida-based VidaCann Ltd. which was originally announced on March 18, 2019. It was valued at $120 million when it was first announced.

“We recognize that responsibly allocating our shareholders’ capital is fundamental to long-term success. While it sometimes means making tough decisions, we are committed to executing on a superior capital agenda, responsibly accelerating the top and bottom-line, executing thoughtful and accretive M&A transactions, and generating efficiencies as we scale,” said Cresco Labs CEO and Co-founder Charlie Bachtell. “With the flexibility to continue to leverage non-dilutive funding options like sale-lease-back agreements, we are well-positioned to continue executing on our strategy to build the most important, enduring company in U.S. cannabis.”

In March, VidaCann was said to have plans to have 20 operating dispensaries by the end of 2019 and licenses for up to 30 in the state. It was to be Cresco’s entry into the lucrative market and another state to plant the Cresco Flag.

Separately, the company also announced the signing of a binding agreement for the sale-and-leaseback of two properties in Ohio and Michigan, for total additional funding of approximately $38 million.

Mr. Bachtell continued, “With these two announcements, we have effectively strengthened our balance sheet to the tune of nearly $158 million between new non-dilutive funding and the elimination of a significant near-term cash outlay earmarked for the Transaction. The team and operations at VidaCann are phenomenal, but with a focus on managing our cost of capital, and ensuring the most efficient and highest return on invested capital, the ability to deploy resources to other, existing, Cresco markets that are widely considered some of the top markets in the US, like Illinois, Pennsylvania, California and Nevada, has to take priority.  We believe it’s in the best interest of our shareholders to re-allocate resources to these existing higher return opportunities with a view to looking for a more capital efficient way to enter the Florida market over the longer term.”

Cresco Labs stock was up slightly by four cents to lately trade at $5.79, down from its 52-week high of $40.63.

SOL Global

SOL Global Investments Corp.’s (CSE: SOL) (OTCPK: SOLCF) said it decided against its deal with MCP Wellness to that was agreed to on April 23, 2019. SOL was to buy MCP Wellness for $35 million in cash and S$115 million in equity consideration in CannCure.

MCP is the Merida Capital Partners affiliate that owns the rights to own three Michigan cultivation licenses, a processing license, 9 licensed and operating dispensaries and 6 additional dispensary licenses, giving it the largest retail footprint in the state of Michigan.

According to the statement, both MCP and SOL Global said that “current market conditions do not support a transaction of this size, and both parties and their respective shareholders are better served focusing capital and resources on building out their respective businesses.” SOL Global said it will remain focused on the scale-up of its rapidly expanding Florida operations via One Plant Florida, and MCP said it will focus on opening additional dispensaries and launching a cultivation facility in Michigan.

While the acquisition is off, MCP Wellness may use Northern Emeralds (which SOL Global has proposed to buy)  to provide cultivation and processing standard operating procedures to MCP for a to be agreed upon royalty. The statement said that the $12.5 million advanced by SOL Global to MCP Wellness will be repaid in full over the next 12 months in monthly installments and 2 balloon payments at the 6 and 12 month time frames. In addition to that, CannCure, which is SOL Global’s portfolio company,  will have the option to acquire certain assets from MCP Wellness, convert any amounts due into stock in the Michigan operator, or complete the originally contemplated transaction on substantially similar terms.


Debra BorchardtDebra BorchardtSeptember 27, 2019
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5min7350

Cannabis REIT company Innovative Industrial Properties Inc. (NYSE: IIPR) picked up another cannabis facility this week. Illinois-based Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) signed a binding agreement to sell its Joliet and Kankakee, Illinois properties to Innovative Industrial Properties (IIPR) for roughly $46.3 million, which includes funding for additional tenant improvements at the Kankakee property.

This follows an announcement earlier this month that IIPR closed on the final parcel of a four property portfolio in southern California with the company Vertical. A long-term, triple-net lease was signed for each property with Medical Investor Holdings who is known as Vertical, for continued operations as licensed cannabis cultivation, extraction, manufacturing, and distribution facility.

This is becoming a typical strategy for cannabis companies. Most buy their facilities since banks don’t want to offer mortgages. Then they are able to sell those assets and quickly put some cash in the coffers. “This strategic transaction with IIP allows us to unlock our capital tied to our real estate and redeploy those proceeds into the tremendous opportunities we see ahead in the cannabis industry, in California and beyond,” said Bill Sutman, CFO of Vertical.

“We are thrilled to add Vertical and its strong management team to our tenant roster,” said Paul Smithers, President and Chief Executive Officer of IIP. “With its breadth of cannabis brands and highly experienced team, Vertical is well-positioned to capitalize on the tremendous growth of the California regulated cannabis industry in the many years to come, and we look forward to continuing to support Vertical and its long-term growth initiatives.”

Cresco Labs

Similar to the Vertical deal, Cresco Labs will enter into a long-term, triple-net lease agreement with IIP and will continue to operate each property as a licensed cannabis cultivation and processing facility. The two properties represent approximately 100,000 square feet of industrial space in aggregate. The agreement is expected to close within the next 30 days.

“This sale-and-leaseback agreement with IIP represents a non-dilutive capital solution for Cresco Labs that will support the expansion of our Illinois operations in preparation for the legalization of adult-use cannabis on January 1, 2020,” said Cresco Labs CEO and Co-founder Charlie Bachtell. “A portion of the proceeds from the sale of the two properties will be utilized to create the scale in our cultivation capacity and retail dispensary network necessary to meet the significant increase in demand projected from the legalization of adult-use cannabis and the expansion of the medical-use program in Illinois. With the Illinois cannabis market projected to reach $2 billion to $4 billion in annual sales at maturity, the expansion of our operations will position Cresco Labs to build upon our leading market share and significantly increase the revenue we generate from Illinois in the coming years.”

IIPR is one of the few cannabis stocks that has managed to keep its head above water in the cannabis sector selloff. The stock was lately trading at $95, higher than its 52-week low of $39.45. While it is lower than its year high of $139, many cannabis stocks have fallen much further.


Debra BorchardtDebra BorchardtSeptember 16, 2019
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8min17960

Cresco Labs Inc.  (CSE: CL) (OTCQX: CRLBF) has announced a plan to acquire Tryke Companies including six prime Reef Dispensary locations in Nevada and Arizona, expanded licensed cultivation and process capacity in Las Vegas and Phoenix and entry into the Utah market.

The purchase price is $282.5 million which includes $30 million in real estate assets. The payment is a mix of Cresco Labs shares (approximately US$227.5 million), which will be subject to a nine to 21-month lock-up agreement following closing, and cash (approximately US$55 million). The deal is expected to close during the first half of 2020

According to the company statement, in 2018 Tryke generated 70.4 million in revenue and $24.6 million in EBITDA making it one of the highest-grossing and most profitable private cannabis companies in the U.S. market. Tryke has established six of the best-positioned retail locations in Nevada and Arizona, including the Reef Dispensary located adjacent to the Las Vegas Strip –  which has produced over $65 million in revenue since 2015 – and five additional operating locations in North Las VegasSparks, and Phoenix, AZ. The Tryke Company said that its North Las Vegas location boasts the highest known daily ticket count in the state of Nevada at 2,300.

“With significant in-state populations and tourist traffic, Nevada and Arizona were key near-term targets for expansion.  Creating the most strategic geographic footprint in the U.S. cannabis industry is not just about the number of states you operate in,” said Cresco Labs CEO and Co-founder Charlie Bachtell. “Rather, our thesis for success in establishing a normalized and professionalized cannabis industry as well as providing the greatest ROIC for our shareholders calls for us to leverage our existing operations in states of significance to rapidly attain material and meaningful market-leading positions.”

Cresco is using the acquisition as a means to quickly expand in Nevada and Arizona. Nevada is one of the largest and fastest-growing cannabis markets in the U.S. with 2019 sales estimates of up to $940 million as per Marijuana Business Daily. Cresco Labs currently sells Mindy’s Edibles n Nevada, which has been one of the top three selling edibles in Nevada in 2019. Arizona is one of the largest and fastest-growing medical-only markets with an estimated 2019 sales of up to $760 million.

“The announcement today is the result of several months of deep interactions between our two groups and I know I speak on behalf of the entire team when I say we are very excited to be joining Cresco and to start realizing significant synergies for both of our organizations,” said Adam Ryan, CEO of Tryke Companies. “We have been consistently impressed by Cresco’s strategic approach to building long-term value in this growth market and its history of delivering what it promises – something that is often lacking in this industry. As the cannabis space has gained national and international attention over the past four years, we have been approached by several operators both private and public, regarding a transaction, but the vision and execution that Charlie, Joe and the team have demonstrated made them the only choice for Tryke.”

The deal will also add 17,000 pounds per year in a strategically-located cultivation capacity along with 1,320 lb. per year of processing capacity. It includes one of eight cultivation licenses recently awarded in Utah.

Reef Dispensary Details

  • The deal adds four (4) Reef Dispensary locations in Nevada in the cities of Las Vegas (2), Sparks and Sun Valley.
  • The deal adds two (2) Reef Dispensaries in Arizona in Phoenix and Phoenix Southeast Valley.
  • Tryke’s flagship Reef Dispensary in Las Vegas is the closest dispensary to the heart of the Las Vegas Strip. To management’s knowledge, on its current 4,800 square foot footprint, it is already one of the highest-grossing dispensaries in the world, with the current highest known grossing dispensary in the world, right across the street. There is no intersection in the world generating more regulated cannabis revenue annually than the intersection of Western Ave. and Desert Inn Rd. in Las Vegas.
  • The Reef Dispensary in North Las Vegas generated $14.5 million in revenue in the year-to-date period to August 31, 2019.

Unit Offering

In addition to the Tryke acquisition, Cresco Labs also announced that it has entered into an agreement with a group of investment dealers, led by Canaccord Genuity Corp. to purchase, on a underwritten basis an aggregate of 7,350,000 units of the company at a price of C$10.00 per Unit for aggregate gross proceeds of C$73,500,000.

 


Debra BorchardtDebra BorchardtAugust 21, 2019
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4min6080

Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) reported that its second-quarter revenue rose 253% to $29.9 million over last year in its unaudited financial results for the second quarter ending June 30, 2019. The revenue rose 42% sequentially. The company attributed the increase in revenue to new market expansion and continued growth in existing markets with a higher revenue generated in Pennsylvania, Illinois, and California.

Cresco Labs also delivered a net loss of $3.9 million versus last year’s net income of $1.6 million for the same period. The net loss was blamed on an income tax expense of $5.6 million, primarily driven by discrete tax items related to the legal close of the acquisitions of MedMar Inc. and PDI Medical.

“We delivered an outstanding quarter that reflects the leading positions we have established in some of the most attractive markets in the cannabis industry,” said Charles Bachtell, Co-founder and CEO of Cresco Labs. “We are seeing accelerating revenue growth driven primarily by market share gains and strong trends in registered patients in our established markets of Illinois and Pennsylvania, as well as our expanded presence and distribution in California. As we scale our operations in our established markets, we are seeing the positive impact on gross profit margin that we projected. The higher revenue and margins helped to drive a substantial increase in Adjusted EBITDA compared to the prior quarter.

The second quarter Adjusted EBITDA was $14.5 million versus $4.8 million in the prior-year period. Excluding the impact of biological assets, adjusted EBITDA for the second quarter was $2.3 million.

It was a very expensive quarter as total expenses came to $20.6 million versus $3.2 million last year for the same quarter. The company said total expenses included $3.0 million in expenses related to share-based incentive compensation, $3.2 million in acquisition and other non-recurring costs and $0.9 million of depreciation and amortization. The balance of the increase represented investments made in talent and operational infrastructure to support the Company’s continued revenue growth

“While our increasing profitability demonstrates our ability to effectively execute and leverage the attractive model we have developed, we continue to operate with a long-term perspective and make investments to position Cresco Labs to lead the cannabis industry in the years to come. We are transforming the retail cannabis experience with the national rollout of our Sunnyside* dispensaries, expanding into the CBD market with the launch of our WellBeings product line, and expanding our cultivation and retail operations in Illinois to capitalize on adult-use legalization beginning in 2020. As we continue to capitalize on the strong organic growth trends in our current markets and complete our pending acquisitions of Origin House and VidaCann, we expect to deliver continued improvement in revenue and profitability, resulting in further value being created for our shareholders,” said Mr. Bachtell.

Balance Sheet

As of June 30, 2019, Cresco Labs had total assets of $355.0 million, including cash and cash equivalents of $61.1 million and a working capital position of $128.7 million with zero debt on the balance sheet.



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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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