Cresco Labs Archives - Green Market Report

StaffOctober 15, 2021
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Cresco Labs (CSE:CL) (OTCQX:CRLBF)  is buying Pennsylvania-based Laurel Harvest Labs, LLC  in a deal valued at $80 million. The acquisition is expected to close in Q4 of 2021.

Laurel Harvest has one of the eight original Chapter 20 licenses in Pennsylvania. The company comes with approximately 52,000 sq. ft. of indoor grow/processing space and room for an additional 52,000 sq. ft. of indoor cultivation space. there is one operational dispensary in Montgomeryville PA and a second dispensary in Scranton is currently under construction. Laurel Harvest also has the option to open an additional four dispensaries throughout the state.

“As the medical market continues to grow and as legislators develop plans for adult-use, we are increasing our depth in the key state of Pennsylvania to strengthen our wholesale leadership while growing profitability and scale through new retail. This acquisition will provide Cresco Labs with immediate incremental cultivation capacity, simplify our ability to expand production capacity further, and add six additional retail dispensary permits in the state,” said Charlie Bachtell, CEO of Cresco Labs. “Importantly, we are excited to further our commitment in research and development through one of the few Chapter 20 clinical registrant licenses in the state. Laurel Harvest and its academic clinical research partner, Temple University, have established one of the most sophisticated cannabis research programs in the country. As an organization focused on normalizing and professionalizing the cannabis industry, we sincerely look forward to supporting and expanding upon this research that will continue to help create safe, effective and accessible cannabis products.”

Located in a medical-only state, Laurel Harvest is very focused on helping patients and research. The company has an academic clinical research partnership with Lewis Katz School of Medicine at Temple University. It is also conducting six ongoing cannabis research studies. The company has said with regards to its scientific mission,

We aim to be at the forefront of advancing research, science, and policy relating to the clinical benefits, limitations and uses of cannabinoids through evidence-based medicine. We will dedicate our resources and expertise to help patients understand how cannabis can help them improve wellness through science. To give our healthcare professionals access to the most credible and current research to help you understand how cannabis can impact your health and wellness.

Cresco Labs will report financial results for the third quarter ended September 30th, 2021 on Thursday, November 11th, 2021 before the market opens.


StaffSeptember 23, 2021
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Cresco Labs Inc. (CSE:CL) (OTCQX:CRLBF) is buying Bay, LLC better known as Cure Pennsylvania in a deal valued at $90 million. The cash and stock acquisition is expected to close in the fourth quarter. The acquisition includes three operational Cure Penn dispensaries in Lancaster, Phoenixville, and Philadelphia. Cresco noted that the three new stores would be incremental and complementary to Cresco Labs’ four existing Sunnyside dispensaries in Pennsylvania

“As we implement localization strategies tailored to state level dynamics, this Transaction with Cure Penn is expected to expand our retail footprint in Pennsylvania, increase profitability, and strengthen our wholesale leadership position in the state. We’re thrilled to continue executing our playbook of achieving depth in strategic markets via rigorous capital allocation,” said Charlie Bachtell, CEO, and Co-Founder of Cresco Labs. “The Cure Penn team has developed a high-performing retail platform across three dispensaries that sets up another immediately accretive acquisition for Cresco Labs. We’ve proven our ability to drive incremental top and bottom-line growth from the implementation of Sunnyside’s best-in-class operating model, and we look forward to growing our house of brands which are already among the most sought after by patients in Pennsylvania.”

Cure Cannabis also has locations in Colorado and Oklahoma, but the group originated in Colorado. It was also one of the early licensees in the state of Pennsylvania.

Expansion Moves

Just last month Cresco Labs closed on its acquisition of vertically integrated Cultivate which operates three cannabis dispensaries in Leicester, Worcester, and Framingham Massachusetts. the deal included approximately 42,000 square feet of active flowering canopy, bringing combined canopy in-state to approximately 64,000 square feet. The three dispensaries bring the combined retail storefronts in-state to four. Concurrent with closing, the company’s Fall River retail location transitioned to medical sales only.

“The closing today constitutes another important step for Cresco Labs as we deepen our presence in large, attractive states like Massachusetts and increasingly tailor and strengthen our state-level strategies to optimize growth and profitability. Expanding operations in the most strategic U.S. cannabis markets is at the heart of our growth strategy and we’re thrilled to have the opportunity to show what can be achieved through a maximized footprint in Massachusetts,” said Charlie Bachtell, CEO and Co-Founder of Cresco Labs. “We have been thoroughly impressed with the Cultivate team and the quality of their operations. We look forward to a productive and efficient integration process to carry their historical strong momentum into the fourth quarter and beyond.”

 


Debra BorchardtAugust 13, 2021
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Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) announced its financial results for the second quarter ended June 30, 2021 as revenue jumped 122.8% to $210.0 million over last year and had a sequential increase of 17.7%. Cresco’s revenue was split almost evenly between wholesale revenue of $108.7 million and retail revenue of $101.3 million from 33 stores, an increase of 22.3% quarter-over-quarter and 157.6% year-over-year. Cresco also delivered a net income of $2.7 million, an increase of $26.8 million quarter-over-quarter and $44.4 million year-over-year.

Reaffirmed Guidance

Cresco did reaffirm its previous revenue guidance for $1 billion by the end of 2021. The company also forecast gross profit margins in excess of 50% in the remaining two quarters of 2021. It is estimating an adjusted EBITDA  margin run rate of at least 30% by the end of 2021.

The company also burned through quite a bit of cash during the quarter. Cresco ended the first quarter with $258 million in cash and cash equivalents. The second quarter saw that figure drop to $135 million as cash dropped by $123 million.

“Q2 was a strong quarter of head-down execution at Cresco Labs and once again we are hitting our stride as we enter the next phase of growth. During the quarter we continued to invest in infrastructure, operationalized new assets, and deployed our proven playbook to build top positions in the most important U.S. cannabis markets,” said Charles Bachtell, Co-Founder and CEO of Cresco Labs. “We are very proud of the record performance this quarter, driven primarily by organic growth, and we’re even more excited about what lies ahead as we begin recognizing contributions from growth initiatives initiated over the last 18 months. We remain dedicated to our differentiated strategy and continue to lay the foundation for long-term leadership in the U.S. cannabis industry.”

Cresco also announced that it upsized its senior secured term loan to $400 million. The Senior Loan bears interest at a reduced rate of 9.5% per annum, with a maturity date of August 12, 2026. The company said it plans to use the money from the Senior Loan to retire its existing $200 million credit facility, fund capital expenditures, and pursue other targeted growth initiatives within the U.S. cannabis sector. The Senior Loan does not include any equity or convertible components and the total facility amount is being provided by a syndicate of five existing, institutional lenders.

“Today we have secured funding to capitalize on new growth opportunities, improved our cost of capital without diluting shareholders, simplified our capital structure, and given ourselves enhanced flexibility in a dynamic capital environment,” said Bachtell. “This agreement to extend and increase our Senior Loan reflects the unique value proposition that Cresco Labs has demonstrated and the confidence our investors have in our differentiated strategy.”

Cresco Labs is the largest wholesaler of branded cannabis products in the U.S. Its brands are designed to meet the needs of all consumer segments and are made up of brands including Cresco, Cresco Reserve, High Supply, Mindy’s Edibles, Good News, Remedi, Wonder Wellness Co. and FloraCal Farms. Sunnyside, Cresco Labs’ national dispensary brand, is a wellness-focused retailer created to build trust, education, and convenience for both existing and new cannabis consumers.


Debra BorchardtMay 27, 2021
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Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF)  announced its financial results for the first quarter ended March 31, 2021, with revenue rising 168% to $178.4 million over last year and an increase of 9.9% sequentially. This beat the Yahoo Finance average analyst estimate for revenues of $170 million. Cresco trimmed its net losses to $24 million from last year’s $35 million for the same time period. The company is sitting in a comfortable cash position with current assets at $381.7 million, including cash and cash equivalents of $255.5 million.

“In Q1, we delivered sequential growth from existing assets, demonstrated our ability to reach and sustain #1 market share positions in two of this industry’s top-five states, and we’re gearing up to repeat that success in more markets this year. We’re accelerating growth through a diverse set of initiatives including several organic expansions and M&A that will benefit the Company in subsequent quarters. In order to execute all of our pending growth initiatives, we invested in the operating platform to support the growth. We laid the groundwork in Q4 and Q1 and now our expertise with integrating new assets and producing operating leverage will kick in,” said Charles Bachtell, Co-Founder and CEO of Cresco Labs. “We’re also pleased to take this opportunity at the outset of the year to make the transition to U.S. GAAP, remove the break-out of certain one-time items, and provide investors with clarity on the transition. This represents another step to prepare Cresco Labs for the future opportunities that await in the U.S. capital markets. On a U.S. GAAP basis, we’re pleased with the growth in Q1 and excited about the steps we’ve taken so far this year to put Cresco Labs on the path to accelerate revenue, profitability, and shareholder value in 2021 and beyond.”

Breaking down the revenue, Cresco noted that its net wholesale revenue was $95.6 million, an increase of 5.7% quarter-over-quarter and 150.8% year-over-year. The retail revenue of $82.8 million from 24 stores, was an increase of 15.2% quarter-over-quarter and 193.2% year-over-year.

Outlook

Cresco is now estimating that its annualized revenue run-rate will be more than $1 billion by the end of 2021. The gross profit margins will be in excess of 50% in the remaining three quarters of 2021. The adjusted EBITDA  margin run-rate will be at least 30% by the end of 2021.


Debra BorchardtMarch 25, 2021
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Cresco Labs Inc. (OTCQX: CRLBF) released its financial results for the year ended December 31, 2020. Revenue for the fourth quarter of 2020 was $162.3 million, an increase of $9.0 million or a 6% increase over the third quarter of 2020. Cresco Labs reported a net loss for the fourth quarter of $23 million versus last year’s net loss of $45 million. The company beat the Yahoo Finance analyst estimate for revenue of $161 million in the quarter.

For the full year, Cresco delivered revenue of $476.3 million, an increase of $347.7 million or a 271% increase over 2019’s revenue of $128 million. The company said that growth was driven by cultivation expansion in Illinois and Pennsylvania as well as strong sequential same-store growth. Cresco trimmed the net loss from $65 million in 2019 to $36 million in 2020.

“2020 was a remarkable year for Cresco Labs. We dedicated our resources to the most strategic markets, grew our leadership as the number one wholesaler of branded cannabis products, executed high efficiency retail, and generated substantial operating leverage as we scaled. We laid out our objectives at the beginning of the year and we executed on what we set out to accomplish, resulting in the largest year-over-year revenue growth among tier one MSOs,” said Charles Bachtell, Co-founder and CEO of Cresco Labs. “In 2021, cultivation expansions are underway and we are executing accretive M&A as we repeat our playbook in more states. Our best-in-class execution was on display in 2020 and it’s what you can expect from Cresco Labs for years to come.”

The company is on solid ground financially with current assets at the end of December at $361.8 million, including cash and cash equivalents of $136.3 million. The company had a working capital of $167.1 million and total debt, net of issuance costs of $184.5 million.

Acquisitions

Following the end of 2020, Cresco has been busy building its cannabis empire with numerous acquisitions. In January 2021, Cresco agreed to buy Bluma Wellness Inc. (OTCQX:BMWLF), a vertically integrated operator in Florida. On February 16, 2021, the company closed its acquisition of four Ohio dispensaries previously operated by Verdant Creations, LLC and its affiliates. On March 18, 2021, Cresco said it would acquire all of the issued and outstanding equity interests in Cultivate Licensing LLC and BL Real Estate LLC, a vertically integrated Massachusetts operator.


Debra BorchardtMarch 18, 2021
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Cresco Labs (OTCQX:CRLBF) said it was buying Massachusetts-based Cultivate Licensing LLC and BL Real Estate LLC  for roughly $90 million, plus an earnout of up to $68 million. The deal is expected to close in the fourth quarter of 2021.

“At the precipice of a transformational moment in U.S. cannabis, now is the time to further our leadership in the country’s largest and most important markets. Through this acquisition, Cresco Labs will immediately vault to a top 3 share position in Massachusetts, the third $1B+ cannabis market where we’ve achieved this status,” said Charles Bachtell, CEO of Cresco Labs.

Cultivate brings to Cresco approximately 42,000 sq. ft. of flowering canopy with a planned indoor expansion of approximately 20,000 sq. ft. The company has two operational dispensaries in Leicester and Framingham and a third dispensary in Worcester is expected to open in the second quarter of 2021.

Terms Of The Deal

The deal consists of $15,000,000 in cash and shares of Cresco having an aggregate value equal to $75 million. The remaining portion is structured as an earnout based on the achievement of certain EBITDA target thresholds in 2021, up to $68 million. An amount equal to approximately 12.5% of any earnout payments earned by seller shall be paid in cash. The remaining portion of any earned earnout payments shall be satisfied via the issuance of Cresco shares.

Massachusetts delivered nearly $1 billion in total retail sales in 2020, including the robust expansion of the medical program and despite 6 weeks of lost sales due to COVID-19 restrictions on the adult-use market. $83.4M in adult-use sales for the 4 weeks ending 3/7/21 was the largest 4 week total to date. It is the second-highest per-gram pricing within U.S. adult-use markets and a strong margin profile achievable through vertical integration and emphasis on wholesale. Currently, it is a supply-constrained market and the largest adult-use market in the North East.

“We continue to demonstrate our ability to execute operationally and make accretive investments to accelerate growth. Cultivate has been a trailblazer and an operational standout since the early days of the Massachusetts market. Like us, the Cultivate team is focused on growing premium flower, offering a full suite of branded products, delivering the best customer experience at retail, and elevating the cannabis industry to a new level of professionalism and social responsibility.” Mr. Bachtell continued, “This will also mark the fourth state in which we operate the maximum number of retail stores. Once again, we look forward to executing our playbook and demonstrating the growth and leverage that can be achieved by going deeper in strategic states. At a period of industry inflection, we are cementing our leadership in a deliberate manner as the most important company in cannabis.”


Debra BorchardtJanuary 14, 2021
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Cresco Labs (CSE: CL) (OTCQX: CRLBF) is buying Florida-based Bluma Wellness Inc. (CSE: BWEL.U) (OTCQX: BMWLF) in an all-stock deal valued at $213 million. Bluma Wellness operates as “One Plant Florida” and has seven strategically located dispensaries with eight more locations under legal control with plans to open.

“Our strategy at Cresco Labs is to build the most strategic geographic footprint possible and achieve material market positions in each of our states. With Florida, we will have a meaningful presence in all 7 of the 10 most populated states in the country with cannabis programs – an incredibly strategic and valuable footprint by any definition. We recognize the importance of the Florida market and the importance of entering Florida in a thoughtful way – we identified Bluma as having the right tools and key advantages for growth. Bluma is known for having best-in-class cultivation in the state of Florida, a differentiated retail experience and omnichannel offering with effective delivery, a clear pathway to scale and an incredible management team. We have a proven track record of integrating assets in strategic states, improving fundamentals, and amplifying operations to take share in the most competitive cannabis markets,” said Charles Bachtell, CEO of Cresco Labs.

Terms

The terms of the deal include Bluma shareholders receiving 0.0859 of a subordinate voting share of Cresco Labs for each Bluma Share held. The Exchange Ratio implies a price per Bluma Share of approximately $1.12, representing a premium of approximately 29% based on the closing price of Bluma Shares on the CSE as of January 13, 2021.

Last month, Bluma reported that its net revenue for the third quarter of 2020 increased by 47.7% from the prior quarter.  The revenue growth was driven primarily by the organic growth of existing dispensaries and the opening of additional retail dispensaries in the third quarter. Additionally, One Plant Florida has seen a steady increase in the average price per gram of medical cannabis flower sold, attributable to the market’s continued recognition of One Plant Florida’s premium medical cannabis products. Net income for the third quarter of 2020 was approximately $300,000.

Bluma used to be called Sol Global, but in 2019 changed its name. The company explained that “Bluma” is an ancient Hebrew word that means to flower, bloom, r blossom. It selected this name based on a key principle of the business: to ensure that its patients and consumers utilize the plant-based products to enhance their daily lives, namely to bloom and thrive.

“Bluma’s high-quality cultivation operations, scaled delivery platform, and strategic retail investments combined with Cresco Labs’ track record of execution and capital allocation creates the best path forward to accelerate growth for our business in Florida,” said Brady Cobb, CEO of Bluma. “Our vision for Bluma and One Plant Florida has always been to cultivate remarkable experiences through exceptional cannabis. Our management team took the responsibility to seriously assess potential partners and we’re thrilled to be joining an organization that aligns operationally and shares our passion for creating quality cannabis products.”

 


Julie AitchesonNovember 24, 2020
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‘Tis the season for America’s favorite foodie holiday, and whether turkey, tofurkey, or none of the above are on the menu, this is sure to be a Thanksgiving like no other. With Covid-19 spikes turning the U.S. map red and growing concerns about the capacity of states to handle an even higher coronavirus positivity rate if citizens choose to gather, some thought leaders in the cannabis industry are taking a stab at predicting the impact on Thanksgiving sales.

Cannabis compliance technology company Akerna (NASDAQ: KERN) anticipates a 78% increase over average daily sales for 2020 during this Thanksgiving weekend, hitting $270 million between November 25 and November 28. James Arendt, Akerna’s Business Intelligence Architect, explains that the huge sales spikes typically happen on Green Wednesday and Black Friday as most dispensaries are closed on Thanksgiving Day, but this hasn’t prevented Thanksgiving from being one of the Top 5 sales holidays of the year. A trend that is expected to continue in 2020.  

Akerna projects that the average order total will be around $83.30 for adult-use consumers and $128.46 for medical consumers. This is an increase of roughly $13 over average order totals for the rest of the year. Cannabis flower is predicted to be the top seller, garnering 42% of sales with cartridges and pens coming in a strong second at 37%. Male users will likely make up the majority of consumers at 64%, with under 30’s and 30-40 year-olds making up a combined 58% of the top consumers over Thanksgiving.

Akerna’s data doesn’t make correlations with anticipated sales and the ongoing Covid-19 pandemic, but Joe Caltabiano, founder of cannabis and medical marijuana company, Cresco Labs, (OTC: CRLBF) highlights the fact that cannabis was deemed essential at the pandemic’s outset. “At the same time,” he adds, “we saw regulators rapidly adopt emergency rules allowing online ordering, curbside pick-up, and delivery in areas where it’s permitted.” These measures will no doubt contribute to keeping cannabis sales strong for Thanksgiving, as retail sales increased by 40% after the measures were taken and remained high even after the stimulus paid out by the federal government in April was exhausted. Caltabiano posits that the pandemic has made consumers even more comfortable with ordering online as a safer and more convenient purchasing option, with retailers offering special deals for those who choose to purchase online, further brightening the prospect for chart-topping Thanksgiving totals.

Caltabiano also predicts that the money saved on airfare, hotels, or other travel-related expenses by those choosing the “safer at home” approach this Thanksgiving may lead to a pandemic holiday trend of self-care. “This year’s new tradition could be treating oneself with an eighth of premium flower instead of buying a bottle of wine for the family dinner.” Between that and the fact that other pandemic-era holidays such as the 4th of July and Labor Day have seen increased retail sales, Caltablano thinks retailers will have ample reason to give thanks once Thanksgiving 2020 is done and dusted.


Debra BorchardtNovember 18, 2020
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Cresco Labs Inc.  (OTCQX: CRLBF) released its unaudited financial results for the third quarter ending September 30, 2020, with revenue hitting $153.3 million. This was a 63% sequential increase over the second-quarter revenue of $93 million and an even bigger jump over last year’s revenue of $36 million for the 2019 third quarter. This also easily beat the Yahoo Finance average analyst estimate for revenue of $115 million. Cresco Labs attributed the increase in revenue to wholesale growth driven by an increase in harvests from expanded capacity in Illinois and Pennsylvania and strong growth in California. Retail growth was driven by strong sequential same-store growth and two new store openings in Illinois.

The company also delivered a net income of $4.9 million for the quarter versus last year’s net loss of $85 for the same time period last year.

“Cresco Labs entered the third quarter firing on all cylinders achieving record levels of revenue, profitability, and cash flow. We remain the number one operator in the industry focused on, and delivering results in, the wholesale distribution of branded products. Our retail is outperforming, and we are generating substantial operating leverage,” said Charles Bachtell, Co-founder and CEO of Cresco Labs. “Comparing Q1 to Q3, we increased revenue by $87 million while keeping SG&A flat. The investments we made to support growth are paying off, and as a result our profitability has grown dollar for dollar with gross profit. Because of the decisions we’ve made, the changes we’ve managed through and the hard work devoted by our team over the last 12 months, Cresco Labs has substantiated itself within the very top tier of the industry and confirmed the value that is driven by our differentiated strategy. This is a unique story of strategic breadth, depth and execution. As we look toward our next phase of growth, it’s rinse and repeat – the playbook will be applied to more states and, again, we will achieve meaningful, material market positions.”

Operational gross profit as a percentage of revenuwas 53%in the quarter as compared to 47% in the prior quarter driven by increased efficiency in our expanded Illinois and Pennsylvania facilities. The adjusted EBITDA  was $46.4 million, which was an increase of 182% sequentially driven primarily by higher revenue, increased operational gross profit across our largest markets and strong SG&A control which dropped dramatically as a percentage of revenue.

The company also noted that its net cash provided by operating activities was $17.8 million, compared to $9.9 million used in Q2. The increase in cash provided by operating activities was driven by increased operating leverage across the business as the Company scales.

 


Debra BorchardtAugust 21, 2020
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Cresco Labs Inc.  (OTCQX: CRLBF) stock dipped following the company’s solid results for the second quarter ending June 30, 2020. Despite beating analysts’ estimates on revenue and market share gains, traders focused on the company’s earnings miss and the stock slid by over 4% to trade at $6.82. The average price target is $8.59 and the stock has been on a huge run over the summer as it has moved from $2.05 in March to $7.70 on August 17.

After the market closed on Thursday, Cresco reported that its revenue rose sequentially by 42% to $94.3 million. The company also said on its earnings conference call that it achieved positive free cash flow in the month of June. Analysts at Yahoo Finance on average expected revenue of $76 million. So, this was a substantial beat.

The company missed the analyst average estimate for earnings be reporting  -$0.09, while the estimate was for -$0.06 per share. The company delivered a net loss of $4.7 million, which was less than last year’s net loss of $13.4 million for the same time period.

Cresco said that its revenue increased sequentially by more than 30% in every U.S. market, with the exception of Massachusetts. The company noted that its wholesale growth was driven by product popularity in California and first harvests from expanded capacity in Illinois and Pennsylvania. Retail growth was driven by strong sequential same-store growth of 31% and two new store openings in Illinois.

Charles Bachtell, Co-founder, and CEO of Cresco Labs said on the company’s earnings call, “In the two states where we have the leading market share, Illinois and Pennsylvania, both have reached a $1 billion in run-rate sales. Illinois is set to issue its next 75 retail licenses, a catalyst to more consumer demand, and increase opportunities for our wholesale business.”

The net losses included unrealized gains and losses on mark-to-market instruments that fluctuate until obligations are settled, changes in fair value of biological assets, interest expense, and tax expense. However, the adjusted EBITDA was $16.5 million, an increase of 419% sequentially. Th e company said this was achieved while integrating Origin House during the quarter and was driven primarily from higher revenues and increased operational gross profit in Illinois and Pennsylvania.

Illinois

Cresco Labs planted its flag in the state of Illinois and is now reaping the benefits of going hard in the state. Bachtell said on the call that state retail grew by 18% from Q1 to Q2. “Our existing Illinois stores grew sales by 37%. A testament to the effectiveness of our retail leaders and teams, nearly 75% of our retail revenue growth was driven by existing stores with the impact of recently announced store openings still to be seen in Q3 and Q4.”

He noted that the Sunnyside model is producing stronger same-store sales, attracting more customers, and achieving a disproportionate share of the market. “As we recently announced, we just opened our ninth retail location in Illinois, the most stores of any operator in the state. Sunnyside Schaumburg is located adjacent to the largest shopping mall in Illinois and at the heart of one of the densest areas of stores, hotels, and restaurants in the state,” he added.

Pennsylvania

The company pointed out that even though Pennsylvania is a medical-only state, it is still one of its largest markets. It is currently hitting a billion dollars in run-rate sales.  “We have room to grow in Pennsylvania from a retail footprint standpoint. We have currently licenses to open up six stores and you can have licenses to open up 15. So, there’s definitely still headroom there,” said Bachtell. Pennsylvania now has nearly 390,000 people registered in the medical program, roughly the same number as Florida, making it one of the most important medical markets in the country.

California

Bachtell also said the company was taking market share in California. “California retail sales grew 10% quarter-over-quarter while Cresco Labs total California revenue increased by 41%. We are taking share. Revenue from Continuum distribution was up 35% sequentially, driven by owned brands like Cresco, Mindy’s, Floracal, and High Supply, as well as continued strength from core partner brands,” he said on the company call.

“Wholesale penetration continued to grow in Q2 and we’re now distributing to nearly all of the states tier 1 dispensary’s. While we’re encouraged by the substantial increase in gross margin during the quarter, we’re even more excited about the immense gross profit opportunity offered by the state in 2020 and beyond. With a continued focus on increasing operating leverage, we’ve optimized the portfolio of brands in our platform, appointed new leadership in the state with extensive CPG and distribution experience, and completed a thorough value chain analysis to further improve the efficiency of our distribution business. California remains one of the most important cannabis markets in the world. And with improving regulations and state retail sales projected to reach $7 billion by 2025, California will continue to be a key driver of growth for Cresco Labs.”

 


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