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A Close Look at Cresco Labs Inc (OTCMKTS: CRLBF)


Cresco Labs Inc (OTCMKTS: CRLBF) is on the rise after the entire cannabis industry gets a lift. The stock currently trades at a 70% discount to the level it was trading at in April 2019 and Investors are looking for a return to previous levels.cresco

Cresco Labs Inc bills itself as one of the largest vertically-integrated multi-state cannabis operators in the United States. Cresco is built to become the most important company in the cannabis industry by combining the most strategic geographic footprint with one of the leading distribution platforms in North America. Employing a consumer-packaged goods (“CPG”) approach to cannabis, Cresco’s house of brands is designed to meet the needs of all consumer segments and includes some of the most recognized and trusted national brands including Cresco, Remedi and Mindy’s, a line of edibles created by James Beard Award-winning chef Mindy Segal. Sunnyside*, Cresco’s national dispensary brand, is a wellness-focused retailer designed to build trust, education and convenience for both existing and new cannabis consumers. Recognizing that the cannabis industry is poised to become one of the leading job creators in the country, Cresco has launched the industry’s first national comprehensive Social Equity and Educational Development (SEED) initiative designed to ensure that all members of society have the skills, knowledge and opportunity to work in and own businesses in the cannabis industry.

Cresco Labs Inc (CNSX: CL) (OTCMKTS: CRLBF) announced in November its unaudited financial results for the third quarter ended September 30, 2019. Third quarter revenue of $36.2 million, up 184% year-over-year and 21% quarter-over-quarter.

“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.”

In Early February Cresco closed on the acquisition of Hope Heal Health, Inc. after receiving regulatory approval for change in ownership granted by the Massachusetts Cannabis Control Commission. HHH holds licenses for cultivation, product manufacturing, and retail operations in Massachusetts, with the ability to obtain up to two more retail licenses in the state. HHH currently operates a cultivation and manufacturing facility in Fall River, Massachusetts, adjacent to its Fall River Dispensary.

The close of Cresco’s acquisition coincides with the launch of recreational cannabis sales at the HHH dispensary. The license enables the Company to continue serving its existing medical-use customer base and begin serving the fast-growing adult-use market through the retail and wholesale distribution of Cresco’s house of brands. Massachusetts recorded nearly $450 million in the first year of cannabis sales, according to the CCC.

Cresco Labs CEO and Co-founder Charlie Bachtell, commented, “In our pursuit of achieving the most strategic geographic footprint in the U.S., we are thrilled to begin serving adult-use customers and continue serving medical patients in Massachusetts. Since we originally entered an agreement to acquire HHH in late 2018, we’ve worked with HHH to build a reputation of quality and consistency in what is now the largest adult-use market in the Northeast. Now that we’ve officially closed the acquisition, we’re stepping into a fully operational, vertically integrated business that is immediately accretive with both positive EBITDA and cash flow. We look forward to building out our retail presence under the Sunnyside* brand (pending approval), as well as our wholesale channel and growing our market share as we’ve done successfully in other states.”

On February 13 Cresco announced a high-profile leadership hire to support its steadfast commitment to building the most important cannabis company in the U.S. Greg Butler joins Cresco Labs as its first Chief Commercial Officer (“CCO”). Greg brings to Cresco Labs a strong background in driving brand growth for top-tier CPG companies including Pfizer, Johnson & Johnson and Molson Coors, wellness retail execution for Walgreens, and business growth and capital management strategic advising for leading private equity portfolio companies.

Currently trading at a $1.3 billion market valuation Cresco is one of the largest vertically-integrated multi-state cannabis operators in the United States. The Company reported third quarter revenue of $36.2 million, up 184% year-over-year and 21% quarter-over-quarter for the 3 months ended September 30, 2019. After CGC beat estimates the entire MJ sector is heating up again. We will be updating on Cresco on a daily basis so make sure you are subscribed to microcapdaily.com so you know what is going on with Cresco.

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Disclosure: we hold no position in Cresco either long or short and we have not been compensated for this article.


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