Cresco Labs Inc - CRLBF stock
Introduction[edit]
Cresco Labs Inc. (OTC: CRLBF, CSX: CL) is a vertically integrated multi-state cannabis operator based in the United States. The company is licensed to cultivate medical-grade cannabis, manufacture medical products derived from cannabis cultivation, and distribute such products to medical or adult-use consumers. It is determined to normalize, professionalize and revolutionize cannabis. The firm pays close attention to regulatory frameworks of the industry while working to create condition-specific strains of cannabis and non-invasive delivery metrics. Cresco was founded by Charles Bachtell, the CEO, and former president Joe Caltabiano in 2013. The company’s common shares trade on the OTCQX Market under the ‘CRLBF’ symbol. It is headquartered in Chicago, Illinois.[1]
Cresco Labs Operations[edit]
Cresco conducts its business operations and ensures efficiency in service delivery together with its subsidiaries. The company offers quality, consistent, and approachable cannabis products tailored to the customer’s needs. The brands include Cresco, Reserve, High Supply, Good News, Wonder Wellness Co., FloraCal Farms, Remedi, Sunnyside, and Mindy’s.
Footprint[edit]
The company’s infrastructure comprises operations in 10 states, 21 production facilities, 51 retail licenses, and 51 fully owned dispensaries. The firm employs more than 3,500 people across the states.[2] It boasts a robust portfolio of more than 300 products retailed in over 1,200 dispensaries across the states. The company owns and operates roughly 10 dispensaries in Illinois state, approximately 16 dispensaries in the state of Florida, over 10 dispensaries in the state of Pennsylvania, five in Ohio, one in New York, and four in the state of Massachusetts, among others.[3]
Products[edit]
The company employs a consumer-packaged goods (“CPG”) strategy for cannabis, delivering a range of brands that meet the needs of numerous consumer segments. Cresco provides cannabis in flowers, vape pens, live resins, disposable pens, and extracts under the Cresco brand; vapes and gummies under the Good News brand; vape carts, vape pens, flower, popcorn, shake, pre-rolls, shorties, and concentrates under the High Supply brand; vapes and edibles under the Wonder Wellness Co brand; and tinctures, capsules, salves, and sublingual oils under the Remedi brand, and cannabis products under the Reserve brand.
It also sells cannabis flowers under the FloraCal brand; and chocolate and toffee confections, fruit-forward gummies, hard sweets, and taffy under the Mindy's Edibles brand. It also licenses the Kiva brand, which produces cannabis-infused edibles, which include chocolate confections, gummies, mints, and tarts. The company also uses the Sunnyside brand to advance cannabis-infused edibles.[4]
History[edit]
Charles Bachtell and Joe Caltabiano met in Chicago back in 2013 while working in the mortgage industry. Bachtell swiftly designed the company’s business plan shortly after the legalization of the medical cannabis program in Illinois. The startup was initially funded with approximately $3.5 million in capital from the duo and three friends. The duo committed 6% of the capital to Denver Relief Consulting for help with infrastructure and establishment of initial business operations. Cresco managed its first cannabis sale in January 2016, owning three retail stores and one cultivation asset. The company rapidly spread its footprint to six states and privately raised $100 million for AAWH's further expansion by 2018. Through its reverse takeover with Randsburg International Gold Corp, Cresco issued an IPO on the Canadian Stock Exchange (CSE) which sired $87 million in December 2018. The capital raised boosted the company’s capital base enabling it to expand into other states via acquisitions and the opening of new dispensaries.[5]
Mergers and Acquisitions[edit]
Cresco has been brutally active in the expansion mission of its footprint since incorporation. This was recently witnessed in the year 2021 when the company made three vital acquisitions. Cresco settled the Bluma Wellness acquisition on April 14, 2021, in an all-stock deal that cost $213 million. The move was engineered to capture the vast Florida market, the third most-populated state. Florida boasts one of the biggest medical markets, forecasted to grow towards adult use by 2025. The deal gave Cresco 8 operational dispensaries in Florida with seven more to be constructed.
The company further made a double acquisition in Pennsylvania, buying Laurel Harvest and Cure Penn. Laurel Harvest exposed Cresco to an indoor growing/processing space approximated at 52,000 square feet, a base for another 52,000 square feet of indoor, two dispensaries, and enabled the company to penetrate more parts of the state. The $80 million deal was funded through cash and stock.
Cure Penn's acquisition advanced three high-value stores to Cresco. The deal was settled through cash and stock and was estimated at $90 million. The company is the top holder of wholesale market share in the state with 100% penetration and up to 15 retail facilities.
Cresco also acquired Cultivate, a vertically-integrated operator in Massachusetts, in a cash and stock deal worth $90 million in the same year. Cresco obtained four operational stores, 42,000 square feet of active canopy, thee dispensaries, and a top three position in the state’s market share.[6]
News[edit]
On August 17, 2022, Cresco released its financial results for the quarter that ended June 30, 2022. Highlights of the second quarter of 2022 include:
- Revenue of $218 million, up 4% year-over-year.
- Adjusted EBITDA of $51 million, or 23% of revenue, an increase of 11% year-over-year.
- Wholesale revenue of $95 million maintained the Company's position as the no. 1 U.S. seller of branded cannabis products.
- Retail revenue increased 22% year-over-year, to $123 million, or $2.5 million per average store open in the quarter; same-store sales increased 6% year-over-year.
- Ended the quarter with $90 million of cash on hand.
The positive results are a clear sign of the company’s drive to be the best in the industry. The consistent positive trajectory in the firm’s performance could be good news and a chimney for massive gains for potential investors.[7]
Management Team[8][edit]
- Charles Bachtell, CEO & Co-Founder
- BSc. Business Administration/Finance University of Arizona
- Trained as an attorney at DePaul University College of Law
- current Chairman of the National Cannabis Roundtable
- Massive legal expertise in both corporate governance and complex regulatory compliance
- Instrumental in Cresco Lab’s organic growth and acquisition strategy
- former Executive Vice President and General Counsel for Guaranteed Rate
- Robert Sampson, Co-Founder, and Director
- currently the CEO of Bemortgage based in Chicago
- Over 20 years of operating experience in large corporations, including 12 years in the heavily regulated mortgage industry as Chief Operating Officer at Guaranteed Rate, before co-founding Cresco Labs
- Tom Manning, Executive Chairman of the Board
- holds an MBA from Stanford Graduate School of Business and a bachelor’s degree from Harvard College.
- former Chief Executive Officer and Chairman of Dun & Bradstreet
- lived and worked in Asia for nearly 20 years, serving as CEO of Cerberus Asia Operations & Advisory Limited
- currently serves on the board of CommScope Holding Company, Inc.
- Sidney R. Dillard, Board Member, Director
- received an AB in Economics from Stanford University
- outstanding 30+ year career providing advice and capital solutions to Fortune 500 corporations and middle market companies
- currently serves as partner and head of corporate investment banking at Loop Capital Markets
- previously the Senior Vice President and Division Manager at Northern Trust Bank
Legal Issues[edit]
Lawsuits[edit]
Sommers Schwartz attorneys Matthew L. Turner, Kevin J. Stoops, and Rod M. Johnston filed a class action lawsuit in U.S. District Court for the Northern District of Illinois against Cresco labs claiming failure by the mentioned company to compensate its employees. The complaint alleged that employees were not paid overtime resulting from time used to attain the company’s imposed requirement for employees’ health screening and to put on (“don”) and take off (“doff”) company-issued personal protective equipment (PPE) in 2021.[9]
- ↑ WSJ Markets/CRLBF/Company Profile – Wall Street Journal. Retrieved 8/17/2022
- ↑ CrescoLabs.com/Brands – Cresco Labs Official website. Retrieved 8/17/2022
- ↑ CNBC.com/CRLBF/Profile – CNBC News
- ↑ finance.yahoo.com/quote/CRLBF/ - Yahoo Finance
- ↑ An Introduction to Cresco Labs: The Leading Cannabis Wholesaler – Seeking Alpha. Retrieved 8/18/2022
- ↑ Mergers and Acquisitions/Introduction to Cresco Labs – Seeking Alpha
- ↑ Cresco Labs Announces Second Quarter 2022 Results – Yahoo Finance. Retrieved 8/18/2022
- ↑ Cresco Labs – Management Team – Cresco Labs' official website
- ↑ FAILURE TO PAY CANNABIS WORKERS OVERTIME FOR DONNING AND DOFFING PPE: JANICE DUTCHER ET AL. V. CRESCO LABS INC. ET AL. - Sommers Schwartz. Accessed 8/18/2022
OTC Symbol: CRLBF | OTC Tier: OTCQX International
