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Cresco Labs
Following years of speculative trading in the cannabis industry, investors are finally getting an idea of which companies will be long-term winners and losers. U.S. multistate operator (MSO)
Cresco Labs (
OTC:CRLBF)
has all the makings of a big-time winner.
Maybe the most interesting thing about Cresco Labs and other U.S.
marijuana stocks is that they don't need federal legalization to thrive. Though legalizing cannabis at the federal level would eliminate some operating redundancies, it's not a necessity for marijuana stocks to grow. Cresco Labs projects as one of the fastest-growing pot stocks over the next four years, and this estimate doesn't take into account any changes from the federal government.
Like most MSOs, Cresco Labs does have a retail presence. It holds 29 licenses and has 20 operating retail locations. Of these 20 dispensaries, 10 are located in the limited license state of Illinois. With the Land of Lincoln limiting the number of retail licenses it'll assign, Cresco has a solid opportunity to gobble up share in a market that hit $1 billion in annual weed sales in 2020.
To build on Cresco's retail presence, it's also in the midst of purchasing
Bluma Wellness in an all-stock transaction valued at $213 million. Assuming the transaction closes, it'll add seven operating stores in Florida to Cresco's portfolio, along with eight additional retail licenses in the Sunshine State. Florida projects as the
third-largest marijuana market by 2024.
But it's the company's wholesale operations that
really allows Cresco to shine. The Origin House acquisition in January 2020 gave it access to a cannabis distribution license in California, the most lucrative cannabis market in the world by annual sales. This license allows the company to place pot products into more than 575 dispensaries throughout the Golden State. Though wholesale margins are lower than retail, Cresco has more than enough volume from California to make it worthwhile.