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Wednesday, November 25, 2020

Why Cresco Labs Inc (OTCMKTS:CRLBF) Could be Prepped for a Breakout

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In its attempt to win a hard-fought bottom, Cresco Labs Inc (OTCMKTS:CRLBF) has been working higher over the past couple weeks, with the key 50-day simple moving average still another 50 cents above as a reasonable bounce target. Helping to further flesh out the story, the company just announced that, in connection with its previously announced C$73,500,000 underwritten unit offering that closed September 24, 2019, it has issued an additional 551,250 share purchase warrants at a price of C$2.16 per Additional Warrant for gross proceeds of C$1,190,700, pursuant to the partial exercise of the underwriters’ over-allotment option.

According to the release, the aggregate gross proceeds of the Offering, including the over-allotment option, total $74,690,700. This stands to present the company with a major boost in ammunition as it continues to fight for a leadership role in a very cost-intensive field.

CRESCO LABS ORD (OTCMKTS:CRLBF) trumpets itself as a company that manufactures and sells medical cannabis products in the United States. It offers cannabis dry flower; vaporizer forms of cannabis; cannabis oil in capsule, oral and sublingual solutions; cannabis in topical; and other cannabis products.

The company also provides cannabis infused edibles, including chocolate and toffee confections, fruit-forward gummies, and hard sweet and chews. Cresco Labs Inc. sells its products under the Cresco brand.

In addition, it operators a Hope Heal Health dispensary in Fall River, Bristol County, Massachusetts.

The company was formerly known as Cresco Labs, LLC and changed its name to Cresco Labs Inc. in November 2018. Cresco Labs Inc. is headquartered in Chicago, Illinois.

According to the release, “Cresco Labs, based in Chicago, is a leading U.S. cannabis company with experienced management, access to capital and a demonstrated growth strategy. As a differentiated grower, processor and retailer of premium cannabis operating in ten states, the company focuses on entering highly regulated markets with outsized demand potential and high barriers to entry. Its impressive speed-to-market gives Cresco a distinct competitive advantage as it replicates its model to expand its national footprint. Cresco’s proven ability to execute is complemented by a cutting-edge brand strategy spearheaded by several of the brightest minds in consumer marketing in the nation. Cresco’s products are tailored to all major consumer segments: everyday cannabis, medicinally focused, connoisseur grade, and chef inspired edibles by James Beard Award-winning pastry chef Mindy Segal. Learn more about Cresco Labs at crescolabs.com.”

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As noted above, CRLBF just announced that, in connection with its previously announced C$73,500,000 underwritten unit offering that closed September 24, 2019, it has issued an additional 551,250 share purchase warrants at a price of C$2.16 per Additional Warrant for gross proceeds of C$1,190,700, pursuant to the partial exercise of the underwriters’ over-allotment option.

The chart shows 12% piled on for shareholders of the company during the trailing month. What’s more, the name has seen interest climb, with an increase in recent trading volume of 21% beyond its prior sustained average level.

According to the release, “Each Additional Warrant ‎‎entitles the holder to acquire one subordinate voting ‎share of the Company at a price of C$12.50 per share, ‎subject to adjustment in ‎certain circumstances, for a period of 3 years following the closing of the Offering. The Additional Warrants have been approved for listing with the Canadian Securities Exchange (“CSE”) under the symbol CL.WT and will begin trading on October 24, 2019.”

Currently trading at a market capitalization of $455M, CRLBF has a significant war chest ($89.8M) of cash on the books, which stands against about $41.2M in total current liabilities. CRLBF is pulling in trailing 12-month revenues of $90.4M. In addition, the company is seeing recent top-line growth, with sequential quarterly revenues growing at 42.9%. This may be a very interesting story and we will look forward to updating it again soon. Sign-up for continuing coverage on shares of $CRLBF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

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

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