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Is Cresco Labs Inc (OTCMKTS:CRLBF) Coiled For the Breakout?

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Cresco Labs Inc (OTCMKTS:CRLBF) just announced that it has closed the previously announced acquisition of CannaRoyalty Corp. (ORHOF) by way of a plan of arrangement.

According to the release, with the closing of the Arrangement, Cresco has significantly increased its footprint and accelerated its entry into the California market. Pursuant to the Arrangement, Cresco will appoint Marc Lustig, Chairman and CEO of Origin House, to the Cresco board of directors, following receipt of certain U.S. regulatory approvals. The acquisition of Origin House makes Cresco a leading wholesale distributor in California, selling into over 575 dispensaries, representing approximately 65% of California’s storefront dispensaries. Origin House’s Continuum distribution platform distributes 13 third party brands, including Kings Garden.

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 it has closed the previously announced acquisition of CannaRoyalty Corp. (ORHOF) by way of a plan of arrangement.

Traders will note 15% tacked on to share pricing for the stock in the past week. In addition, the name has seen a growing influx of trading interest, with the stock’s recent average trading volume running 70% over what the stock has registered over the longer term.

“This is a transformational deal for Cresco and represents the culmination of the better part of a year’s work for both the Cresco and Origin House teams,” said Charlie Bachtell, Cresco’s CEO and Co-founder. “With the closing of this transaction, Cresco is in a position to accelerate its entry into one of the largest legal cannabis markets in the world, while adding valuable expertise in wholesale distribution and brand development, which we expect will drive significant value for all of our shareholders as we scale across the country in the coming years. We also see meaningful synergies across our national footprint through the addition of Origin House’s ultra-premium indoor cultivation team, which we expect will assist us in our goal to consistently outperform the market on yield and quality metrics.”

At this time, carrying a capital value in the market of $889M, CRLBF has a significant war chest ($108.2M) of cash on the books, which stands against about $60.6M in total current liabilities. One should also note that debt has been growing over recent quarters. CRLBF is pulling in trailing 12-month revenues of $138.2M. In addition, the company is seeing recent top-line growth, with sequential quarterly revenues growing at 19.6%. We will update the story again as soon as further details emerge. 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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