Yesterday, Cresco Labs (CRLBF) (CL) announced it had received licenses for its five Illinois medical cannabis dispensaries to sell adult-use cannabis. The company’s retail footprint in the state now comprises ten cannabis dispensaries.
On September 30, the company received approval to cultivate cannabis for adult use. It’s the only company in Illinois to have licenses for both adult-use cultivation and adult-use dispensary operation.
Illinois legalized recreational marijuana after governor J.B. Pritzker signed a bill on June 25. According to the law, the state will start adult-use cannabis sales on January 1, 2020. The law will initially allow only existing medical cannabis dispensaries and cultivation license holders to receive adult-use licenses. These provisions helped Cresco obtain its licenses.
In a press release, Cresco CEO Charlie Bachtell stated, “Illinois is Cresco’s home state and with the transition to a legal adult-use market in January of 2020, the state is expected to produce between $2 – 4 billion in sales at maturity (BDS Analytics), making this one of the single largest opportunities in the U.S. cannabis space today.”
He added, “Cresco is well-positioned to capture a significant share of this revenue opportunity for shareholders. We have 25% wholesale share of the current medical market, a portfolio of recognized brands and three cultivation facilities that can represent 630,000 square feet at completion, in what is expected to be a supply-constrained market.”
Cresco Labs’ stock performance
Cresco Labs stock rose after the licensing announcement. It reached a high of 8.89 Canadian dollars yesterday before closing at 8.75 Canadian dollars, up 5.3% from its previous closing price. Despite yesterday’s rise, the stock us still down 5.4% year-to-date. Weakness in the cannabis sector and Cresco’s lower-than-expected second-quarter revenue appear to have dragged down its stock. However, Cresco has outperformed peers and cannabis ETFs this year. Year-to-date, Canopy Growth (CGC) (WEED), Cronos Group (CRON), and HEXO (HEXO) have fallen 28.9%, 23.3%, and 31.0%, respectively.
Canopy is focusing on expanding its US cannabidiol business and Cannabis 2.0 to drive growth. The company had also acquired Beckley Canopy Therapeutics, a cannabinoid-based research company. Despite Canopy stock’s decline, analysts are bullish. To learn more, read, Canopy Growth: Analysts Provide Target Price and Ratings.
For Cronos Group, cannabis sector weakness and a higher-than-expected operating loss in the second-quarter have impacted its stock. Cronos is scheduled to report its third-quarter earnings results on November 12.
HEXO’s CFO’s abrupt resignation, lower-than-expected preliminary fourth-quarter revenue, and analysts’ downgrades have hurt its stock. Furthermore, law firm Hagens Berman is investigating possible wrongdoings at HEXO. For analysts’ ratings and marijuana news and updates, follow 420 Investor Daily.