Cresco Labs (OTCQX:CRLBF) is one of the “Big 4” U.S. multi-state operators (‘MSOs’) in the cannabis industry. In comparison with peers, CRLBF has a heavier emphasis on the wholesale market, although its retail dispensary segment is also growing rapidly. The newly-elected Democratic administration may provide tailwinds if cannabis is decriminalized on the federal level. CRLBF’s balance sheet is in weaker shape than the rest of the Big 4, but future growth may enable the company to eventually reduce leverage. I rate shares a buy with tremendous upside but note the high uncertainty and potential risks.
New Cannabis Growth Monster
CRLBF has operations in 9 states, but its key core markets are in Illinois and Pennsylvania, where it has leading market share and 100% wholesale penetration:
We can see below that unlike most U.S. based cannabis operators, CRLBF derives the bulk of its revenues from wholesale distribution channels:
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