This past year hasn't been particularly good for marijuana stocks. A widespread sell-off has affected cannabis companies large and small. There have been many reasons for investors dumping their pot investments this year, including over-hyped valuations, lack of profitability, and bad press documenting company-specific and industry-wide problems.

The good news is that all this bearish activity has brought cannabis stock prices down to much more reasonable valuations, and for pot companies that are expecting a lot of growth in 2020, now is an opportune time to buy.

One company that could fall into that category is Chicago-based Cresco Labs (CRLBF 1.51%).

Illinois recreational market opens Jan. 1

When the new year begins, recreational marijuana users will have a new state where they can buy weed: Illinois. That alone could make 2020 a terrific growth year for Cresco Labs. With a population of more than 12 million people, Illinois is the second-largest state to legalize pot thus far, coming well behind California's population of around 40 million. It could prove to be one of the hottest marks for cannabis and Cresco Labs is in a great position to benefit from that with five retail locations already up and running and three more on the way.

Cannabis greenhouse.

Image source: Getty Images.

Earlier this year, the company received approval to move its MedMar Lakeview dispensary to a convenient location near Wrigley Field. The dispensary will see lots of traffic as both local and out-of-state visitors visit the stadium to watch baseball this summer. Right now, the license is only for medical marijuana and if Cresco wants to sell recreational marijuana there, it needs additional approval. But with many pot shops to choose from, location is everything and it could be a way for Cresco to get a leg up on its rivals.

Cresco has more growth potential beyond Illinois

While Illinois may offer the most significant growth opportunity for the company since the recreational market will be brand new in 2020, Cresco isn't putting all of its eggs in one basket. Including pending acquisitions, the company boasts a total of 56 retail licenses, 22 dispensaries, and 23 production facilities spanning 11 states.

Earlier this year, the company announced it was purchasing assets from Tryke Companies, giving Cresco a stronger presence in Arizona and Nevada. As part of the deal, Cresco will acquire all six of Tryke's Reef Dispensary locations -- two in Arizona and four in Nevada.

The flagship location near the Las Vegas Strip is the prized jewel for Cresco Labs. In the release, it's referred to as "one of the highest-grossing dispensaries in the world" and it says "there is no intersection in the world generating more regulated cannabis revenue annually than the intersection of Western Ave. and Desert Inn Rd. in Las Vegas." 

In 2018, the location by the Strip did $31 million in sales and the entire Reef portfolio generated $70 million. The deal is on track to close during the first half of next year. Once completed, the transaction will complement Cresco well and give the company a big boost in sales. Over the past nine months, Cresco collected $87 million in revenue.   

Does this make the stock a buy today?

Like many of its peers, Cresco has seen its share price tumble over the past six months, losing around half its value. It isn't one of the big cannabis stocks, but that could change if its sales numbers skyrocket as expected in 2020.

The company has been within $7 million of breakeven in each of its past three quarters, so it's in a good position to be able to record a profit next year as its sales continue rising. Over the long term, Cresco could prove to be a solid investment for cannabis investors.