Chicago cannabis company Cresco Labs (CRLBF 3.12%) saw its stock rise 5.82% on Monday after being up as much as 10.1% on the day. The stock is down more than 37% so far this year.
The move was the result of several factors, and the stock is up more than 21% over the past month. The one thing that was new Monday was that Pennsylvania Lt. Gov. John Fetterman, a Democratic candidate for the U.S. Senate, said he plans to push President Joe Biden to follow through on campaign promises to decriminalize marijuana at the federal level.
While that's potentially good news for all marijuana companies, Cresco Labs, a large multi-state operator (MSO), is in a better situation to capitalize on decriminalization than many other cannabis companies because of its size and financial strength.
The company is coming off a second-quarter report earlier this month that included revenue of $218 million, up 4% year over year and 1.7% sequentially. It also reported adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $51 million, up 11% over the same period last year. It did report a loss of $8.3 million in net income, however.
The company has 51 retail locations, and that number is about to jump once its $2 billion all-stock deal to purchase Columbia Care and its 99 dispensaries is finalized. The company said the deal will make it the largest MSO in terms of pro forma revenue.
Expect all cannabis stocks to remain volatile for the short term, with the slightest rumor sending them soaring or plummeting. But in the long term, it's hard to ignore Cresco's potential for growth as it becomes potentially the largest cannabis company in the United States with the merger. The deal makes Cresco particularly strong in some of the more lucrative states, particularly as New York moves into adult sales later this year.