Cresco continues its national footprint and its leading position in Illinois ahead of the adult-use market launch.
Cresco Labs, one of the largest vertically integrated multistate cannabis operators in the United States, today announced the closing of an agreement (the "Agreement") to sell its Lincoln, Illinois cultivation facility to GreenAcreage Real Estate Corp. ("GreenAcreage"), for USD$50 million.
Concurrent with the closing of the sale, Cresco has agreed to enter into a long-term, triple-net lease agreement with GreenAcreage and will continue to operate the property as a licensed medical & recreational cannabis cultivation and processing facility.
Cresco's Lincoln property is expected to be 220,000 square feet when completed, making it the largest such facility in Illinois. With more production capacity than any other cannabis company in the state, Cresco is positioned to grow its already leading 25% market share.
"This Agreement is representative of the comprehensive approach to capital planning that we anticipate will ensure our future success, while enabling us to grow our footprint both rapidly and responsibly," said Cresco Labs CEO and Co-founder Charlie Bachtell.
"We have several opportunities right in front of us, including in our home market of Illinois, which will be moving forward with adult-use legalization on January 1st and is projected to reach $2 billion to $4 billion in annual sales at maturityiii. I
llinois represents one of the largest opportunities in U.S. cannabis and we feel Cresco is uniquely situated to maintain and expand its leading market position in the state with a cultivation footprint and growth plan unmatched by any other player in the market, a portfolio of well-known and accepted branded products and a strategically located retail footprint."
Enhancing Capital Position
The Company has continued to strengthen its balance sheet and enhance its financial flexibility since the end of Q3-2019. Cresco's capital is primarily earmarked for projects expected to drive strong, sustainable returns on capital for shareholders.
- Cresco's balance sheet ending Q3-2019 included a cash and cash equivalents balance of $73.7 million, a working capital position of $144.6 million and zero debt.
- On November 26, 2019, Cresco announced a sale-and-leaseback agreement for its Marshall, Michigan and Yellow Springs, Ohio facilities for $38 million.
- On December 3, 2019, the Company established an at-the-market program ("ATM") with a two-year term. While the Company has no intention to utilize the ATM immediately, it rounds out Cresco's comprehensive approach to capital strategy by providing the Company with the security of readily accessible future capital, if needed, at what is expected to be a more attractive cost of capital and lower dilution than other alternatives in the current environment.
"Access to capital is critical for cannabis industry operators to build scale and grow"Katie Barthmaier, Chief Executive Officer of GreenAcreage.
"We are excited to acquire this facility from Cresco, an industry and market leader, to fuel their continued success in Illinois."
"We are confident that today's announcement, together with the measured steps we continue to take to strengthen our capital position and continue investing in strategic U.S. cannabis markets, will generate significant returns for our shareholders, our employees and the communities in which we operate," concluded Cresco CEO Charlie Bachtell.
Disclaimer: Past performance is not an indicator of future performance.
To learn more about Cresco Labs visit their Company HQ here.
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