|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||6.51 - 7.00|
|52 Week Range||0.81 - 40.63|
|Beta (3Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||14.48|
ETFMG Alternative Harvest ETF (NYSE: MJ), one of the largest cannabis ETFs on the market, on Wednesday will pay a quarterly dividend of 28 cents per share to shareholders of record as of the close of business on Sept. 23. In an effort to push for the legalization of adult-use cannabis in New Jersey, the state's National Organization for the Reform of Marijuana Laws chapter, Garden State NORML, will conduct a lobby day and rally to support SB2703: the New Jersey Cannabis Regulatory and Expungement Aid Modernization Act. Last week, Cresco Labs Inc (OTC: CRLBF) announced entering into an agreement with a group of investment dealers led by Canaccord Genuity to offer them an aggregate of 7.35 million units at a price of CA$10 ($7.53) apiece and approximately 1.10 million units as an over-allotment option.
The U.S. multi-state operator (MSO) cannabis sector has taken severe stock hits in the last few months. Companies like Cresco Labs (CRLBF) have generally all hit financial goals, but the market has shaken off the positive developments due to a lack of progress of closing key mergers and federal approval of cannabis. The stock is down sharply as the company stacks another merger on top of other large pending deals.Another MergerThe stock slumped to nearly $7 following a rally above $13 just back in April. The nearly 45% loss is in line with most domestic MSOs as the excitement over large-scale acquisitions has faded with none of the deals closing in a timely manner.Cresco Labs announced the acquisition of Tryke of $282.5 million. Tryke operates six retail stores in Arizona and Nevada under the Reef Dispensary brand.On the surface, the deal appears solid with the company generating 2018 revenues of $70.4 million and an impressive EBITDA of $24.6 million. A deal costing 12x trailing EBITDA in a fast-growing sector is typically encouraged.The problem here is that Cresco Labs has several pending major acquisitions and the market is naturally concerned the regulators will balk at these MSOs gaining too much scale.The company announced the acquisition of Origin House on April 1 in a deal promoted as the largest ever public company deal in the U.S. cannabis sector. The deal had a listed value of C$1.1 billion or roughly $850 million at the time. Origin House has a listed market value of only $440 million now as investors lose interest in the sector and the deal closing.The market clearly has concerns about the deal closing with Origin House trading at only $5.50 now. The company originally forecast the deal closing by the end of June and the date was recently pushed out as closing after the waiting period for HSR expires on October 17. The market isn’t comforted by the ongoing delay.In addition, VidaCann hasn’t closed adding more regulatory uncertainty. The pending acquisition target expects to have 20 stores open in Florida by the end of 2019 to greatly expand on the market opportunity for Cresco Labs. The Tryke merger makes for three relatively large-scale deals pending.Focus On The FutureThe Origin House deal along with VidaCann are crucial to the future of Cresco Labs. The company only reported Q2 revenues of $29.9 million while pro-forma revenues were up at $52.7 million. The pending acquisitions already accounted for nearly 45% of the revenue stream counted on by the company and this Tryke deal adds another $17.5 million in quarterly revenues based on FY18 numbers.The company already has the Illinois market projected to reach annual sales in the $2 to $4 billion range with adult-use cannabis starting on January 1. In addition, Cresco Labs got regulatory approval for an acquisition of Valley Agriceuticals, LLC providing for access into New York. Along with a license in Michigan, Cresco Labs is poised for substantial growth with or without all of these pending acquisitions closing.Consensus VerdictWith 7 'Buy' ratings in the last three months, the word on the Street is that Cresco Labs is a ‘Strong Buy'. Its $17.41 average price target suggests about 150% upside potential. (See Cresco Labs's price targets and analyst ratings on TipRanks)TakeawayThe key investor takeaway is that regulatory uncertainty is a big factor in the weakness of Cresco Labs. For investors that believe in the sector, Cresco Labs now offers the potential for a $1+ billion business trading with a fully diluted market valuation of only $2 billion. Unfortunately, the stock is likely to trade weak until progress is made on all of these pending deals.Disclosure: No position.
Cresco Labs Inc. (“Cresco Labs”) (CL.CN) (CRLBF) and CannaRoyalty Corp. d/b/a Origin House (“Origin House” and together with Cresco Labs, the “Companies” – CSE: OH, OTCQX: ORHOF), both announced today that, effective September 16, 2019, they have each submitted certifications of substantial compliance with the request for additional information (“Second Request”) from the United States Department of Justice Antitrust Division (the “DOJ”) in connection with Origin House’s and Cresco Labs’ notification to U.S. antitrust authorities pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”), as amended, in respect of Cresco Labs’ pending acquisition of Origin House (the “Transaction”).
With this agreement Cresco Labs will expand its presence acquiring six prime Reef Dispensary locations in Nevada and Arizona, licensed cultivation and process capacity in Phoenix and Las Vegas, and it will enter the Utah market, the company said. Entering the Utah market will mark the company’s access to a 12th state, and the transaction will also make the company one of the top 3 cannabis operators in Nevada, and it will increase its market share in Arizona by 300%, as per the press release. Cresco Labs said the purchase price is set to around $282.4 million, which will consist of the company’s shares (around $227.5 million) and cash (around $55 million).
Tryke generated US$70.4 million in Revenue and US$24.6 million in EBITDA in fiscal 20181, making it one of the highest grossing and most profitable private cannabis companies in the U.S. market. Arizona is one of the largest and fastest growing medical-only markets with estimated 2019 sales of up to US$760 million 2 . Tryke has established six of the best-positioned retail locations in Nevada and Arizona, including the iconic Reef Dispensary located adjacent to the Las Vegas Strip and five additional operating locations in North Las Vegas, Sparks and Phoenix, AZ.
Tryke generated US$70.4 million in Revenue and US$24.6 million in EBITDA in fiscal 20181, making it one of the highest grossing and most profitable private cannabis companies in the U.S. market. Arizona is one of the largest and fastest growing medical-only markets with estimated 2019 sales of up to US$760 million 2. Tryke has established six of the best-positioned retail locations in Nevada and Arizona , including the iconic Reef Dispensary located adjacent to the Las Vegas Strip – which has produced over US$65 million in revenue since 2015 – and five additional operating locations in North Las Vegas , Sparks and Phoenix, AZ.
Cowen analyst Vivien Azer initiated coverage Friday of five multi-state cannabis operators, saying she's bullish on those that rely on the consumer packaged goods model given the higher margins, especially relative to those relying on the retail model. Azer started Green Thumb Industries Inc. at outperform with a stock price target of $18.50, Curaleaf Holdings Inc. at outperform with a $10.50 target, and Cresco Labs Inc. at outperform with a $14 target. "We believe that the greatest shareholder value will be created through businesses that emulate a traditional CPG finished goods model, given its superior margin structure," Azer wrote in a note to clients. Meanwhile, Azer started MedMen Enterprises Inc. at underperform with a $1.50 price target. "[MedMen] is the clear leader in the [California] market, with a distinguished brand, reflecting an attractive retail concept," Azer wrote. "However, to us, retail is less attractive than wholesale. And, an over-reliance on retail revenues today, coupled with excessive spending and notable management turnover, make this a'show-me' story." Azer also started Acreage Holdings Inc. at market perform with a $9 target, saying consolidation a of a "disparate network of dispensaries" and launching a "nascent brand strategy" could prove challenging. The ETFMG Alternative Harvest ETF was up 0.4% in afternoon trading, but has lost 28.7% over the past three months, while the S&P 500 has gained 3.5% in three months.
Anyone who closely follows the cannabis industry knows that it is experiencing unrivaled growth. The year is set to end with a 31.7% increase in annual legal cannabis sales, bolstered by new regulation, ...
Market research and data analytics firm Prohibition Partners has released its first North American Cannabis Report. In the 134-page paper, the firm analyzes the current state of the cannabis industry in Canada and the United States to draw key insights into the industry’s future in the region. The firm is estimating that by 2024, the continent's cannabis market will be worth $47.3 Billion.
Just three months ago, Seaport analyst Brett Hundley was rolling back price targets on Canadian cannabis stocks, cutting forecasts for both sales and EBITDA left and right -- and Hundley was right to do so. Since the analyst began slashing targets, shares of Aphria (APHA) and Hexo (HEXO) (two subjects of the analyst's ire in June) have fallen 10% and 35%, respectively. More broadly (and over a longer time horizon) the Horizons US Marijuana Index ETF has declined 39% from April to today -- against a broader S&P 500 performance that's been basically flat.And yet, there comes a day that marijuana stock prices get too cheap to ignore, and that day, apparently, was Labor Day 2019.Seaport Announces a Labor Day SaleIn a report just out entitled "Labor Day Sale", Hundley argues that after the sell-off, it's now "time to buy cannabis stocks" again. His reason:"Quality cannabis names" are trading at "2020 price-to-sales multiples near 3.0x-4.0x, alongside EV multiples of 7.5x-10.5x against 2020/21 EBITDA expectations." In the analyst's opinion, these valuations have been depressed for several good reasons, including "disappointing and frustrating regulatory developments, delayed profitability expectations, specific compliance/credibility issues, and founder/management upheaval."And yet, Hundley foresees a "potential for forward regulatory improvements/updates and widening access to capital" that could result in higher valuations going forward. And he further argues that "the [marijuana] space is profitable" already -- albeit only profitable from the perspective of "EBITDA," which considers earnings but not the interest, taxes, depreciation, and amortization that generally come along with (and subtract from) them.Given this continued absence of real profitability, though, are any of these stocks really bargains, even down 39% on average?3 'Quality Cannabis Names' to ConsiderHundley notes that the valuations on his alleged "quality cannabis names" look attractive when compared to "biotech/pharma" stocks trading "6.0x+ 2020 sales expectations and 15.0x-25.0x 2020/21 EBITDA expectations." But which ones exactly? Let's take a closer look.Canopy Growth (CGC) for example, probably the best-known Canadian cannabis stock (and certainly the most expensive at $8.9 billion in market capitalization), currently sells for 19 times the $467 million in sales it's expected to produce in 2020. Aurora Cannabis (ACB), the next-biggest player in the industry at $5.9 billion in market cap, costs more than 11 times the $516 million in sales that analysts project for it in 2020. And Cronos Group (CRON), No. 3 in the industry at $3.9 billion in market cap, costs a staggering 23.6 times forward sales!In fact, to get anywhere close to his promised "3.0x-4.0x" sales valuations, Hundley has to scrape pretty far down into the barrel, coming up with just one example from his own coverage list: Green Thumb Industries (GTBIF), which he says at $1.6 billion in market cap costs 3x fiscal 2020 projected sales. Granted, the analyst says there are other names down in that barrel as well, if you're willing to look for them -- Cresco (CRLBF) for one, and Trulieve (TCNNF) for another.But if these are the kind of "quality cannabis names" Hundley is urging investors to look for, it bears asking: If they're so great, why hasn't he bothered to cover Cresco and Trulieve before?The answer could be as simple as this: Because they aren't.Visit TipRanks’ Trending Stocks page, and find out what companies Wall Street’s top analysts are looking at now.
Origin House (ORHOF) has been put on the cannabis map in a big way because of the attempt by Cresco Labs (CRLBF) to acquire the company. This has unfortunately taken the focus off of the actual performance of the company, as uncertainty concerning the deal being approved weighs on the share price of Origin House for now.The most recent earnings report was a good one for the company, and when coupled with a recent decision by Weedmaps which will result in a significant reduction in cannabis sales in the California cannabis market, Origin House is positioned to benefit greatly from that action.Cresco Labs acquisition not a done dealSome investors consider the attempt by Cresco Labs as a done deal, as does management, which has stated it doesn't believe it'll fail in getting the deal done.The C$1.1 billion offer by Cresco Labs appeared to be a sure thing in the early stage of the process, but it wasn't long afterward that the Department of Justice requested more information concerning the proposed deal based upon the Hart-Scott-Rodino Antitrust Improvements Act of 1976.Why that matters is these types of requests are related to issues related to reducing competition. Even though it's being spun as not much more than a formality, in fact it could derail the deal and leave both companies as they were before the offer was made.This is why looking at the fundamentals of Origin House is important, as the assumption should be made by investors that the deal won't be allowed to go through. After all, some paid a premium price for the company based upon the idea it was going to go forward.I'm not suggesting it isn't going to be approved, as I think it has more than a 50 percent chance of being given the go ahead. But the company would take a hit if it is stopped, and investors should be prepared for the company to stand on its own merits either way.With that in mind, there's a lot to like about the future prospects of Origin House, whether it's acquired by Cresco Labs or not.California cannabis market has been a messA fallout from the policies associated with the California cannabis sector has resulted in a lot of customers going back to the black market as their source of supply.The two major reasons for this are leaving up to individual jurisdictions concerning what is allowed, and second, the enormous taxes levied against cannabis sales.Taking into account there are 58 counties and 482 incorporated cities and towns in California, it's not surprising to see the disastrous consequences of each one deciding on the guidelines and laws associated with cannabis.Not only are there different rules from city to city, but a county may have one set of rules, while the individual cities in the county have a different set of rules. It also means in many jurisdictions pot remains effectively prohibited. That's important because many people have chosen to go back to the black market for their recreational pot supply.Changing practices at Weedmaps is going to change this situation around.As for the combination of state, local, and excise taxes, that could in a number of cases surpass the 40 percent mark, dependent upon the tax burden in each municipality. Not only has that pushed users toward the black market, but also to Nevada, where overall cannabis costs are much lower.Weedmaps Weedmaps is an Internet directory that allows marijuana dispensaries and users to connect with one another.Until recently Weedmaps has allowed legal and illegal operators to advertise on the platform. About a week ago Weedmaps said that starting in the latter part of 2019, it was no longer going to allow illegal or unlicensed dispensaries on the platform. Weedmaps stated it will help unlicensed operators to go through the process of reaching compliance, but that will take some time to work itself out.Upon hearing of the decision, some have suggested it could result in as much as 50 percent of illegal sales to be slashed in California. This is a potentially huge catalyst for Origin House.The benefit to Origin HouseThe strength of Origin House in California is the distribution assets it owns. All legal cannabis products sold in California must be handled via licensed distributors.Only a distributor can transport cannabis products in the state, and they are required to ensure all of their labeling and packaging is compliant with guidelines. They also act as the tax collector for all sales in the state.So when Weedmaps announced it was going stop allowing unlicensed businesses on its platform, it means a huge swath of the black market competition will lose business to the benefit of Origin House and other distributors.Since Origin House has acquired a number of important California distribution licenses and companies in California, it is positioned to take advantage of this major catalyst, which will drive revenue up in the quarters ahead.With so much fragmentation in the California cannabis sector, this is going to be a welcome change to end-users in my opinion, and it will be a major catalysts for cannabis distributors in the state.C$12 Price TargetDown by nearly 40% from its April highs, Origin House stock rides the rollercoaster of investor sentiment. But the good news for shareholders is that this sentiment may take a turn for the better. 4-star analyst Matt Bottomley is advising his clients to buy the stock, and he believes it could hit C$12 within a year. For perspective, Origin House's stock closed at C$7.74 today, so this implies upside of about 55%. (To watch Bottomley's track record, click here)ConclusionWhile the focus on many investors has been on the potential acquisition of Origin House by Cresco Labs, it has quietly went about generating strong sales, which are going to continue to improve going forward as the huge black market in California shrinks to the benefit of Origin House.For those reasons, even if the acquisition is not allowed to go forward, the future of Origin House is very bright.At its current share price level, there isn't a lot of support remaining from the announced deal. If it doesn't go forward, Origin House will take a hit, but I see it rapidly returning to where it is at now based upon the potential associated with new sales growth coming in the latter part of 2019 and into 2020.However it plays out, I think Origin House is going to make shareholders happy.Visit TipRanks’ Trending Stocks page, and find out what companies Wall Street’s top analysts are looking at now.Disclosure: No position
The marijuana company delivered record high results thanks to strong California operations and added revenue from its Canadian business.
The U.S. cannabis multi-state operator (MSO) sector isn’t getting a lot of respect lately despite a group of stocks building a strong future. A prime example is Cresco Labs (CRLBF) trading near multi-month lows following strong Q2 results. The stock is being overlooked as the market losses focus during the dull summer months while Cresco Labs builds a solid position in 2020.Strong Q2The U.S. MSOs have multiple paths for growth. The companies can buildout existing licenses in states with approved cannabis and enter new states once cannabis is approved. A prime example is the approval of adult-use cannabis in Illinois.The actual financials are messy and a prime reason why the stock has hit a period of weakness. During Q2, Cresco Labs saw Q2 revenues surge 42% QoQ to $29.9 million. The issue here is that pro-forma revenues were $52.7 million for 55% sequential growth.Investors have to decide on whether to value the stock based on actual or pro-forma revenues. The market appears to be passing on the stock due to the regulatory approval delays considering the stock reached a high in April following the announcement of the acquisitions.Cresco Labs has a market value of $1.1 billion or something slightly below $2.0 billion on a fully diluted basis with the closing of both Origin House (ORHOF) and VidaCann. The deals were expected to close by June and now apparently won’t close until later this year.The company generated a Q2 adjusted EBITDA of $2.3 million and Cresco Labs has working capital of $128.7 million with zero debt so the company doesn’t need the deals to survive and thrive. Unfortunately for shareholders, the market sees the sector as needing these large deals to close and the regulatory uncertainty has investors sitting on the sidelines.Part of the problem could be the lack of seeing the full financials of companies that will contribute 45% of current revenues. The integration is crucial to the success and a couple of decent deals at the same time could be tricky for an unproven management team.The FutureWithout these deals closing, Cresco Labs has the Illinois market going from 5 dispensaries to 10 stores as the adult-use market opens up on January 1. The Illinois market is targeted at $2 to $4 billion in sales and alone matches some of the global cannabis markets that Canadian LPs are chasing. Cresco Labs doesn’t even have to chase this market as it just opens up for the company that will surely improve the profits of the U.S. MSOs over the Canadian peers.In addition, the company has a license in Michigan and regulatory approval to enterNew York via the acquisition of Valley Agriceuticals, LLC. Cresco Labs is poised to expand into Michigan, New York and Massachusetts with or without closing the acquisitions of Origin House and VidaCann.TakeawayThe key investor takeaway is that regulatory uncertainty is a big factor in the weakness of Cresco Labs. The company is positioned for substantial growth one way or another allowing investors to comfortably take advantage of the current stock weakness.At only $8, Cresco Labs now offers the potential for a $1+ billion business trading with a fully diluted market valuation below $2 billion.Visit TipRanks’ Trending Stocks page, and find out what companies Wall Street’s top analysts are looking at now.
Cresco Labs disclosed a net loss of $3.9 million for the quarter, compared to a net income of $1.6 million in the same quarter last year. “We delivered an outstanding quarter that reflects the leading positions we have established in some of the most attractive markets in the cannabis industry,” CEO Charlie Bachtell said in a statement.
Conference Call with Investors and Analysts to be Held at 5:00 p.m. Eastern Time Today