Cresco Labs Finalizes Sale of Arizona Operation and Secures Mortgage on New York Properties

CHICAGO — Cresco Labs Inc. has officially concluded the sale of its single licensed operation in Arizona to an affiliate of Mint Cannabis, marking another significant move in its strategic financial reshuffling. The sale, fetching a total cash purchase price of $6.5 million, follows the company’s ongoing objective of strengthening its foothold in pivotal markets.

Additionally, Cresco Labs secured a conventional mortgage for its real estate holdings in Ellenville, New York. The mortgage, with a principal value of up to $25.3 million, comes with an interest rate pegged at 8.43%.

Charles Bachtell, the Chief Executive Officer of Cresco Labs, commented on these developments, “The completion of our Arizona asset sale reflects our targeted approach towards accentuating our core strengths, spanning markets, stores, brands, and products. Our departure from Arizona is in tune with our intent to fine-tune our portfolio, with the emphasis on assets that offer a more significant growth trajectory.”

He added, “We’re delighted to have clinched a mortgage on our New York properties under such favorable terms. This form of non-dilutive financing stands as a prudent measure in optimizing our financial statement, paving the way for a more economical capital cost as we fortify our overall enterprise.”

Details of the Transactions:

• Encanto Sale: Cresco Labs inked the binding agreement with an affiliate of Mint Cannabis on September 13, 2023. Following the green light from the Arizona Department of Health Services on October 17, 2023, the deal was finalized, garnering net cash inflows of $6.5 million for Cresco Labs. During this transaction, SSC Advisors played the role of financial consultants to Cresco Labs.
• New York Mortgage: Cresco Labs’ commercial mortgage, backed by three of the company’s properties in Ellenville, New York, was finalized on September 26, 2023. The initial funding stood at roughly $20 million, with the residual principal earmarked for future capital outlays. The ten-year mortgage has its interest derived from the FHL Bank Boston 5-year rate, supplemented with 375 basis points, settling the initial interest rate at the closing at 8.43%.

As Cresco Labs realigns its business strategy, industry observers will be keenly watching how these transactions influence its position in the cannabis market, particularly in terms of profitability and expansion within its core markets.