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

CHICAGO– In a recent move aligning with its strategic vision of optimizing its portfolio, Cresco Labs Inc., a prominent figure in branded cannabis products, has finalized the sale of its singular licensed Arizona operation, “Encanto”, to an affiliate of Mint Cannabis. The Phoenix-based Sunnyside dispensary was offloaded for a cash aggregate of $6.5 million.

Coupled with the Arizona deal, the company has also sealed a conventional mortgage on its real estate holdings in Ellenville, N.Y., for a principal sum of up to $25.3 million. This mortgage boasts an interest rate of 8.43%.

Reflecting on the decision, Cresco CEO Charles Bachtell expressed satisfaction with the company’s steps towards strengthening its core operations and elevating profitability. He remarked, “Our departure from Arizona is in tandem with our objective of emphasizing assets that present a clearer path to expansion. Additionally, procuring a conventional mortgage for our New York properties under such favorable conditions provides another prudent means of enhancing our balance sheet. This approach reduces our capital cost as we persistently bolster our overarching enterprise.”

Details of the Encanto Transaction: A concrete agreement between Cresco Labs and an affiliate of Mint Cannabis was inked on Sept. 13, 2023. Following the green light from the Arizona Department of Health Services on Oct. 17, the transaction concluded, resulting in net cash gains of $6.5 million. Throughout this process, SSC Advisors functioned as the financial consultant for Cresco Labs.

New York Mortgage Breakdown: A commercial mortgage, backed by three company-owned assets situated in Ellenville, N.Y., was solidified by the company on Sept. 26, 2023. Of the total principal amount of $25.3 million, an initial $20 million was settled at the closing. The residual principal is allocated to support upcoming capital expenditures. The decade-long mortgage has its interest rate derived from the FHLBank Boston five-year rate, with an additional 375 basis points. This formulation led to the initial rate at the closing standing at 8.43%.