Cresco Labs Reports Q2 2024 Financial Results

LOS ANGELES- Cresco Labs Inc. has released its financial results for the second quarter of 2024, showcasing significant improvements in profitability and maintaining strong market positions across several states. Key highlights from the report include:

• Revenue: $184 million
• Adjusted EBITDA: $54 million, reflecting a 33% year-over-year increase
• Adjusted EBITDA Margin: 29%, an 880 basis point improvement
• Operating Cash Flow: $17 million
• Free Cash Flow: $11 million

The company has retained its leading market share in Illinois, Pennsylvania, and Massachusetts, underscoring its competitive edge in these key markets. Cresco Labs also announced a new tax position, anticipating an estimated $65 million in cash savings for 2024, despite taking a $61 million charge this quarter related to its tax adjustments.

Cresco Labs’ Chief Executive, Charles Bachtell, highlighted the company’s optimism about ongoing cannabis reform and its preparedness for industry changes. “The pace of [cannabis] reform challenges even the most patient of us,” Bachtell noted, expressing confidence in the company’s future positioning.

The potential reclassification of cannabis to Schedule III, as proposed by the federal government, could significantly impact the company’s tax obligations. This reclassification would eliminate the constraints of the 280E tax rules, which currently prevent cannabis businesses from taking standard business deductions.

Despite reporting a quarterly loss of $51.18 million, which widened from a $2.06 million loss in the same period last year due to the tax charge, Cresco Labs demonstrated robust operational performance through its Sunnyside dispensaries. Revenue remained steady at approximately $184 million, slightly below the FactSet consensus estimate of $184.8 million.

The company’s stock has risen 8% year-to-date, outperforming the AdvisorShares Pure U.S. Cannabis ETF, which has seen a 3% decline.

Cresco Labs’ strategic focus on profitability and market expansion, coupled with anticipated regulatory changes, positions the company for continued growth in the evolving cannabis industry.