Cresco Labs M&A
Cresco is a LONG
CRLBF announced today the closing of the Company's previously announced acquisition of Laurel Harvest Labs in P.A. Laurel Harvest is one of eight original Chapter 20 licenses in Pennsylvania. As the CEO said, "Between the acquisition of Laurel Harvest and the previously closed Cure Penn acquisition, we are executing our strategy of strategic breadth and depth, focused on the most important states, and positioning ourselves to capitalize on the eventual expansion of the cannabis program in Pennsylvania. We are tailoring our strategy to the unique dynamics of each state to maintain our leading market position and increase profitability. It is imperative for us to maximize our retail presence and add a second cultivation facility to optimize product quality, assortment, and accessibility to maintain the state's number one wholesale market share. We're very excited to further develop the research platform with Temple University as a key component of our mission to normalize and professionalize the industry –a responsible industry creates a respectable industry which, in turn, creates a robust cannabis industry."
What the Company acquired:
- Approximately 52,000 sq. ft. of indoor grow/processing space
- Foundation for an additional 52,000 sq. ft. of indoor cultivation space
- One operational dispensary in Montgomeryville
- A second dispensary in Scranton is currently under construction
- Ability to open an additional four dispensaries throughout the state
CANADIAN EXCHANGE CREATES NEW TIER
The largest MSO's are traded on the Canadian Securities Exchange instead of the New York Stock Exchange because of federal illegality. However, we hear that the NYSE is just waiting for a change at the federal level and is not opposed to listing U.S. companies. The Canadian Securities Exchange is creating a "senior tier" of companies on the exchange, a move that may help liquidity of the largest MOS's. According to the article, American cannabis companies make up about 80% of the CSE market cap. In theory, this would likely make it easier for U.S. cannabis companies to access cheaper capital and boost their liquidity, but it's only temporary; the first chance these companies have to list in the U.S., they will.
Mexico to take another shot?
Three years ago, Mexico's Supreme Court ruled that the country's prohibition of cannabis use by adults was unconstitutional, but legislative efforts to create a regulated recreational market have stalled. According to advocates tracking the issue, the Senate has been circulating a draft bill in recent weeks similar to legislation passed by the chamber last year. Senate Majority Leader Ricardo Monreal Ávila of the ruling MORENA party has recently indicated that legalization is a priority. Last June, the country's top court issued an 8-3 ruling reiterating that the prohibition of recreational use is unconstitutional. If Mexico finally enacts legalization, it would potentially create the most significant legal cannabis market in the world. The country's population of roughly 130 million is more than triple that of Canada. It's also likely to increase pressure on the U.S. to push legalization forward. If the Senate passes the bill, that would likely kick it to the Chamber of Deputies, which passed its legalization bill earlier this year. However, that legislation was never taken up by the Senate. It remains to be seen whether the two chambers will eventually agree on the best path forward.
