Cresco Labs Exiting California Market as Part of ‘Strategic Restructuring’  

Cresco Labs Inc. on Monday announced plans to exit the California market as
part of a “strategic restructuring” as part of a larger strategy by the
company “to strengthen its balance sheet, increase cash flow and prioritize
markets with the highest margins and long-term growth potential.”

In a statement, Cresco Labs CEO and co-founder Charlie Bachtell said that
“While California is the largest cannabis market in the world, the
structural challenges – ranging from fragmented retail to price compression
and the illicit market” combined with the company’s “lack of scaled
footprint in the state,” have made “it extremely difficult to generate
sustainable profitability.”

“Capital is increasingly precious in this environment, and our focus is on
deploying it where it earns the strongest return. … Exiting California
allows us to reallocate capital and resources to our core markets and build
out new markets where we see clear pathways for growth and shareholder
value.” — Bachtell in a press release

The Chicago, Illinois-based company indicated that it is “in active
discussions” with potential buyers for its cultivation, manufacturing, and
“select distribution operations” in California and expects to finalize a
deal “within the next several quarters.”

Cresco said it plans to retain full ownership of its FloraCal brand.