Cresco Labs posted a $180 million loss in 2023 as the Chicago-based cannabis multistate operator exited two state markets and saw its high-profile merger collapse.
The company’s strategy “to do more with less” also means preparing for future opportunities offered by adult-use legalization in Ohio and the hope that legalization in Florida and Pennsylvania will follow, Cresco executives said Wednesday during a quarterly earnings call.
“We’re making investments ahead of those expected conversions,” CEO Charlie Bachtell said.
Cresco shares were trading at $1.68 on Wednesday morning, down from an early 2024 peak of $2.57 and still far off the company’s all-time peak of $15.86 in February 2021.
Despite the midyear struggles, Cresco enjoyed a positive fourth quarter.
Cresco reported a fourth-quarter profit of $4.8 million on revenue of $188.2 million.
That’s a significant turnaround from the final quarter of 2022, when the company reported a $180 million loss that it attributed, in large part, to an unexplained $140 million impairment loss.
That $180 million annual loss also represented an improvement over a $215.8 million loss in 2022, though total revenue also dipped, from $842.6 million in 2022 to $770.8 million in 2023, the company reported.
The company attributed $151 million of the $180 million full-year loss to a determination that its holdings in California, Florida, Massachusetts and New York lost value, according to a regulatory filing.
It was summer 2023 when a long-planned $2 billion merger between Cresco and Columbia Care, since rebranded as The Cannabist Co., was called off.
In the months that followed, Cresco gave up entirely on Arizona and Maryland.
The merger died, in part, because the companies struggled to divest assets in Florida and Ohio, MJBizDaily reported at the time.
Those states are now central to Cresco’s strategy going forward, said Bachtell, who added that, unlike other cannabis operators, the company is not banking on U.S. marijuana reform or securing federal tax refunds.
Cresco reported no such relief from Section 280E of the Internal Revenue Code, saying instead that it will “continue to evaluate” the situation.
Bachtell said Cresco “plans to make significant investments ahead of adult use” in Florida, where the state Supreme Court has yet to decide whether an adult-use legalization measure will appear on November ballots.
The company also said it entered 2024 with $109 million in cash, cash equivalents, and restricted cash on hand.
Chris Roberts can be reached at chris.roberts@mjbizdaily.com.
