It is no longer surprising when United States cannabis companies report a great quarter. The marijuana boom that began during the covid-19 pandemic lifted earnings and revenue for pot companies, and the continuing growth of state marijuana laws has helped this momentum keep going. Though the federal prohibition on marijuana poses some difficulty, that is not preventing these firms from expanding.
Green Thumb Industries and Cresco Labs (OTC:CRLBF) both recently had another great quarter. Let me tell you why I believe these two cannabis stocks are going to be millionaire makers.
1. Green Thumb Industries
Green Thumb had revenue growth of 85% y/y to $222 million in Q2 which ended June 30. The firm attributed this to its 58 retail stores. Most revenue was from key markets such as Pennsylvania and Illinois, where it has 16 and nine retail stores, respectively.
Illinois, a relatively new market (which legalized usage in Jan. 2020), has given close to $753 million in sales through July. It is on its way to breaking its record of $1 billion in sales last year for the entire year. Illinois being the company’s home state is another advantage. The company also gone into the Virginia cannabis market by buying 100% of cannabis producer Dharma Pharmaceuticals. In July, the state made recreational cannabis legal, but retail sales will not start until January 1, 2024.
The revenue growth also led to the fourth consecutive profitable quarter — reaching $22 million, compared to a $13 million net loss in the year-ago time frame. It left the quarter with cash and cash equivalents of around $359.2 million and total debt outstanding of $198 million. With increasing revenue and profits, it is in a great financial standing to remove its debts. It holds licenses for 111 stores in 14 United States markets.
2. Cresco Labs
Cresco has also been benefiting from the growing Illinois cannibas market. Its Q2, which ended on June 30, saw a large 123% y/y increase in revenue to reach $210 million. The company’s revenue, which was produced from 33 stores during this quarter, grew to reach $101 million, which is up 157% y/y. Much of the credit goes to its Sunnyside platform. Cresco has 11 Sunnyside stores in the state of Illinois.
The firm reported adjusted earnings before taxes, interest, depreciation, and amortization, of around $45 million and net income of around $2.7 million for this quarter, compared to the loss of $41 million in the second quarter 2020. Though Cresco does not have a large nationwide presence yet, it is in a stable spot to keep expanding as more states make marijuana legal. It left the second quarter with cash around $131 million and debt of around $189.4 million.
Author: Blake Ambrose