Cresco Labs (CSE: CL), one of the US’s largest multi-state cannabis companies, announced today that they had completed the most arduous aspect of becoming pre-qualified to begin cultivating and processing cannabis in another U.S. state. In specific, the company announced that they were going to begin operations in Michigan.
The company has formally applied for a cultivation facility to be located in a former 100,000 square foot factory in Marshall, Michigan, with the company having been granted conditional approval to build and operate the facility pending final regulatory approval.
“We continue to execute well on our expansion strategy and leverage our professional, proven approach to win access to new markets. Entering Michigan will add another large market opportunity to our growing footprint and increase our total addressable consumer base to more than 150 million people. Michigan is one of the largest medical cannabis markets in the country with an estimated patient population of nearly 300,000 patients and is steadily moving towards implementation of an adult-use program,” said Cresco Labs CEO and co-founder Charlie Bachtell. “Pre-qualification is the most significant regulatory hurdle in the Michigan licensing process. We expect to replicate the process that has enabled us to quickly and efficiently get operational in other markets and begin making our full suite of brands available to patients wanting to experience the positive medicinal benefits of cannabis.”
Michigan, while not as attractive to cannabis companies as states such as California and Florida, still represents the 10th largest state in the country with it’s 10 million population alongside having over 300,000 registered patients in the state’s medical cannabis program. Overall, the total cannabis market size in the state between both medical use along with projected future recreational use once legalized is expected to reach $1.4 billion by 2022, as opposed to the $869 million seen in 2018.
Should the company pass final regulatory hurdles (which it’s expected that it will), Cresco Labs will have 15 production facilities alongside 21 retail dispensaries and licenses in total. Overall, Cresco Labs has 51 licenses to operate dispensaries across 11 states, including Nevada, California, Arizona, Florida, Michigan, New York, Illinois, Pennsylvania, Ohio, Maryland, and Massachusetts. The company’s products are currently being sold in over 250 dispensaries outside the companies own retail operations.
Last week, Cresco Labs announced that they were moving into the Florida market through the strategic acquisition of VidaCann, one of the largest medical cannabis providers in the state. For most multistate operators that are trying to enter states such as Florida with strong barriers to entry, these types of acquisitions are usually the preferred way of accomplishing this. “Entering the Florida market is consistent with Cresco Lab’s strategy of entering markets with outsized demand with strong regulatory structures and is an important milestone for the Company that dramatically impacts our growth trajectory and will be accretive to our earnings in 2019,” said Bachtell at the time.
Shares of Cresco Labs jumped up a significant 8 percent in today’s trading session in response to the news. Overall, share prices have continued to increase in value, surging nonstop since first going public on the market at C$6.65 per share, in comparison to its current price of C$14.95 per share.