Cresco Posts Full-Year Increase Amid Industry Price Compression
March 28, 2023Chicago-based Cresco Labs saw quarterly net revenue slip 5% sequentially to $200 million in its fiscal fourth quarter ended in December. That was also down from $217.8 million in the same period last year. Nonetheless the company set a new record for full-year net revenue at $842.7 million, up from $821.7 million in 2021.
Cresco’s weaker fourth quarter points to the intense price compression that has hit the cannabis sector over the past year. Even as revenue faltered, branded unit volume was up 24% to 17 million in the three-month span and retail transactions increased 4% to 1.2 million. The company logged $90 million in adjusted gross profit, or 45% of revenue, and a fourth quarter adjusted EBITDA of $31 million, or 15% of revenue.
“Our relentless focus on providing the highest perceived value to the consumer led Cresco Labs to have the number-one most sold branded product portfolio in the U.S. for the second straight year,” said CEO Charlie Bachtell. “Cannabis made progress on its path to becoming one of the largest consumer product categories in the country. The limited legal cannabis industry reached over $25 billion in revenue and produced almost $4 billion in state tax revenue. The current estimated regulated-plus-illicit cannabis market in the U.S. is nearly the size of the U.S. beer industry. From our front-line position, we were disappointed that federal reform did not pass late last year, but last year’s efforts have led to strong momentum for change with the new Congress.”
Cresco retained the top market share position in Illinois and Pennsylvania and achieved a number-one share in Massachusetts in 2022. The company had the best-selling branded portfolio of cannabis products in the industry, the leading portfolio of branded flower and branded concentrates, and the number-three portfolio of branded vapes, according to BDSA.
Cresco Labs’ full year net revenue of $842.7 million represented a 3% improvement year-over-year but looks better when excluding the California distribution operations it exited in 2021, which yields a 6% improvement. It set a record for branded unit volume at 61 million, up 37% year over year, as well as a record for 4.6 million retail transactions, up 15%. Adjusted gross profit hit $418 million, or 50% of revenue, and adjusted EBITDA reached $174 million, or 21% of revenue.—Danny Sullivan
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