Green Thumb, Cresco Show Sales Jumps, Expect More Gains AheadAugust 17, 2021
The Midwest’s two biggest cannabis producers, Green Thumb Industries (GTI) and Cresco Labs, both based out of Chicago, reported earnings in recent days that reflect the record-setting demand across some of their core markets. Cresco’s swing toward profitability—a milestone GTI has already reached—in particular helps to vindicate the scale many major cannabis operators have pursued, demonstrating that the investment required to steadily add states to the corporate footprint is paying off.
Cresco reported $210 million in sales for the three months ending June 30, up 17.7% from $178.4 million the quarter before and more than double its sales from the same period last year. Recreational sales in markets like Illinois and Michigan have now been taking place for long enough that year over year comparisons are finally meaningful. Cresco also reported its first quarter in the black, with $2.7 million in net income, up from a loss of $24.1 million in the prior quarter. The company is even healthier on an underlying basis, with an adjusted EBITDA of $45.5 million. In addition to its namesake label, Cresco’s brands include Cresco Reserve, High Supply, and Mindy’s Edibles, among others, as well as its Sunnyside national dispensary brand.
“We are hitting our stride as we enter the next phase of growth,” said Cresco CEO Charlie Bachtell. “During the quarter we continued to invest in infrastructure, operationalized new assets, and deployed our proven playbook to build top positions in the most important U.S. cannabis markets.” Noting that sales were primarily driven by organic growth in the second quarter, Bachtell added that Cresco will also soon “begin recognizing contributions from growth initiatives initiated over the last 18 months.”
Over at Green Thumb, a similar story is playing out. The company’s revenue reached $221.9 million in the second quarter of the year, up 14.1% from $194.4 million the previous quarter and up 85.4% from $119.6 million in the same period last year. With net income of $22 million in the quarter (up approximately $12 million from the three months before), Green Thumb celebrated four consecutive quarters of positive net income. Its adjusted EBITDA for the quarter was a robust $65.9 million.
These gains have been driven by a confluence of factors. Green Thumb is present in 12 states and operates its own retail locations in 11 of those. Many of these states are seeing a surge in demand as more and more retail comes online, most dramatically in Illinois, where cannabis sales totaled approximately $345 million during the second quarter and reached a new monthly high of $127 million in July. Green Thumb also recently partnered with Cann, a leading cannabis beverage brand, bringing it to Illinois and planning its expansion to other states later this year. Meanwhile, Green Thumb announced that it’s expanding into the Virginia and Rhode Island markets via acquisitions of local players.
Green Thumb founder and CEO Ben Kovler continues to see massive expansion opportunities on the horizon. “We see a lot of growth coming for U.S. cannabis, and we’re sitting inside a protected moat, given the regulatory structure,” he said in an interview with Yahoo Finance in recent days. “Currently U.S. legal cannabis sales are a $24 billion industry. We believe that will triple in the next decade. So that’s $50 billion of growth that we’re going to be investing into.”—Danny SullivanSubscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning. You will also receive the Cannabis edition as part of your subscription.