Cresco Labs stock is moving up slightly after Cresco Labs Inc (CSE:CL) (OTCQX:CRLBF) reached a binding agreement to sell two properties to Innovative Industrial Properties (NYSE:IIPR) for $46.3 million.
The whole cannabis industry might have gone through a bit of a downturn over the past few months, but most of the companies have continued to work on deals in order to further grow their businesses. In a new development, Cresco Labs announced today that it had reached an agreement with the cannabis-focused real estate investment trust Innovative Industrial Properties over two of its properties in Illinois.
According to the binding agreement, Cresco is going to sell the properties at Kankakee and Joliet for around $46.3 million. After selling, the company will then sign a long-term lease on the same properties with IIP so that Cresco can continue cultivating cannabis there. This is an important deal for Cresco since it opens up capital and also allows the company to keep cultivating on the 100,000 square foot properties. The agreement is expected to be completed in the next month.
Cresco Labs stock is up about 1% at $6.31 in the morning session. IIPR stock is up 0.50% at $95.67.
The Chicago-based company has come a long way over the years, and analysts now believe that Cresco Labs stock could well be one of the most underrated stocks in the cannabis space. Back in August, Cresco released its Q2 2019 results, and the sales figures have been quite impressive. The company generated revenues of $29.9 million in the quarter, and that reflects a rise of a staggering 263% from the prior-year period.
However, it is the acquisition of Origin House that could really propel it into the big time. The acquisition will give Cresco the opportunity to have a sales network in California, which remains the most lucrative market for cannabis in the United States.
More importantly, it will also grow the company’s revenues substantially, considering the fact that Origin House (CSE:OH) (OTCQX:ORHOF) managed to generate sales of $21.4 million CAD in its latest reported quarter. Moreover, it has 22 dispensaries and 23 production facilities, which gives it greater control over its business.
Additionally, the company has been able to generate growth without burning too much cash. It managed to generate pre-tax profits to the tune of $1.7 million, but a tax bill of $5.6 million ate into that. In this year alone, Cresco Labs stock has gained as much as 5%, and it could well be an intelligent play for the long-term investor.
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