A Chicago-based medical marijuana company is spending $170 million to expand in Pennsylvania through a pair of acquisitions which include a Lancaster dispensary and a Mount Joy growing-and-processing operation.
Cresco Labs recently agreed to buy three Cure Penn dispensaries, including one here on Fruitville Pike in the former Kmart Plaza, plus dispensaries in Philadelphia and Phoenixville (near King of Prussia) for $90 million.
The Fruitville Pike store is the county’s oldest dispensary, opening in March 2018 and operating seven days a week. It has nearly 20 employees.
The Cure Penn dispensaries will join Cresco Labs’ five dispensaries operating under the Sunnyside brand, including a Wyomissing location that opens today.
“We’re continuously focused on normalizing the cannabis-buying experience,” said William Butler, Cresco Labs’ senior vice president for retail, in a prepared statement. “Our goal is for patients who prioritize their health and wellness to feel as comfortable buying cannabis products as they do visiting a supermarket or fitness center.”
The acquisition is expected to be completed by year-end. When that happens, the three Cure Penn dispensaries will become Sunnyside locations. However, they already carry some Cresco Labs products, including the Cresco, Remedi and Good News brands, as Cresco Labs is the largest wholesaler of brand cannabis products in the U.S.
Cresco Labs, a publicly held company, also recently agreed to buy Laurel Harvest Labs, including its growing-and-processing operation in Mount Joy, for $80 million.
Laurel Harvest also has a dispensary in Montgomeryville (near Lansdale, Montgomery County), a dispensary under construction in Scranton and permits to open four more dispensaries in the state. In addition, Laurel Harvest has an academic clinical research partnership with the Lewis Katz School of Medicine at Temple University, with six ongoing research projects.
Laurel Harvest unveiled plans for its $8 million Mount Joy facility in 2017. Largely due to the pandemic, the 52,000-square-foot location at New and South Jacob streets only got its initial state permit to grow medical marijuana in May.
More than 25 people work there, though construction is not complete, said Cresco Labs spokeswoman Kelly Evans.
In addition, Laurel Harvest constructed the building so it can be doubled in size, although a date for the expansion has yet to be determined. Evans declined to disclose the cost of expanding the facility. When the extra space is fully utilized, the Mount Joy location will have nearly 200 employees, Evans said.
Evans declined to say how much medical marijuana the Mount Joy facility is expected to produce a year.
Cresco Labs, founded in 2013, operates in 10 states with 20 locations for medical marijuana growing and processing plus 37 dispensaries. The company grows, processes, retails its products through its own dispensaries and wholesales its products to dispensaries owned by others.
The company is ramping up revenue rapidly through acquisitions, including deals in Florida, Massachusetts, Ohio and Maryland this year, and organically. Revenue has jumped from $128.5 million in 2019 to $476.3 million in 2020. In just the first half of this year, revenue was $388.4 million.
Profits, though, have been scarcer, Cresco Labs’ financial reports show. It had a net loss of $65.3 million in 2019 and a net loss of $36.6 million in 2020. For the first half of this year, Cresco Labs lost $21.5 million, though the second quarter was slightly in the black, with a net profit of $2.7 million.