Cresco Labs Inc. (CRLBF) delivered first-quarter 2026 revenue of $151 million during its earnings conference call. Executives highlighted adjusted gross margins of 51% and adjusted EBITDA of $33 million, reflecting 22% margins amid market challenges.5020
Financial Highlights
- Revenue: $151 million
- Gross profit: $75 million; adjusted gross profit: $77 million (51% margin)
- Adjusted SG&A: $51 million (34% of revenue)
- Adjusted EBITDA: $33 million (22% margin)
- Cash and restricted cash: $67 million
- Operating cash flow used: $6 million
- Capital expenditures and acquisitions: $11 million, mainly for Kentucky facility
Sequential declines in wholesale (1.6%) and retail (3.1%) revenue stemmed from seasonal factors, California exit, and Michigan tax disruptions. Cultivation efficiencies boosted yields and potency, countering pricing pressures.50
Strategic Expansions
The company advanced its footprint with nine dispensaries acquired in Pennsylvania under a management services agreement, targeting 27 total stores. Two new Sunnyside dispensaries opened in Ohio, reaching eight locations. Kentucky saw its first harvest in April, with branded products launching in Q2. Cresco secured a merit-based license in Texas for future growth.50
Sunnyside stores outperform state averages by 30% in revenue per store, driven by site selection and execution. Wholesale leadership persists in Illinois, Pennsylvania, Massachusetts, and Ohio through consistent cultivation and branding.
Q2 2026 Outlook
Executives project Q2 revenue growth of about 10% sequentially, fueled by new Pennsylvania and Ohio dispensaries and Michigan stabilization. Gross margins hold at 48%-50%, with adjusted EBITDA margins near 21%. Base business revenue rises low single digits, excluding new sites. SG&A increases modestly from expansions and M&A.50
Federal Rescheduling Impact
Federal cannabis rescheduling to Schedule III validates medical use and could eliminate 280E tax penalties. About 50% of revenue qualifies as medical. Management monitors developments, including manufacturing applications, while maintaining operational readiness. No immediate changes occur, but long-term profitability improves.50
Q&A Key Points
Pennsylvania deal proves accretive, positioning for adult-use. Michigan (<3% of footprint) stabilizes post-tax issues. M&A focuses on retail partnerships via Sunnyside model. Rescheduling strategy emphasizes caution amid evolving guidance.50
Charles Bachtell, CEO, underscored Q1 as a growth foundation, with 11 new dispensaries year-to-date and leverage from emerging markets like Kentucky and Texas. Federal reforms enhance long-term value.50
