Cresco Labs (CSE: CL) announced on Thursday that it is exiting exclusive distributorship agreements of certain third-party branded products in California. This results in the cannabis operator lowering its revenue guidance for Q4 2021 to be between $235 million and $245 million.
“As we continue to implement localization strategies tailored to each state’s market dynamics, this decision will enable us to put our full weight behind our rapidly growing owned-brand portfolio in California, while also expanding profitability margins for our overall business,” said Cresco Labs CEO Charlie Bachtell.
Aside from shifting towards owned-brand distribution, increasing profitability is also one of the strategies that led to the company’s decision.
However, the firm reiterated that its Q4 2021 guidance for adjusted EBITDA and gross margins still remain at 30% and over 50%, respectively. It will also continue partnering with a small group of brands in the US state.
Cresco Labs last traded at $11.99 on the CSE.
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