Cresco Labs (CSE: CL) announced this morning that it would be entering a sale and leaseback arrangement for two of its properties, following a trend seen as of late within the US cannabis sector as firms search for sources of funding. Cresco will be selling two properties in Illinois, locating in Joliet and Kankakee, to Innovative Industrial Properties (NYSE: IIPR).
The move is unsurprising for Cresco Labs, who has been on an acquisition spree as of late that has had the effect of draining company funds. The latest acquisition for that of Tryke Companies in Nevada, announced earlier this month, requires US$55 million in cash alone to complete. That deal was large enough that Cresco announced an associated financing just to pay for the transaction.
Under the terms of the leaseback, Cresco will sell the two properties for a combined $46.3 million. The agreement will also see certain funds be allocated for tenant improvements at the Kankakee facility, however a budget was not given within the press release.
A portion of the proceeds will go towards developing the facilities, while some will also go towards developing the retail dispensary network of Cresco within the state of Illinois. The Illinois market, which goes recreational in January 2020, is expected to be approximately $2 to $4 billion in size.
Cresco Labs closed yesterdays session at $8.29.
Information for this briefing was found via Sedar and Cresco Labs. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
