Cresco Labs Inc (CRLBF)

[FUNMAN]

We all agree (See Blue) Cresco Labs Files Shelf Registration for Up to $1 Billion in Financing
The company could sell debt securities, equity, warrants, or a combination of some or all.

To: ignatiusrielly35, '$5.95akadawson-m', and JohnCM:

IMO All of us know what a shelf registration is; it's the legal filing allowing a company to raise money. The difference of opinion is over why are they doing it?

With USA legalization on the near term horizon, the huge amount of new money needed to expand new and existing cultivation, manufacturing, and retail facilities into new and existing states is going to be overwhelmingly huge in terms of scope of new legalized Medical states only and Rec Legal states too.

CRESCO is laying the financial groundwork to grow rapidly. They cannot grow in leaps and bounds without the money.

CRESCO will pay a premium to acquire competitors or grow the less costly, slow and hard way by growing organically.

CRESCO's history tells us to plan for M&A's.

They will definitely do it.

Plan for the dilution.

Now I understand, "dilution" is a scary term to a lot of people.

IMO there is good and bad dilution.

Dilution to keep the lights on is bad dilution.

Dilution to expand and make more money is good dilution.

This filing represents good dilution. - FUNMAN

By: Eric Volkman
Mar 1, 2021 at 11:24PM

https://www.fool.com/investing/2021/03/01/cresco-labs-files-shelf-registration-for-up-to-1-b/

Cresco Labs (OTC:CRLBF), the ambitious multi-state operator (MSO) headquartered in Illinois, is gearing up to raise a boatload of cash. The marijuana company intends to issue up to $1 billion in new securities, it revealed in a shelf registration statement filed on Monday.

A shelf registration statement is essentially a document indicating a company's intent to float new debt, equity, or a combination of the two. In its Monday filing, Cresco wrote that it might issue one, some, or all of several different types of funding instruments, including subordinate voting shares (possibly combined with warrants) and debt securities.

Such a move has become typical for cannabis companies, as they often struggle with financial losses and cash flow drain. The most recent trend in equity fundraising is the issuance of "units," which consist of packages of stock and warrants bundled together. This theoretically makes the issue more attractive to investors than a straightforward stock flotation.

While Cresco Labs has had much success in its native state (in which recreational marijuana was legalized at the beginning of 2020), it consistently posts bottom-line losses. Meanwhile, the company aims to keep expanding its footprint throughout the U.S., and such expansion will not come cheap.

Last month, for example, it closed a deal for four new dispensaries in Ohio; it now owns the maximum five stores allowed by state law. Also in February, it was awarded a recreational marijuana license in Arizona, and since it has only one of its Sunnyside dispensaries in the state it's surely eager to build out its network there.

On Monday, Cresco Labs stock closed 1.5% higher, lagging behind the nearly 2.4% gain of the S&P 500 index.

ignatiusrielly35
Monday, 03/01/21 10:18:42 PM
Re: FUNMAN post# 2594
Post # 2595 of 2601

They are not going to raise any significant money unless it is for M&A purposes. They are already cash flow positive and it will only get better from here. A shelf registration is not an offering and neither does it necessarily indicate a specific intent to do an offering.

'$5.95akadawson-m'
No reason to dilute unless they're buying something. Iggy is right.