“We truly established ourselves as the largest wholesaler of branded cannabis products in the industry": Cresco Labs CEO

Charlie Bachtell, Cresco Labs CEO joins the Yahoo Finance Live panel to discuss their latest earnings report and the future for the cannabis industrry.

Video Transcript

ZACK GUZMAN: Welcome back to "Yahoo Finance Live." Checking in on the latest financial results from one of America's largest cannabis companies, Cresco Labs reporting the latest results this morning. And interesting numbers to dig into here as we got record revenue and EBITDA in their fourth quarter.

The company reported revenue of $162.3 million, that topped expectations, and also reported adjusted EBITDA of about $50 million, also ahead of expectations. And those updates come as New York apparently closes in on a deal to legalize marijuana for adults above the age of 21. Of course, Cresco Labs one of the companies already operating there for medical marijuana.

And happy to bring on with us here today the CEO of Cresco Labs, Charlie Bachtell joins us once again. Charlie, good to be chatting with you, man. I guess we'll just start with the results here in the quarter because not only did you top expectations in those two numbers I walked through, but also same-store sales growth pretty noticeable there as well. So talk to me about what you saw in the quarter as we've seen continued demand across the sector.

CHARLIE BACHTELL: Zack, thanks for having me. It's good to be back Yeah, we were happy to be able to report these Q4 results today. It's a good story to tell. 2020 was an incredibly strong year for us, over 270% growth year-over-year. We've truly established ourselves as-- as the largest wholesaler of branded cannabis products in the industry.

It was also nice, BDS Analytics, which is an analytics company that covers the space, identifying Cresco as the number one selling brand of cannabis in the country. So a lot of positives, happy to meet and beat expectations. And it's-- it's a good place to start 2021 from.

ZACK GUZMAN: And you guys, I mean, we-- last time we had you on the show, we were talking about your expansion into Florida. We'll we talking about New York in a second. But I mean, when you look at how you guys differentiate from the competitors, it's interesting to see Curaleaf, one of your US competitors, looking abroad. You got Green Thumb kind of digging in to drinks here with their partnerships. How do you look at Cresco as maybe differentiating from some of the other cannabis companies that are growing here in the US?

CHARLIE BACHTELL: Sure. I think it goes back to even the fundamentals of the way that we approach the industry, very strategic geographic footprint, so it's strategic breadth. We like having top three market share in the market shares that we're in. That depth is very important. And then we've always prioritized those middle two verticals of the value chain, which is branded products and distribution of those branded products.

So a very traditional CPG approach to the space. That has been a differentiator for us in the peer set. We definitely are intent on really growing our brands and making sure that they get into as many retail stores as possible, not just the retail stores that we own. So it's-- it's really good to be able to show the value of that business model and thesis, and also this track record of execution that we're displaying.

ZACK GUZMAN: Well, one of those markets that you're in already perhaps looking to expand to recreational use, that being New York. You guys operator there in a medical capacity. But it sounds like, Governor Cuomo talking yesterday, that they're in the final innings of closing a deal there. Of course, we have heard that before.

But optimistic the deal could come through to legalize for adults over the age of 21 by the April 1 budget deadline. So I mean, if that were to happen, how quickly do you think Cresco Labs would be able to ramp up locations there in that state, because we know it takes a little bit of time for things to work through in the logistics end, the legal side of the business? But-- but what's the outlook for you if that is the case?

CHARLIE BACHTELL: Fortunately for us, you know, just at the very outset, incredibly encouraging to see the development and the progress that's being made in New York on the issue. It somewhat mirrors the progress in the conversations that we're seeing at a federal level too. But as it relates to New York, as you said, we've seen this over the last couple of years they've gotten close in getting this across the finish line. It looks like this is going to be the year that it happens. We're very encouraged by it, but very excited to see the final language of the bill too.

As far as ramping up, this is where it really does fit into our sweet spot here. This is what we do at Cresco. We know how to-- we know how to build facilities. We know how to grow the product. We know how to open up retail stores. We know how to bring-- bring product to-- to consumers. It's-- it's part of the track record of success.

We've been the first to sort of make it through those very similar stage gates in Pennsylvania, in Ohio. Even in Illinois here, we're the-- we're the first, and still only, operator that's been able to open up all of our eligible stores. So that-- that ability to really take advantage of the opportunities that we have in our portfolio is-- is a strength of ours, so we're excited about it.

ZACK GUZMAN: And lastly, we also-- I mean, that's the excitement on the East Coast in terms of New York perhaps legalizing. But federally, we once again saw the Safe Banking Act introduced. That would change the banking laws around companies like yours to access capital and change the laws on that side.

We've seen that before as well, hasn't gone much of anywhere in getting passed outside of the House. Talk to me about how that might change things as well, because I'm sure you'd take either one at this point. But how would it change maybe how you guys operate as a company in putting some of your capital to work?

CHARLIE BACHTELL: It's a great question. And we're optimistic that we're going to get both. So it's-- it's really a potential-- potential great story here that will develop in the next few weeks. But Safe, for sure, it has implications for organizations like ours. Cost of capital-- access to capital, cost of capital have always been sort of really-- really big issues that this industry has had to deal with.

And you're talking about the fastest-growing industry in America, over $17 and 1/2 billion worth of sales last year, 300,000-plus individuals are actually employed in the space. And we're doing it with one hand tied behind our back. We don't have access to traditional banking opportunities.

So for us, it'll bring down cost of capital, which is a big unlock. It'll allow us to invest more in infrastructure, and, again, keep the industry developing the way it is. I think it's also very important to note it's an incredible unlock for the future development of the broader industry too. As this industry is developing on a state by state basis, inclusivity and diversity is a big part of where the adult use side of this industry is going.

And access to capital for those smaller startups is going to be a gating issue for them to get into the space. So access to small business loans, that seed capital to actually open more doors, not only is it a requirement for those new entrants, it's also an unlock for a company like Cresco that is wholesale focused and sees that as potential new partners that we'll be able to sell into.

ZACK GUZMAN: All right, well, we'll be watching for either one of those updates. Got to have you back on. But nonetheless, even without them, still able to top expectations in the latest quarter. Cresco Labs CEO Charlie Bachtell, always love having you on. Thanks again for joining us today.