The marijuana industry has been booming even during a global pandemic. Marijuana was deemed an “essential item” during lockdowns in Canada and the U.S., which drove cannabis sales through the roof in both places — U.S. legal cannabis sales grew 46% year over year to $17 billion in 2020…
Sales are on the rise this year, too, driving revenue and profits for cannabis companies. The U.S. cannabis industry, in particular, has been performing exceptionally well compared to its Canadian counterpart. Among the U.S. companies, Illinois-based Green Thumb Industries (OTC:GTBIF) and Cresco Labs (OTC:CRLBF) are my top picks at the moment. Both performed well in their most recent quarters, showing triple-digit revenue growth.
There’s also one Canadian pot company, Canopy Growth (NASDAQ:CGC), that has been standing out from its peers as well — mostly because of its strategic decision to partner up with U.S. beverage giant Constellation Brands, which is keeping its pockets full. Let’s take a look at why these companies have the potential to be millionaire makers.
1. Green Thumb Industries
Green Thumb’s exceptional performance continued in its first quarter of 2021, with revenue up 89.5% to $194.4 million, driven by higher growth from all 12 states in which it operates. Increased foot traffic in its 56 retail stores and 13 new store openings during the quarter added to this remarkable performance. Higher revenue and a dip in selling, general, and administrative expenses to $59 million (30% of total revenue, down from 44% in Q1 2020) led to another quarter of positive adjusted earnings before interest, tax, depreciation, and amortization (EBITDA).
Positive EBITDA determines how well a company is handling its operating expenses, while net profits are its earnings after all the deductions. Green Thumb achieved both, recording an adjusted operating EBITDA of $71 million (up from $25.5 million in the year-ago period) and net profit of $10 million (compared to a net loss of $4.2 million in Q1 2020).
Management noted that the bulk of revenue growth came from the Illinois and Pennsylvania markets. In Illinois, its home state, recreational cannabis only became legal in January 2020. Adult-use sales alone are expected to total $1 billion in the state in 2021. Recreational cannabis is illegal in Pennsylvania, but efforts to legalize it are ongoing.
Green Thumb also expanded into the Virginia market by acquiring 100% of Dharma Pharmaceuticals, which will allow it access to one of five vertical licenses in the state. Virginia has legalized recreational cannabis starting in July, but retail sales won’t begin until Jan. 1, 2024.
2. Cresco Labs
Illinois-based Cresco Labs also benefited from legalization in its home state, which is evident from its recent first-quarter results ended March 31. Revenue was up 169% year over year to $178 million, driven by expansion in both retail and wholesale. Retail revenue from 24 stores came in at $83 million, a surge of 193% from the year-ago period, while wholesale revenue also recorded a 151% year-over-year increase to $96 million.
Another quarter of positive adjusted EBITDA — $35 million — marked an impressive jump from a loss of $8.5 million in the year-ago quarter. The company isn’t profitable yet, but with…
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