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Marijuana Stock Cresco Labs' Revenue Soars 253%

Joe Tenebruso, The Motley Fool

As one of the largest dispensary operators in the U.S., Cresco Labs (OTC: CRLBF) is capitalizing on the cannabis boom .

Cresco's revenue surged 253% year over year to $29.9 million in the second quarter, fueled by solid sales growth in its existing operations and expansion into new markets.

"We delivered an outstanding quarter that reflects the leading positions we have established in some of the most attractive markets in the cannabis industry," co-founder and CEO Charles Bachtell said in a press release. "We are seeing accelerating revenue growth driven primarily by market share gains and strong trends in registered patients in our established markets of Illinois and Pennsylvania, as well as our expanded presence and distribution in California."

A cannabis leaf on top of a $100 bill

Cresco Labs' marijuana sales are booming. Image source: Getty Images.

Better still, Cresco's profit margin is improving as it expands. The marijuana company's operational gross profit, before the impact of biological assets accounting, came in at $14.4 million. That represented 48.1% of Cresco's revenue, up from 44.6% in the first quarter and 29.6% in the year-ago period. Management said the gains were driven by efficiencies in cultivation, processing, and packaging.

"As we scale our operations in our established markets, we are seeing the positive impact on gross profit margin that we projected," Bachtell said.

Cresco is using acquisitions to accelerate its growth. The cannabis company said it expects its pending merger with Origin House (OTC: ORHOF) to close in the fourth quarter. Origin House owns one of the few cannabis distribution licenses in California. When the deal closes, Origin House's license will permit Cresco to distribute its cannabis products to more than 500 dispensaries in California.

Cresco also recently acquired medical cannabis dispensary operator VidaCann. The deal will help Cresco expand into Florida's legal marijuana market.

In part because of expenses related to these acquisitions and others, Cresco Labs' earnings before interest, taxes, depreciation, and amortization ( EBITDA ) -- excluding the impact of biological assets -- declined 11% year over year to $2.3 million. Still, Bachtell said investors should expect these investments to bear fruit in the years ahead.

"As we continue to capitalize on the strong organic growth trends in our current markets and complete our pending acquisitions of Origin House and VidaCann, we expect to deliver continued improvement in revenue and profitability, resulting in further value being created for our shareholders," Bachtell said.

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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Origin House. The Motley Fool has a disclosure policy .

This article was originally published on Fool.com