Let’s be blunt (and that’s a huge pun, by the way): Marijuana investors are increasingly high on the prospect of a Biden/Harris administration.

This month alone, Canopy Growth (CGC) is up nearly 40%. Weed packaging firm KushCo Holdings (KSHB) is up about 15%. And Grow Generation (GRWG), a specialty retailer selling all the accoutrements to grow weed, is up about 15% as well. There are others in similar position.

There’s certainly reason to understand this budding excitement. Kamala Harris, during the recent VP debate, stated that a Biden presidency would see the decriminalization of weed at the federal level, and the expungement of criminal records for those convicted of marijuana-related crimes. Whether that actually happens – who knows? If it does, might that lead to full legitimacy for an industry that’s either an angel or a devil, depending on what state you’re in?

Whatever tomorrow ultimately brings, the fact today remains that the Holy Grail of legal weed is possibly nigh. And if so, then just maybe there’s an opportunity for the patient and risk-tolerant investor willing to take a calculated and educated gamble.

Right now, numerous marijuana stocks are trading at dirt-cheap prices, at least on a nominal basis. Mainly that’s because Wall Street’s in a position it despises: Wracked by uncertainty. No one knows who will win the White House, nor what either candidate really means for the marijuana industry. Thus, all but the most-hardcore believers in weed’s future have simply abandoned marijuana stocks and moved onto investments far less challenging to analyze.

Which means now might be the moment to take on the calculated risk that is Cresco Labs (CRLBF), the largest wholesaler of branded cannabis products. (It also runs several dispensaries under the Sunnyside shingle, and it grows some product, but that’s not the meaty part of the Cresco story.)

The company’s true strength lies in its distribution of a multitude of local brands (including its own) for manufacturers of all sorts of marijuana products who don’t have the expertise – nor want it – in navigating the regulatory affairs of individual states. The best way to think about this is the beer distributor model. When a bar, restaurant, supermarket, or mini-mart wants to load up on, say, Bud Light and Michelob, they must go through a state-licensed distributor of Anheuser-Busch products. Cresco is the marijuana equivalent. Retailers have to buy their product through a state-licensed wholesaler … Cresco.

As such, Cresco has emerged as the market leader by a long shot, selling product into more than 700 dispensaries across some of America’s most important cannabis markets, including California, Illinois, and Pennsylvania. In California, the world’s most important weed market, the brands Cresco hawks are in 75% of that state’s dispensaries. In Pennsylvania, it’s 100%. In all, the company’s footprint stretches across the country’s 10 largest cities and/or states.

And that’s likely to grow in the wake of the upcoming presidential election, regardless of who wins the White House.

Along with a presidential vote, several states have marijuana initiatives on the ballot, most prominently Arizona and New Jersey. Both are looking to legalize recreational pot. Cresco already has a footprint in Arizona with a medicinal-use dispensary in Phoenix – America’s fifth-most populous city. Recreational use approval would see a jump in the number dispensaries, with Cresco as a likely leading wholesaler supplying everything from pre-rolled joints, to edibles, to vape-related oils, and other sundry goods.

The company doesn’t have exposure to Jersey, but it has operations in neighboring Pennsylvania and New York. Thus, it’s not hard to imagine that Cresco would have interest in adding the Garden State to its roster, given that Jersey is #11 in terms of population.

At the moment, Cresco is still losing money – $4.7 million as of the third quarter, which ended in June. However, during that quarter, Cresco achieved it first ever month of positive operating and free cash flow. That’s a meaningful step forward. Moreover, the company is gaining market share in key states. In California, for instance,  the state’s overall sales grew 10% quarter-over-quarter. Cresco’s grew more than 40%.

That’s not say hiccups won’t happen. Of course they will. But for the patient, risk-tolerant investor, Cresco in the $7 range might prove to be a buy opportunity ahead of the election.

Ultimately, this is a pedestrian corner of the industry, but it’s a necessary corner. And that makes Cresco a unique, calculated gamble. It’s a bit like owning the storied pick-axe and shovel companies during the California and Klondike gold rushes. Nothing sexy about it … but everybody who wants to make a go at getting rich needs the service.


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