Cresco Labs (CL) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue reached $151.3 million, with $77 million in adjusted gross profit, $33 million in Adjusted EBITDA (21.7% margin), and a net loss of $17 million, reflecting efficiency gains and a solid baseline for growth initiatives.

• Maintained leading wholesale market share in multiple billion-dollar cannabis markets, supported by a strong brand portfolio and 77 operating retail locations as of March 31, 2026.

• Strategic expansion included entering a management agreement for nine new dispensaries in Pennsylvania and opening two new stores in Ohio, increasing the total footprint and positioning for future adult use opportunities.

• Secured a conditional Texas Compassionate Use Program license and began revenue generation in Kentucky, with Kentucky shifting from investment to revenue generation after first harvest in April.

• Federal rescheduling of medical cannabis to Schedule III is expected to benefit the business, particularly through the removal of 280E tax constraints.

Financial highlights

• Q1 2026 net revenue was $151.3 million, with adjusted gross profit of $76.7 million (50.7% margin) and adjusted EBITDA of $32.9 million (21.7% margin).

• Net loss for Q1 2026 was $17 million.

• Adjusted SG&A was $51 million (33.7% of revenue), reflecting investments in growth initiatives and offset by productivity gains.

• Cash, cash equivalents, and restricted cash totaled $67 million as of March 31, 2026.

• Free cash flow for Q1 2026 was negative $13.2 million.

Outlook and guidance

• Q2 revenue expected to increase approximately 10% sequentially, driven by new dispensaries and market stabilization.

• Gross margins anticipated to remain between 48%-50%, with Adjusted EBITDA margins near 21%.

• SG&A expected to rise modestly due to new store openings and M&A activity.

• Management expects to benefit from the reclassification of medical marijuana to Schedule III, which should eliminate Section 280E tax impacts on medical operations.

• Growth initiatives in Kentucky and Texas expected to scale over time, with Kentucky's contributions modest in 2026 but growing into 2027.