Cannabis Stock CRLBF Gains 25% in a Month: Time to Buy, Sell or Hold?

Shares of Cresco Labs CRLBF, one of the largest vertically integrated, multistate cannabis operators in the United States, have risen 25% over the past month, driven by hopes of federal reform and a strong operational discipline.

Although the company is working on a disciplined operational strategy, sales growth remains tepid, and profitability is being weighed down by rising costs. Let’s delve into CRLBF’s fundamentals to gain a better understanding of how to play the stock amid this price increase.

Operational Discipline Drives Cresco’s Path to Efficiency

Cresco has been doubling down on initiatives that reflect a sharp focus on operational discipline. An important step in this initiative is divesting its California operations — a market hailed as the world’s largest but among the toughest for earning sustainable profits. Structural hurdles such as intense price competition, illicit operators and heavy taxation have weighed on industry profitability, prompting Cresco to step back. Yet, CRLBF intends to retain full ownership of its premium FloraCal brand, keeping exposure to California’s consumer base while reducing the drag of direct operations.

Complementing this move, Cresco recently announced another major strategic move — a $325 million debt refinancing of the company’s prior $360-million facility. While management expects this decision to extend maturities, the main motive is to reduce near-term financing pressure and enhance liquidity. This step underscores CRLBF’s commitment to shoring up its balance sheet while redirecting capital toward markets with better long-term margin prospects.

Taken together, these measures highlight Cresco’s ongoing push to simplify its business model, strengthen cash flows and improve cost efficiency. The broader industry is witnessing similar adjustments, with players like Curaleaf Holdings CURLF also exiting challenging markets such as California to redirect resources to higher-return states.

CRLBF’s Cannabis Business Under Pressure

What differentiates Cresco from its peers is that its revenues are generated solely from the United States. This geographic concentration exposes it to the challenges of a heavily regulated domestic market.

Cresco’s second-quarter 2025 revenues declined 11% year over year and 1% sequentially to $163.6 million. Although the company claims to retain “the No. 1 share position” across multiple U.S. states, restrictive federal laws and fragmented state-level regulations continue to pose challenges to operators like Cresco.

While the company continues to highlight its leading market share in several U.S. states, top-line pressures persist. Management expects third-quarter revenues to remain unchanged sequentially, citing price compression across several key markets. Profitability remains under pressure, with shrinking gross and EBITDA margins reflecting tough wholesale conditions and limited pricing power.

Cresco points to new dispensary openings and cultivation expansions as potential growth drivers, but these initiatives depend on sustaining strong cash flow conversion. This may prove challenging if revenue softness persists.

CRLBF Faces Stiff Competition From Peers

Cresco faces stiff competition from its peers — Curaleaf Holdings, Green Thumb Industries GTBIF and Tilray Brands TLRY — all of which are also pursuing similar expansion and cost-optimization strategies, making the competitive landscape even tougher.

Companies like Curaleaf Holdings and Tilray Brands are also expanding their footprints beyond geographic borders, in markets like Europe and Australia. This international exposure gives them an edge over Cresco and Green Thumb, which remain fully dependent on an increasingly saturated and fragmented U.S. market.

CRLBF Stock Performance and Estimates

Shares of Cresco have outperformed the industry year to date, as shown in the chart below.

Movements in loss per share estimates for 2025 and 2026 have been mixed over the past 30 days.

How to Play CRLBF Stock?

While Cresco’s restructuring plans highlight its strong focus on profitability, the stock remains exposed to significant domestic headwinds. President Trump’s recent comments on marijuana rescheduling have reignited optimism in the cannabis sector, but investors may prefer to wait for clearer signs before initiating or expanding positions.

Existing shareholders may consider maintaining exposure while monitoring this Zacks Rank #3 (Hold) company’s execution on its profitability roadmap.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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