Cresco Labs Inc (CNSX: CL) (OTCMKTS: CRLBF) (FRA: 6CQ) has become the latest public cannabis cultivator to shutter its operations in California due to economically unfeasible market conditions.
In a news release on Monday, the multi-state operator announced plans to sell its Santa Rosa cultivation and packaging operations and a series of other manufacturing and distribution assets. Cresco Labs is yet to secure buyers for these facilities.
The state’s market has become one of the most difficult to turn a profit in within the United States. Oregon, Michigan and Colorado are a few others plagued by significant challenges.
“While California is the largest cannabis market in the world, the structural challenges — ranging from fragmented retail to price compression and the illicit market — combined with our lack of scaled footprint in the state, make it extremely difficult to generate sustainable profitability,” said CEO Charlie Bachtell.
Cresco Labs will be turning its focus to American jurisdictions it has been performing better in — like Illinois, Florida and Pennsylvania. As the cultivator and dispensary operator currently has debt exceeding US$370 million and only about US$159 million in cash, optimizing operations is essential.
The decision follows California boosting its excise cannabis tax as much as the law would permit on Jul. 1. It just ascended from 15 per cent to 19 per cent. This is taking a detrimental toll on many already struggling Golden State businesses.
In another sign of the times, Creso Labs says it is selling off its California operations. $CRLBF
It begs the question, who would be the buyer? pic.twitter.com/LlEdy00fGr
— Jeremy Berke (@jfberke) July 21, 2025
Read more: Omaha Tribe legalizes cannabis on Nebraska reservation lands
Cresco 1 of many to call it quits on west coast
The MSO is following the footsteps of major industry players like Trulieve Cannabis Corp (CNSX: TRUL) (OTCMKTS: TCNNF) (FRA: T0A) and Curaleaf Holdings Inc (TSE: CURA) (OTCMKTS: CURLF) by throwing in the towel in California.
Others such as Gold Flora, StateHouse, MedMen and Unrivaled Brands have also called it quits in recent years while countless local pot shops have given up hope on sustaining themselves.
“Even national players are waving the white flag, and local operators are feeling the pressure too,” commented marijuana payroll expert, David Dare, on Tuesday.
Legal cannabis sales in California dropped by 11 per cent year-over-year in Q1 at US$1.08 billion. This marked the most significant decline in the state’s history.
California has also been attracting considerable attention this month due to the recent ICE raids at local cultivation facilities held by Glass House Brands Inc (OTCMKTS: GLASF) (FRA: 4KF0).
Read more: TerrAscend decides to call it quits in Michigan
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