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Trulieve and Cresco Labs Exit Markets Amidst Cannabis Industry Reshaping

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After years of rapid expansion followed by swift exits, some of the nation's largest cannabis multistate operators (MSOs) are continuing to streamline operations, with Trulieve Cannabis and Cresco Labs bowing out in the past five months.

Florida-based Trulieve Cannabis and Chicago-based Cresco Labs have exited state legal cannabis markets in recent months, reflecting ongoing efforts to fortify balance sheets as the cannabis industry anticipates federal reform and improved investor sentiment.

Pressured by a challenging macroeconomic environment and the slow pace of federal cannabis reform, MSOs have been strategically leaving challenging state markets over the past year, aiming to optimize operations in more lucrative markets.

Cresco Labs confirmed its exit from Arizona and Maryland in recent months, as part of its “Year of the Core” mandate. The company, with retail operations in seven states, reported $191 million in revenue in the third quarter, offsetting divestments.

Trulieve also took proactive steps to strengthen its balance sheet, divesting its three remaining California retail outlets and ceasing operations in Massachusetts this year. Trulieve CEO Kim Rivers highlighted the company's focus on becoming a leaner organization, well-positioned for the anticipated wave of growth catalysts.

Both companies' strategic moves align with the anticipation of significant growth catalysts, particularly the potential rescheduling of marijuana by the U.S. government, which could stimulate investor interest in the cannabis industry. The industry is also optimistic about the potential passage of the SAFER Banking Act in the U.S. Senate, offering protection to financial institutions serving state-legal marijuana businesses.

However, uncertainties loom as the House of Representatives' recent selection of hard-right Republican Mike Jonson as the new speaker raises questions about the prospects of the SAFER Banking Act in that chamber. Despite these uncertainties, support for marijuana legalization among Americans is at an all-time high, further shaping the landscape for the future of the cannabis industry.

This story was originally published by MJBiz Daily.