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    CL   CA22587M1068

CRESCO LABS INC.

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Exclusive: Credit Suisse stops custodian service for some U.S. cannabis stocks - sources

05/05/2021 | 09:06pm EDT
FILE PHOTO: Logo of Swiss bank Credit Suisse is seen in Zurich

(Reuters) - Credit Suisse Group AG has told customers in recent months it will no longer execute transactions in shares of cannabis companies with U.S. operations or hold them on behalf of clients, a cannabis company executive and other industry sources told Reuters on Wednesday.

The Swiss lender was among a handful of banks that had been willing to buy and sell marijuana-related stocks for clients in the United States and hold those shares as a custodian.

Credit Suisse declined to comment.

Cannabis remains illegal under U.S. federal law, even though many states have legalized its use. This represents a legal risk for investment banks working for companies that produce or trade the drug.

Credit Suisse's compliance and risk management procedures have come under scrutiny from investors and analysts after it lost at least $4.7 billion from the collapse of Archegos, an investment firm dedicated to managing the fortune of hedge fund veteran Bill Hwang, as well as the suspension of funds linked to insolvent supply chain finance company Greensill.

The MSOS exchange-traded fund, which tracks U.S. marijuana stocks, has fallen by more than a fifth since early February. Several market players said they believed Credit Suisse's actions played a role in the selloff.

"(When) Credit Suisse pulled custodian (services) on cannabis stocks, a number of large investors in the space lost their ability to custodian the stocks," said Abner Kurtin, Chief Executive Officer of newly-floated marijuana grower Ascend Wellness Holdings Inc.

"That led to a significant selloff."

A custodian bank holds customers' securities for safekeeping, to prevent them from being stolen or lost, while also collecting dividends and handling other corporate actions. It plays an important role in helping many investors to hold shares in companies.

The weed industry has boomed over the last three years, as Canada and a succession of U.S. states, including most recently New York and New Jersey, legalized recreational use.

Credit Suisse shares are down over 20% so far this year, and the bank has said it is cutting its prime brokerage business, which caters to hedge fund clients, by about a third.

(Reporting by Shariq Khan and Matt Scuffham; Writing by Patrick Graham; Editing by Howard Goller)

By Shariq Khan and Matt Scuffham


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AURORA CANNABIS INC. -0.33% 11.94 Delayed Quote.12.64%
AUXLY CANNABIS GROUP INC. -5.45% 0.26 Delayed Quote.1.96%
CANOPY GROWTH CORPORATION 1.42% 31.44 Delayed Quote.0.38%
CREDIT SUISSE GROUP AG 0.08% 9.602 Delayed Quote.-15.77%
CRESCO LABS INC. -0.71% 13.96 Delayed Quote.11.24%
CRONOS GROUP INC. 2.08% 10.82 Delayed Quote.22.40%
HEXO CORP. 0.12% 8.02 Delayed Quote.71.73%
ORGANIGRAM HOLDINGS INC. 1.31% 3.87 Delayed Quote.128.99%
THE GREEN ORGANIC DUTCHMAN HOLDINGS LTD. -1.30% 0.38 Delayed Quote.61.70%
THE SUPREME CANNABIS COMPANY, INC. -1.39% 0.355 Delayed Quote.129.03%
TILRAY, INC. -5.59% 16.55 End-of-day quote.88.07%
TILRAY, INC. -0.80% 19.89 Delayed Quote.140.80%
TRULIEVE CANNABIS CORP. -0.65% 45.8 Delayed Quote.13.93%
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Financials (USD)
Sales 2021 842 M - -
Net income 2021 22,7 M - -
Net Debt 2021 58,7 M - -
P/E ratio 2021 203x
Yield 2021 -
Capitalization 3 778 M 3 779 M -
EV / Sales 2021 4,56x
EV / Sales 2022 2,98x
Nbr of Employees 2 700
Free-Float 56,5%
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Technical analysis trends CRESCO LABS INC.
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Mean consensus BUY
Number of Analysts 17
Average target price 23,32 CAD
Last Close Price 13,96 CAD
Spread / Highest target 144%
Spread / Average Target 67,0%
Spread / Lowest Target 28,9%
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Managers and Directors
NameTitle
Charles Bachtell Chief Executive Officer & Director
Dennis Marin Olis Chief Financial Officer
Thomas Joseph Manning Executive Chairman
Mo Dastagir Chief Information Officer
Ty Gent Chief Operating Officer
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