Cresco Labs Inc. has announced plans to sell its California operations.

The company says this restructuring is part of its broader strategy to increase cash flow and prioritize markets with the highest margins and long-term growth potential.

Cresco Labs reports it is in active discussions with prospective buyers interested in acquiring its California assets, including cultivation, manufacturing and select distribution operations. The company expects to finalize the transaction within the next several quarters, subject to customary closing conditions and regulatory approvals. 

Cresco Labs will retain full ownership of its FloraCal brand and continue producing and marketing the brand across key U.S. markets.

“Capital is increasingly precious in this environment, and our focus is on deploying it where it earns the strongest return,” said Charlie Bachtell, CEO and co-founder of Cresco Labs. “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. Exiting California allows us to reallocate capital and resources to our core markets and build out new markets where we see clear pathways for growth and shareholder value.”