Beacon Securities analyst Russell Stanley likes the way that Cresco Labs (Cresco Labs Stock Quote, Chart, News CSE:CL) is firming up its industry leading market share in its home state of Illinois.

In a corporate update to clients on Friday, Stanley reiterated his “Buy” rating and C$24.00 per share

price target for Cresco, saying that the stock is currently cheap compared to its cannabis sector peers.

Chicago-based Cresco Labs, which has interests across 12 states and includes 29 dispensaries and licenses for up to 62 in total, announced on Friday that it had entered into a sale and leaseback agreement with cannabis REIT Innovative Industrial Properties involving Cresco’s cultivation and manufacturing facilities in Joliet and Kankakee, Illinois.

The deal will see Cresco sell the two properties to IIP for $46.3 million and then enter into a long-term, triple-net lease agreement with IIP for the properties. (All figures in US dollars unless where noted otherwise.)

The company says proceeds from the deal will go towards Cresco’s expansion plans for Illinois and follows on the announcement last week of a C$73.5-million bought deal also confirmed as supporting Cresco’s Illinois plans.

“This sale-and-leaseback agreement with IIP represents a non-dilutive capital solution for Cresco Labs that will support the expansion of our Illinois operations in preparation for the legalization of adult-use cannabis on January 1, 2020,” said Cresco Labs CEO and co-founder Charlie Bachtell in a press release.

Stanley says that the new deal is a positive for the stock and for the company, which already owns and operates five dispensaries in Illinois (the state maximum and representing five of a total of 55 statewide), with the legalization of adult-use to potentially allow for five more Cresco retail locations.

“Cresco is unique for having three cultivation/manufacturing operations in Illinois, which has helped it develop an industry-leading 28 per cent share of the state’s wholesale market, with 100 per cent penetration of Illinois’ third party-owned dispensaries. We therefore view this transaction positively as it supports continued expansion of the company’s strong wholesale and retail positions in the sixth largest state in the US,” writes Stanley.

The analyst also notes in his update that directors of the company have been buying shares of CL, something he views as a positive, as well, as it shows confidence from insiders. Stanley says that Cresco is currently trading at approximately 5.0x his fiscal 2021 EBITDA estimate, which amounts to a 16-per-cent discount to the 5.9x average of its US multi-state operator peers and a 26-per-cent discount to the 6.7x average among its broader cannabis sector peers.

Stanley thinks that Cresco will generate fiscal 2019 revenue and EBITDA Net non-controlling interest of $155 million and $16 million, respectively, and $747 million and $186 million, respectively in fiscal 2020.

Looking ahead, the analyst sees potential catalysts for the stock in progress on the Origin House transaction, the closing of announced acquisitions in Florida, Massachusetts and New York, the third quarter financials due in November and additional M&A and buildout news.

Stanley’s C$24.00 target represented a projected 12-month return of 191 per cent at the time of publication.