Beacon Securities analyst Russell Stanley has dropped his target on US cannabis multi-state operator Acreage Holdings (Acreage Holdings Stock Quote, Chart, News CSE:ACRG.U) but he said in a new update to clients on Tuesday that the company’s recent moves to cut costs and improve profitability are prudent given the current economic environment. New York-based Acreage, which has cultivation, production and retail operations in the US including interests in 20 states, announced last Friday a number of measures aimed at addressing the current COVID-19-influenced business environment along with more cannabis-specific trends and “other uncontrollable factors that have greatly shifted the cannabis landscape,” according to management. The company has furloughed 122 employees from both the corporate office and field operations, temporarily closed some operations including a dispensary in Maryland and one in North Dakota, closed wholesale operations in Iowa, and closed its Form Factory operations in California, Oregon and Washington. Acreage has also converted its dispensary in Queens, NY, to a delivery hub and terminated the pending acquisition of a dispensary in Rhode Island. As well, Acreage said it will be terminating the planned acquisition of Deep Roots Harvest, a private Nevada company which was set to be bought for US$120 million including US$20 million in cash and US$100 million in stock. CEO Kevin Murphy said despite the difficult times, he is optimistic about the US cannabis industry and about Acreage, in particular. “But as a result of the COVID-19 pandemic, we have made the very difficult decision to furlough several of our employees and close certain facilities while we navigate through the crisis. Additionally, we withdrew from certain agreements with Deep Roots and Greenleaf as circumstances have materially changed. These bold measures will help to ensure that we emerge from this very challenging situation stronger than ever before,” Murphy said in a press release. In his commentary, Stanley said terminating the Deep Roots buy was a good move, as the near-term disruption in Nevada (where cannabis companies are now operating as delivery-only during the COVID-19 era) and lingering uncertainty around new licenses and ownership requests in the state made the acquisition more dicey. “We view the initiatives as sensible given the company’s balance sheet as well as the current market/regulatory environment. The termination of the Nevada and Rhode Island transactions alone conserve a combined $30 million in cash, and we believe that the temporary closures were focused primarily on markets that were underperforming, but may have good long-term potential that can be monetized at a later date.” The analyst has reduced his forecasts and is now calling for fiscal 2020 GAAP revenue of $157 million (was $179 million) and EBITDA of negative $64 million (was $60 million) and for fiscal 2021 GAAP revenue of $387 million (was $470 million) and EBITDA of $68 million (was $92 million). (All figures in US dollars unless where noted otherwise.) Correspondingly, Stanley reiterated his “Buy” rating but dropped his price target from C$5.25 to C$4.25, which at press time represented a projected 12-month return of 139 per cent.