Cresco Labs will be acquiring Columbia Care Inc. in one of the largest acquisitions ever for the cannabis industry.
The deal is valued at approximately $2 billion and will merge Cresco’s extensive product line with Columbia’s expansive retail apparatus. Once the deal is official, Cresco will have a business presence in 17 states (up from 10 before the acquisition) as well as the District of Columbia, according to Bloomberg.
“We are incredibly excited to announce this transformative transaction today at a very important time in the development of this industry,” said Charles Bachtell, CEO of Cresco Labs. “This acquisition brings together two of the leading operators in the industry, pairing a leading footprint with proven operational, brand, and competitive excellence. The combination is highly complementary and provides unmatched scale, depth, diversification, and long-term growth. On a pro-forma basis, the combined company will be the largest cannabis company by revenue, the number one wholesaler of branded cannabis products, and the largest nationwide retail footprint outside of Florida.”
Nicholas Vita, CEO of Columbia Care, signaled that he was pleased with the acquisition and his relationship with Bachtell. Vita was also excited about the acquisition’s benefits for Columbia shareholders.
“Since our founding, our mission has been to deliver the best outcome for our stakeholders, ”Vita said. “In an evolving industry, the opportunities to better achieve our mission through consolidation led us to this historic moment. With Columbia Care’s strategic national footprint in the most attractive markets and Cresco Labs’ success in execution and incredibly popular brands, we will together create the most important — and the most investable — company in cannabis. Getting to know Charlie, his team, and the culture at Cresco Labs has given me a high level of confidence in the ability to successfully integrate Columbia Care and maximize the tremendous value of the combined footprint.”
According to Cresco, the new combined company will now maintain the top market share in Illinois, Pennsylvania, Colorado, and Virginia. Cresco expects to benefit from an increased presence in larger markets with huge growth potential including New York, New Jersey, and Virginia where adult-use sales could start in near future. The Cresco/Columbia deal is also expected to create the third-largest company operating in multiple states in terms of overall market value behind Curaleaf Holdings Inc. and Green Thumb Industries Inc.
According to Cresco, the company should have annual revenues north of $100 million in eight different states by next year after the deal reaches completion. Columbia Care has maintained 131 facilities nationwide including 99 dispensaries as well as 32 cultivation and manufacturing facilities that are either fully operational or expected to come online soon.
The deal is yet another major step toward industry consolidation. Last year saw significant acquisitions including Jazz Pharmaceuticals taking over GW Pharma for $7.2 billion. Some analysts believe continued federal prohibition and unresolved issues including a lack of access to banking are fueling the series of recent acquisitions as larger businesses try to improve their market position despite needed reforms.