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In one of the largest deals in the U.S. cannabis space, cannabis producer Cresco Labs Inc. is set to acquire its rival Columbia Care for $2.1 billion. Once the deal is finalized, Cresco Labs will become the new leader in North American Cannabis.
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“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,” Cresco Labs CEO Charles Bachtell said in a statement. “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.”
“Since our founding, our mission has been to deliver the best outcome for our stakeholders,” Columbia Care CEO Nicholas Vita added. “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.”
Key transaction highlights of the deal
- The deal gives Cresco the largest pro-forma revenue in cannabis at over $1.4 billion.
- Strategic footprint comprising of 18 states, with the combined company covering 10 of BDSA’s top-10 largest and fastest growing markets by 2025, and representing approximately 55 percent of the U.S. population.
- Large diverse retail footprint of over 120 retail stores across 18 markets, representing the number two retail footprint of all MSOs, and the number one footprint excluding Florida.
- Independently the two companies are already leaders in primary cannabis markets, but will now have a foothold in those ready to takeoff, including New York, New Jersey, Virginia, Pennsylvania, Ohio, Maryland, and Florida.
- According to BDSA, the deal strengthens market share in every major category — branded flower, concentrates, and vapes — and will remain in the top five for edibles.
- Cresco Labs’ 50 current Sunnyside retail stores have average annualized revenue per store of over $11 million, the highest of any scaled national operator in the industry.
- On a pro-forma basis, the newly formed company expects to have annual revenues in excess of $100 million in 8 different states by 2023 as the combined company increases depth across other markets and diversifies its revenue base.
- Increased retail revenue mix to 65 percent of total, from 47 percent today (for Cresco standalone), increasing vertical integration and scale to drive profitability improvement.
According to Benzinga, Columbia Care’s stock has risen about 9% this year but is down nearly 70% since it started trading in 2019. Cresco Labs shares have slumped 63% from a 2021 peak.
Cresco is scheduled to report its fourth-quarter financials on Wednesday, while Columbia Care postponed its earnings from last week to this Thursday.
