Cresco’s $2 Billion Deal For Columbia Care Creates 18-Market Player

With revenues of $822 million and adjusted EBITDA of $194 million in its fiscal year ended in December, Chicago-based Cresco Labs has emerged as one of the key multi-state players driving the cannabis industry forward in the U.S.—and that was before the announcement of its pending acquisition of New York-based Columbia Care for $2 billion.

Expected to close in the fourth quarter, the transaction represents one of the largest mergers in the cannabis industry so far, surpassing, for instance, Trulieve’s $1.7 billion acquisition of Harvest Health & Recreation from last year.

The deal will make Cresco Labs into a national powerhouse, both in terms of revenue and market presence. According to the company, it will have the largest pro-forma annual revenue in the U.S. at over $1.4 billion. Columbia Care’s developed footprint will take Cresco from its current 10-state presence to 17 states plus Washington, D.C., and give it the top market share in Illinois, Pennsylvania, Colorado, and Virginia. Cresco Labs will also see its retail footprint more than double as it adds Columbia Care’s 83 stores to Cresco’s 50. Put another way, Cresco will have access to 55% of the total population of the U.S. and over 70% of the current addressable cannabis market.

Cresco CEO Charlie Bachtell said the “combination is highly complementary and provides unmatched scale, depth, diversification and long-term growth.” Cresco, whose brands include its namesake label as well as Remedi, Mindy’s, Good News, and High Supply among others, acknowledged that divestitures may be necessary in some markets to gain regulatory approval for the deal, including in Florida, Illinois, Massachusetts, New York, and Ohio.

“With Columbia Care’s strategic national footprint in the most attractive markets and Cresco’s success in execution and incredibly popular brands, we will together create the most important and investable company in cannabis,” said Columbia Care CEO Nicholas Vita.

Addressing the outlook for 2022, Vita noted, “There are remarkable catalysts on the horizon, including adult-use sales in New Jersey and growth in the medical programs in New York and Virginia. We will continue to roll out our award-winning Cannabist retail experience as we open new locations and will bring our house of brands to our strategic national footprint throughout 2022.” Columbia Care’s house of brands includes Seed & Strain, Triple Seven, Amber, and Press, with in-house and owned brands now accounting for 67% of all flower sold at Columbia Care owned dispensaries, according to the company.—Danny Sullivan

Tagged : cannabis

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