Cresco Labs Will Buy Columbia Care, Creating A Cannabis Industry Giant

Chicago-based Cresco Labs on Wednesday announced it had agreed to buy New York-based Columbia Care for a whopping $2 billion. The deal combines one of the largest publicly traded cannabis firms in Cresco with another powerhouse multistate cannabis company with 99 dispensaries and 32 cultivation facilities in 18 states.

Together, the two companies boast 180 cannabis facilities, about 130 of which are dispensaries. Pending regulatory approval, the deal expected to be finalized before the end of the year, forming the world’s largest marijuana company by revenue.

Cresco CEO Charlie Bachtell during a conference call Wednesday said the company’s full-year revenue for 2021 reached $821.7 million. Columbia Care earned $460 million revenue in 2020, according to financial reports, and the company is expected to announce its 2021 earnings on Thursday.

The acquired assets will operate under the Cresco brand. Bachtell said Wednesday that buying Columbia Care will allow Cresco to leverage its cultivation, production and brand performance across a “much wider footprint,” which the company hopes will lead to long-term growth and increased market share.

“This is how you turn brands like High Supply, Cresco and FloraCal into Miller High Life, Coca-Cola and Johnnie Walker Blue Label,” Bachtell said of his company’s product portfolio.

The proposed merger is an all-stock deal. Both companies trade on the Toronto-based Canadian Securities Exchange because cannabis is still federally illegal in the United States. Cresco has about 3,500 employees, according to Wednesday’s earnings release, while Columbia Care employs about 1,800 people.

The deal still faces a number of hurdles before it can be completed. Either Cresco or Columbia Care will need to shed assets in New York, Illinois, Ohio, Massachusetts and Florida to abide by state regulations that limit the number of cannabis licenses an individual company can hold. Bachtell pledged to work closely with state regulators and said he’ll offer updates on Cresco’s divestiture plans as they happen.

The acquisition adds to Cresco’s long history of buying up competitors, which so far include Ohio-based Verdant Creations, Florida-based Bluma Wellness, and Massachusetts-based Cultivate, along with Pennsylvania-based Cure and Laurel Harvest Labs. The company has also seen three other acquisition deals fall apart, including agreements to buy Maryland-based Blair Wellness, Nevada-based Tryke and Florida-based VidaCann.