Subject to customary closing conditions and necessary regulatory approvals, the transaction is expected to close in the fourth quarter of 2022.
“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,” said Charles Bachtell, CEO of Cresco Labs. “The combination of Cresco Labs and Columbia Care accelerates our journey to become the leader in cannabis in a way no other potential transaction could. We look forward to welcoming the incredible Columbia Care team to the Cresco Labs family. I couldn’t be more excited about this enhanced platform and how it furthers the Cresco Labs Vision — to be the most important and impactful company in cannabis.”
Shareholders of Columbia Care will receive 0.5579 of a subordinate voting share of Cresco Labs for each Columbia Care common share (or equivalent) held, subject to adjustment representing total consideration enterprise value of approximately $2 billion based on the closing price of Cresco Labs Shares on the Canadian Securities Exchange as of March 22, 2022.
After giving effect to the transaction, Columbia Care shareholders will hold approximately 35% of the pro forma Cresco Labs shares (on a fully diluted in-the-money, treasury method basis).
Once complete, the transaction will make Cresco Labs the largest multi-state operator by pro-forma revenue at more than $1.4 billion. The company will have more than 130 stores across 18 markets, representing the second-largest retail footprint in the industry and the largest outside of Florida.
Cresco Labs says the company will cover all of BDSA’s top-10 largest and fastest-growing markets by 2025, representing approximately 55% of the U.S. population and more than 70% of the addressable cannabis market. Independently, the companies currently have No. 1 share positions in four markets in Illinois, Pennsylvania, Colorado and Virginia; No. 2 share in Massachusetts; and a pathway to a top-3 position in New York, New Jersey, and Florida, bringing the combined company to a material market position in seven of the top 10 markets by revenue in 2025, according to BDSA.
On a pro-forma basis, Cresco Labs expects to have annual revenues exceeding $100 million in eight different states by 2023 as the combined company increases depth across other markets and diversifies its revenue base.
“Since our founding, our mission has been to deliver the best outcome for our stakeholders,” said Nicholas Vita, CEO of Columbia Care. “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.”
The transaction has been unanimously approved by the Boards of Directors of Cresco Labs and Columbia Care.
Stephanie Gorecki, VP of product development for Cresco Labs, will deliver a keynote presentation on applying traditional R&D methodologies to cannabis product development during Cannabis Products Exchange, set for April 28-29 in Denver. Visit the CPX website to learn more and register.