Chicago-based Cresco Labs, one of the largest publicly traded cannabis companies in the U.S., may get a lot bigger after announcing its proposed acquisition Wednesday of Columbia Care in an all-stock merger valued at about $2 billion.
The deal is expected to close at the end of 2022, pending regulatory approval, creating a cannabis cultivation and retail giant with over 180 stores across an 18-market footprint.
“The ability to leverage our cultivation, production and brand performance across a much wider footprint is expected to lead to long-term sustainable growth and market share gain,” Cresco CEO and founder Charlie Bachtell said during an earnings call Wednesday.
The merger will create the No. 2 cannabis retailer in the U.S. with projected annual sales of more than $1.4 billion. Batchell said the added retail heft will turn the combined company’s brand portfolio “into the Miller High Life, Coca Cola and Johnnie Walker Blue Label of the cannabis industry.”
Founded in 2013, Cresco is in 10 states with 21 production facilities and 49 dispensaries, most of which operate under the Sunnyside banner. In Illinois, Cresco has 10 retail dispensaries — the maximum allowed by the state — and three manufacturing facilities.
On Wednesday, Cresco reported full-year revenue of about $822 million for 2021.
New York-based Columbia Care, which started as a medical-only operator 10 years ago, has grown into one of the largest multistate cannabis companies in the U.S. with a footprint in 18 states, including 99 dispensaries and 32 cultivation facilities.
In Illinois, the company has two dispensaries which operate under its newly rebranded Cannabist retail banner. Columbia Care also has a 32,000 square foot cultivation facility in Aurora.
Last year, Columbia Care generated $460 million in revenue, according to financial reports.
As part of the proposed transaction, Cresco will have to divest of some assets in New York, Illinois, Ohio, Massachusetts, and Florida, to comply with state regulations. The divestiture likely includes two dispensaries and a cultivation facility in Illinois. The company said Wednesday it will be “working closely” with regulators and will provide an update on divestiture plans “in the coming quarters.”
Cresco and Columbia Care both trade on the Canadian Securities Exchange. The companies are listed in Canada because while recreational cannabis is legal in 18 states, it is still a federally controlled substance in the U.S.
