CHICAGO – Columbia Care, the multi-state, publicly traded medical marijuana retail company that has the largest number of Delaware storefronts, is set to be acquired by a large industry rival in a deal worth $2 billion.
The New York-based Columbia Care, which has dispensary licenses in 17 states, operates three Delaware medical marijuana dispensaries, with one each in Wilmington, Smyrna and Rehoboth Beach.
It is set to be acquired by Cresco Labs, a Chicago-based multi-state operator that is the largest wholesaler of branded cannabis products in the U.S.
The merger of Cresco Labs and Columbia Care, announced March 23, would create the largest multi-state marijuana operator by pro-forma revenue, totaling more than $1.4 billion. It would have a footprint of more than 130 retail stores in 18 markets, including the market share leaders in Pennsylvania, Virginia, Illinois and Colorado.
“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,” Charles Bachtell, CEO of Cresco Labs, said in a statement. “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.”
Under the terms of the agreement, shareholders of Columbia Care will receive 0.5579 shares of Cresco Labs for each Columbia Care share, based on the closing price of Cresco Labs shares on the Canadian Securities Exchange as of March 22. Upon closing, Columbia Care shareholders will own about 35% of the combined company.
The deal is anticipated to close in the fourth quarter of this year, subject to customary closing conditions and necessary regulatory approvals.
It has been unanimously approved by both company boards, and Columbia Care shareholders holding 25% of the company, officials said. The Columbia Care shareholder vote would need to clear two-thirds for final approval.
“Since our founding, our mission has been to deliver the best outcome for our stakeholders,” said Nicholas Vita, CEO of Columbia Care, said in a statement. “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.”
The deal represents the corporatization of the once-underground marijuana market, as medicinal and, or, recreational use have become legalized in 37 states. With no federal framework, each state sets different parameters around its marijuana market and its subsequent licensing. Companies have quickly scaled, or even gone public as Columbia Care and Cresco Labs did, in order to raise capital to work through lengthy licensing processes, start quickly and stay ahead of competition.
