Cresco Labs to buy rival cannabis MSO Columbia Care in $2 billion deal

(This is a developing story and will be updated.)

Major multistate cannabis operators Cresco Labs and Columbia Care said they have agreed to combine in a blockbuster deal worth roughly $2 billion, with Chicago-based Cresco set to acquire New York-based Columbia.

The proposed all-stock merger is one of the largest in the cannabis industry to date, and would produce one of the biggest MSOs in the nation.

The combined footprint of the two companies would include more than 130 cannabis retail locations across 17 states and the District of Columbia, reaching about 55% of the U.S. population, the companies said in a Wednesday morning news release.

Those states include “today’s most influential markets and those with the biggest tailwinds for growth and adult-use upside,” the companies said, specifically citing New York, New Jersey, Virginia, Pennsylvania, Ohio, Maryland and Florida.

The companies said the combined business would have pro-forma annual revenues “in excess of $100 million in 8 different states by 2023.”

Cresco and Columbia Care also said they would achieve synergies by boosting retail productivity, cutting “redundant operational and capital expenses,” and “(de-leveraging) the organization through the proceeds from the sale of redundant licenses and assets in high-value markets.”

Under the proposed deal, Columbia shareholders would receive 0.5579 of a Cresco subordinate voting share for each Columbia share held, a premium of roughly 16% over the companies’ Tuesday closing share prices.

Columbia shareholders would end up with roughly 35% of Cresco.

The acquisition is subject to court, regulatory, and shareholder approvals, and is expected to close in the fourth quarter of this year.

The $2 billion deal is set to be one of the largest M&A transactions in U.S. cannabis history.

Florida-based MSO Trulieve announced a $2.1 billion deal to acquire Harvest Health in May 2021, a deal that closed in October.