Cresco Labs Acquires Columbia Care To Become U.S. Cannabis Market Leader

 | Mar 29, 2022 07:40

The cannabis sector has taken its share of hits in the last year. But every so often there appears a sign that although it might be down, it is far from out. The fighting spirit is still stirring.

The latest indicator? The $2-billion deal announced last week by American marijuana grower and processor Cresco Labs (OTC:CRLBF) to acquire Columbia Care (OTC:CCHWF). The acquisition is one of the biggest merger deals in the cannabis sector.

The merger is expected to be completed by the end of 2022. And when it happens, Cresco Labs will have powered itself into a leading position in the US cannabis market, with operations in 17 states and the District of Columbia, making it the largest multi-state operator by revenue in the US.

According to published reports, Cresco’s projected revenue post-merger will be in the neighborhood of $1.4 billion, the company claims.

Referencing some of the company's brands, Cresco Chief Executive Officer Charles Bachtell told BNN Bloomberg:

“This is how you turn brands like High Supply, Cresco and FloraCal into Miller High Life, Coca-Cola and Johnnie Walker Blue Label.”

From a strategic point of view, the merger not only expands Cresco’s operating footprint to 17 states from 10, it also extends the company’s reach in key markets, including Illinois, Pennsylvania and Colorado.

In addition to becoming the largest multi-state operator by revenue, Cresco will also acquire the title to the third-largest multi-state operator by market value, behind Curaleaf Holdings (OTC:CURLF) and Green Thumb Industries (OTC:GTBIF).

Shares of Cresco Labs last week fell on the news of the merger, going from about $6.54 to a low of $5.82. They rebounded slightly to close the week at $6.02, but have since slipped again. They closed yesterday at $5.91, down just under 2% on the day and about 9.6% from just before the merger was announced last week.