The largest acquisition deal currently unfolding between a pair of plant-touching companies in the cannabis space will now be closing later rather than sooner.
Chicago-based Cresco Labs Inc. and New York-based Columbia Care Inc. announced Feb. 27 a mutual agreement to postpone their outside date to complete Cresco’s roughly $2 billion acquisition that was first disclosed last March.
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Cresco CEO Charles Bachtell now expects the agreement to close before the end of June 2023 with the mutual extension moving the closing date from March 31 to June 30. That extension was spurred by the companies needing additional time to finalize divestiture agreements and to obtain the regulatory approvals necessary for closure.
The divestitures of certain assets in state markets where the companies have overlapping footprints, such as New York, are key to the blockbuster deal becoming a reality: Many states have licensing caps for how many dispensaries or how much canopy space one company can legally operate, or other regulatory restrictions.
“We are making good progress on the remaining divestitures and moving closer to completing the Columbia Care acquisition,” Bachtell said in a press release. “Given the current divestiture and regulatory approvals timeline, we now expect closing to occur sometime before the end of June 2023. In the meantime, our teams are doing the hard work of streamlining operations and optimizing our asset base to be the strongest company we can upon closing.”
When Cresco and Columbia Care first announced their definitive agreement 11 months ago, the companies had overlapping footprints in several key markets, including California, Florida, Illinois, Massachusetts, New York, Ohio and Pennsylvania.
One of their more publicized divestitures was a $185 million agreement announced in November with Sean “Diddy” Combs, where an entity owned and controlled by the American rapper—also known by his stage names Puff Daddy and P. Diddy—would acquire certain vertically integrated assets in New York, Illinois and Massachusetts.
“We continue to make meaningful progress on the remaining divestitures and look forward to making those announcements,” Columbia Care CEO Nicholas Vita said in a statement. “We are driving operational efficiencies, enhancing market-level scale to offset pricing pressure, and demonstrating leadership in several of the fastest growing markets in the industry, such as New Jersey, Virginia and West Virginia.
Those efforts will enable the combined company to leverage Columbia Care’s retail footprint—including roughly 85 dispensaries nationwide—while maintaining Cresco’s wholesale leadership, Vita said. Columbia Care operated 99 dispensaries when the definitive agreement was first announced (before divestitures started unfolding).
Cresco Labs plans to report its Q4 2022 and full-year financial results on March 16, while Columbia Care will do so on March 29.