Columbia Care, one the largest cultivators, manufacturers and providers of cannabis products in the country that operates a cultivating and processing operation in Jamesport, has announced that Chicago-based Cresco Labs will acquire it as part of a stock merger valued at $2 billion.
Columbia Care, which opened Suffolk County’s first medical marijuana dispensary in Riverhead back in 2016, entered into a $42 million deal to purchase 34 acres at Van de Wetering Greenhouses at 5784 Sound Avenue in Jamesport last spring, the first major marijuana-related real estate purchase on the East End since New York State legalized adult-use cannabis in March 2021. The deal is set to occur in two phases. Suffolk deed transfers made available just last month showed the Van de Wetering commercial property traded for $30 million on April 20, 2021.
Five months later, it began cultivation and processing operations, following approval from the state Department of Health. The company said at the time that the facility would be one of the largest cultivation and production sites on the East Coast that would serve the increasing number of medical patients.
“We are incredibly excited to announce this transformative transaction today at a very important time in the development of this industry. This acquisition brings together two of the leading operators in the industry, pairing a leading footprint with proven operational, brand and competitive excellence,” Charles Bachtell, CEO of Cresco Labs, said in a statement in March. “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. We look forward to welcoming the incredible Columbia Care team to the Cresco Labs family. I couldn’t be more excited about this enhanced platform and how it furthers the Cresco Labs Vision – to be the most important and impactful company in cannabis.”
Under the terms of the agreement, shareholders of Columbia Care will receive 0.5579 of a subordinate voting share of Cresco Labs for each Columbia Care common share (or equivalent) held,
The merger gives Cresco Labs “the largest pro-forma revenue in cannabis” at over $1.4 billion, according to a joint statement. Its national footprint includes over 130 retails stores across 18 markets. “The combined company will have a meaningful presence in today’s most influential markets and those with the biggest tailwinds for growth and adult use upside including: NY, NJ, VA, PA, OH, MD, and FL,” the statement continued.
Cresco has held the No. one slot in the market share when it comes to branded flower, concentrates and vapes, and has been fifth in edibles. Cresco Labs’ Sunnyside retail stores have done an average of over $11 million in annual revenues per store — the highest of any scaled national operator in the industry, according to the company. Its fourth quarter wholesale revenue came in at over $120 million, the highest in the industry.
Cresco expects to increase annual revenues “in excess of $100 million in eight different states by 2023 as the combined company increases depth across the markets and diversifies its revenue base.”
The proposed merger is subject to closing conditions and regulatory approvals and is set to close in the fourth quarter of 2022.