Cresco Labs is Set to Buy Columbia Care in Massive $2 Billion Cannabis Deal
Cresco Labs recently shook up the cannabis industry by announcing a massive deal that would see Cresco buying fellow cannabis sector giant Columbia Care in the largest merger in cannabis industry history. The move is poised to affect the growth of the industry throughout 2022 and beyond. Here’s everything we know so far.
The deal is set to combine Cresco’s various marijuana brands with Columbia Care’s growing cannabis sector retail segment. This will effectively make Cresco one of the largest U.S. multi-state cannabis companies both in terms of reach and revenue.
The ultimate aim of Cresco with the merger is to solidify the company as a mainstay in the cannabis industry and ultimately to expand the reach of the company to multi-state markets across the U.S. With this acquisition, Cresco will be in a prime position to take advantage of what's already one of the fastest-growing sectors in the country.
But how will this move actually affect the growth of the industry? Well, there are three key areas that are likely to experience acceleration as a result of the merger between these two cannabis giants: retail operations, distribution, and brand awareness.
First and foremost, the two billion dollar deal sees Cresco acquiring one of the largest cannabis sector retail footprints in the northeastern U.S., which no doubt plays into their long-term strategy of capitalizing on multi-state markets. As more and more states push to legalize recreational cannabis at the state level, this is sure to result in the penetration of emerging markets all throughout the country.
Senate majority leader Chuck Schumer recently put forth a draft bill that would effectively legalize recreational at the federal level and expunge the criminal records of certain individuals charged with cannabis-related offenses.
There can be no doubt that should this bill pass, it would open the door for companies like Cresco to gain footholds in states where cannabis is still classed as a controlled substance. So, in all likelihood, the timing and nature of this merger are no coincidence.
Cannabis retail is already a multi-billion dollar industry, and two-thirds of the country still isn't in play. By buying out one of the largest retailers in the cannabis space at this pivotal time, Cresco could very well become the Coca-Cola of cannabis in the months and years ahead.
The capacity for Cresco to expand its distribution network is another pivotal factor informing the probability of growth in the sector as a result of this mega-merger with Columbia Care. The deal will create the third-largest cannabis sector multi-state operation by revenue, which will likely impact the supply chain across the northern half of the country.
As a result of this merger, Cresco is well-positioned to gain major market shares in both New York and New Jersey, both of which will commence recreational sales later this year. With so many multistate operators competing in both size and scale, having a stronghold in these populous states and a distribution network to support what's sure to be a high demand is likely to result in large profits year over year.
Marijuana stocks have already gone up since the deal was announced and will likely remain on an upward trajectory throughout 2022 in anticipation of this and other moves in the sector. It’s not clear where the market is heading, but what is clear is that with a huge market cap in both retail operations and distribution, Cresco is certainly looking like the front-runner in the race to become the industry leader, at least in the north-east.
Last but not least, major deals like this one between Cresco Labs and Columbia Care facilitate brand awareness and often promote growth not only through marketing and advertising but also with respect to branding and brand recognition. In fact, in a recent press release about the merger, Cresco Labs CEO Charles Bachtell specifically referenced this, saying, "This is how you turn brands [like Cresco] into Miller High Life [and] Johnnie Walker." He's likely right about that.
All things considered, this is a massive deal that will no doubt play a major role in the movement of cannabis markets throughout the remainder of 2022 and likely beyond. In a rapidly growing and volatile space, such as the current cannabis sector, major moves at a pivotal time can have long-lasting impacts both for consumers and the industry as a whole.
It's expected that by the end of the calendar year, Cresco will have the capacity to reach 70% of the available market with both their retail and distribution networks, making the stock one to watch in the coming months.