As Cresco Labs and Columbia Care work toward closing an acquisition agreement with each other—one of the biggest in the cannabis space—the multistate operators announced Nov. 4 divestitures in three markets to Sean “Diddy” Combs.
The planned divestitures include certain assets in New York, Illinois and Massachusetts with a purchase price of $185 million by an entity owned and controlled by the American rapper, who is also known by his stage names Puff Daddy and P. Diddy.
The transaction is Combs’ first investment in cannabis and, upon closing, will create the country’s first minority-owned and operated, vertically integrated multistate cannabis operator, according to a release from Cresco and Columbia Care. The divestiture is required for Cresco to close its acquisition of Columbia Care, a deal that was valued at $2 billion when the agreement was first announced in March. The two deals are expected to close concurrently.
“Today’s announcement is bigger than the transaction—and it couldn’t come at a time of greater significance and momentum,” Cresco Labs CEO Charlie Bachtell said in the release. “We’ve seen executive power exercised to address matters of cannabis injustice, we’re seeing bipartisan support for elements of federal reform, and we’re seeing some of the largest and most influential states in the country launch cannabis programs prioritizing social responsibility—this announcement adds to that momentum.”
Cresco officials indicated the agreement with combs is an industry-changing transaction that is rooted in the company’s vision to develop a more “responsible, respectable and robust industry.”
Combs, 53, a Harlem, New York, native, has built a career portfolio of leading global brands across music, entertainment, spirits, fashion and media.
“My mission has always been to create opportunities for Black entrepreneurs in industries where we’ve traditionally been denied access, and this acquisition provides the immediate scale and impact needed to create a more equitable future in cannabis,” said Combs, chairman and CEO of Combs Enterprises. “Owning the entire process—from growing and manufacturing to marketing, retail, and wholesale distribution—is a historic win for the culture that will allow us to empower diverse leaders throughout the ecosystem and be bold advocates for inclusion.”
The vertically integrated assets in New York, Illinois and Massachusetts—all adult-use states—will provide Combs the ability to grow and manufacture cannabis products; wholesale and distribute branded products to licensed dispensaries in major metropolitan areas like Boston, Chicago and New York City; and operate retail facilities in all three states, according to the release.
Bachtell also indicated that the divestitures not only represent major steps toward closing the Columbia Care acquisition but also toward Cresco’s leadership position in one of the largest consumer product categories of the future.
“For an industry in need of greater diversity of leadership and perspective, the substantial presence of a minority-owned operator in some of the most influential markets in the country being led by one of the most prolific and impactful entrepreneurs of our time is momentous … and incredibly exciting,” he said. “We’re thrilled to welcome Sean and his team to the industry.”
Columbia Care CEO and co-founder Nicholas Vita added, “These assets offer the Combs’ team significant market presence, enabling them to make the most impact on the industry as a whole. It’s been clear to us that Sean has the right team to carry on the strong legacy of these Columbia Care and Cresco Labs facilities, and we can’t wait to see how he helps shape the cannabis industry going forward through his entrepreneurial leadership and innovation.”
Cresco and Columbia Care are in the process of divesting other assets to meet regulatory requirements ahead of closing the Columbia Care acquisition, according to the release. That deal is expected to close around the end of the first quarter of 2023.