Sean “Diddy” Combs has lost out on his bid to create the world’s largest Black-owned cannabis brand due to Cresco Labs Inc. and Columbia Care Inc abandoning their merger.
The rapper and entertainment mogul previously announced a $185 million purchase of nine existing licensed cannabis dispensaries and three cannabis production facilities in three states through the purchase of business operations from Cresco Labs and Columbia Care.
The initial merger between the two multistate cannabis operators was announced in March 2022 in a proposed all stock deal that was valued at approximately $2 billion. The planned merger would have created the largest cannabis company in the United States. Cresco Labs and Columbia Care said they would not be able to complete the divestitures necessary to receive the approvals to complete the transaction. In February 2023, the two companies announced revised plans that would have allowed more time to divest assets in some markets to comply with regulatory requirements. The termination of the merger was mutually agreed upon by the two companies and neither party will have to pay any fees or penalties.
“In light of the evolving landscape in the cannabis industry, we believe the decision to terminate the planned transaction is in the long-term interest of Cresco Labs and our shareholders. We want to express our sincere gratitude to Columbia Care for their valuable collaboration and dedication during this transaction,” said Charles Bachtell, CEO and co-founder of Cresco Labs. “Moving forward, we remain committed to our year of the core strategy, which involves the swift restructuring of low-margin operations, improving competitiveness and driving efficiencies in markets where we maintain leading market share, and scaling operations to prepare for growth catalysts in emerging markets. A strong core will enable us to take advantage of the margin accretive, growth opportunities we foresee within this tough economic time for the cannabis industry. While this is not the outcome we originally hoped for, we are confident Cresco Labs is in a stronger position moving forward.”
“After careful consideration, we are confident in the mutual decision to move forward as separate, standalone companies. This is the best path forward for Columbia Care’s employees, customers, and shareholders. We are thankful for the collaboration and partnership with the Cresco team throughout this extensive process,” said Nicholas Vita, the CEO and co-founder of Columbia Care. “Over the last 16 months we have reviewed every aspect of our business, remained decisive and have made substantive changes that significantly improved our operations—positioning us with significant strategic and operational strength at this inflection point in the company’s history.”
With the termination of the merger, the companies also announced the end of the $185 million deal with Combs to acquire divested operations in New York, Massachusetts and Illinois. Combs said he initially purchased the assets to help address the inequalities in the cannabis industry with many minority entrepreneurs saying that difficulties with financing have kept them from trying to enter the legal cannabis space.
“It’s diabolical,” said Combs to the Wall Street Journal. “How do you lock up communities of people, break down their family structure, their futures, and then legalize it and make sure that those same people don’t get a chance to benefit or resurrect their lives from it?”
“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 in a statement. “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.”
