Cannabis producer Cresco to buy Columbia Care for $2 billion

It could be one of the largest transactions in the recent history of the cannabusiness. The American company Cresco is expected to announce the acquisition of its rival, Columbia Care, for two billion dollars in the near future. That is what’according to the well-informed Reuters news agency, which is based on «three sources familiar with the matter». So far, management at the companies in question has not responded. «An agreement could be announced this Wednesday», the Reuters reporter notes.

Cresco specializes in the production—through its Mindy’s, High Supply, and Good News brands—and distribution of cannabis through its Sunnyside stores. These stores are primarily located in the eastern United States, from Illinois to Florida. Another strength is that it is off to a head start in New York, which will soon legalize recreational cannabis.

For its part, Columbia also has a presence in the Eastern United States… but is also very well established in major markets in the West. In California, it has half a dozen stores in Los Angeles, San Francisco, and San Diego. And in Colorado, it already has about twenty stores. This makes it a formidable rival for Cresco… which has therefore decided to acquire it.

«Not the biggest acquisition in history, but a very big one»

Cresco is currently valued at $1.8 billion. Columbia is slightly smaller, with a market capitalization of $1.2 billion. With a deal estimated at $2 billion—nearly equal to its market value—Cresco is making a significant effort. «It's not the biggest acquisition in the history of the cannabis industry, but it's still a very big one.», notes Antoine Quesnel, a French trader specializing in cannabis stocks.

For American cannabis giants, the time has come to join forces. The plant is still illegal at the federal level in the United States, which severely complicates their operations. «To sell cannabis, you have to grow and sell it in the same state, so it costs a fortune, Quesnel continues. S»If Cresco wanted to enter the California market, it would take them two years. But now that they've acquired Columbia, they'll be there tomorrow."

And, in fact, it's exactly the same principle for another recent one deal. Last spring, Trulieve acquires one of its competitors, Harvest. The reason given? « C»This allows us to speed up our entry into Arizona.", in the words of Trulieve's CEO.