Cresco Labs and Columbia Care abandon plans to merge

Multi-state cannabis operators« Cresco Labs and Columbia Care officially abandon plans to merge, valued at $2 billion when it was announced in March 2022.

There are no costs associated with the termination of the agreement, according to a press release issued on Monday.

«In light of the evolving landscape of the cannabis industry, we believe the decision to terminate the planned transaction is in the long-term best interest of Cresco Labs and our shareholders,» said Charles Bachtell, CEO and co-founder of Chicago-based Cresco Labs, in a statement.

«We would like to express our sincere gratitude to Columbia Care for their invaluable collaboration and dedication during this transaction.».

He added: «Looking ahead, we remain committed to our base-year strategy, which involves rapid restructuring of low-margin businesses, improving competitiveness and efficiencies in markets where we retain leading market share, and expanding operations to prepare for growth catalysts in emerging markets. A solid core will enable us to take advantage of the margin-enhancing growth opportunities we anticipate in this difficult economic environment for the cannabis sector. While this result is not what we originally expected, we are confident that Cresco Labs is in a stronger position for the future.»

The banking crisis at the beginning of the year dried up a crucial source of funding, as cannabis remains illegal at federal level in the United States, while legislation to relax lending standards for legitimate cannabis-related businesses remains blocked.

Last month, Cresco and Columbia declared that they would not be able to complete the disposals necessary to obtain the regulatory approvals required to close the transaction.

In addition, the companies have also terminated an agreement with hip-hop mogul Sean «Diddy» Combs for the acquisition of certain divested businesses in New York, Massachusetts and Illinois, for an amount of up to $185 million.

Meanwhile, Columbia Care said separately that it had closed its Downtown Los Angeles facility and completed a previously announced corporate restructuring plan, including the layoff of 52 people.