New York-based Columbia Care has signed a deal to acquire California’s Project Cannabis in a $69 million stock and cash deal. Project Cannabis brands include Triple Seven and Classix.
Under the terms of the deal announced on Tuesday, $57 million will be paid in Columbia Care stock while $12 million will be paid in cash derived from a concurrent sale of some of Project Cannabis’ real estate assets. Project Cannabis operates a 32,000 square foot cultivation facility and three adult-use dispensaries in North Hollywood, Downtown Los Angeles, and Studio City. It operates one retail dispensary in San Francisco, which includes one of the city’s only permitted consumption lounges.
Going forward, Columbia Care will manufacture and package all Project Cannabis extracted products and concentrates in its San Diego manufacturing facility.
Nicholas Vita, CEO of Columbia Care, said the deal “perfects” their California operating model by enabling the company “to maintain supply chain continuity [and] optimize profitability.” He estimated the gross margin impact for the company would be an increase of about 10-15 percent.
“Since its founding, the Project Cannabis team has developed the well-earned reputation for cultivating the highest-quality products and award-winning genetics resulting in an extensive distribution network of over 100 dispensaries state-wide. The uniqueness and depth of this distribution channel will enable us to access and serve much of the state’s addressable market.” – Vita in a statement
Project Cannabis Executive Vice President Cameron Wald called the move “a pivotal next step” in the company’s growth trajectory.
“Although we have been approached by virtually every conceivable strategic partner, we believe our culture, focus on producing the highest-quality products through the most effective brand architectures and extensive distribution network aligns perfectly with Columbia Care’s vision to grow its footprint into the market leader in California,” he said in a statement
The deal is expected to be finalized by the fourth quarter of the year.