Multi-state cannabis operators Cresco Labs and Columbia Care on Sunday announced they would not be completing their merger, saying the companies could not complete “the divestitures necessary to secure all necessary regulatory approvals.”
In March, Cresco had agreed to acquire Columbia Care in a $2 billion deal, which would have created the largest multi-state operator in the U.S. Neither company will pay any penalties or fees related to the decision, which the companies described as mutual.
In a statement, Cresco CEO Charles Bachtell said that despite the termination of the deal, the company remains committed to its “Year of the Core strategy” which Bachtell described as “restructuring of low-margin operations, improving competitiveness and driving efficiencies in markets” where Cresco maintains “leading market share, and scaling operations to prepare for growth catalysts in emerging markets.”
“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.” — Bachtell in a press release
Nicholas Vita, CEO and co-founder of Columbia Care, called ending the deal “the best path forward” for the company’s employees, customers, and shareholders.
“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,” Vita said in a statement. “We are looking forward to realizing the benefits of these changes as well as focusing on the opportunities in our outstanding footprint in markets with embedded upside; diversified portfolio of brands; our award-winning national retail brand, The Cannabist; recently implemented operational and organizational efficiencies; proactive balance sheet management activities; and meaningful equity capital markets initiatives that will propel Columbia Care into one of the most profitable and resilient companies in the industry over the next several years.”
The companies also terminated a deal to sell some divested operations in New York, Massachusetts, and Illinois to an entity owned by Sean “Diddy” Combs for up to $185 million.
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