The cannabis industry has numerous tailwinds at its back.
Demand for the product is at an all-time high as the moral panic about the drug is nearly non-existent among the younger generations.
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For the first time in U.S. history, there seems to be bipartisan support for legalization, or alternatively, decriminalization.
However, the fact that the drug is still illegal federally is a huge headwind that is limiting the industry from growing, and the fact that Congress is dragging its feet on legislation has soured the proposed cannabis megamerger between Cresco Labs and Columbia Care.
This week the two companies mutually agreed to terminate the $2 billion merger that they agreed to in March 2022. While the companies did not give an exact reason for the breakup, they did hint at what pushed the deal over the edge.
"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," Cresco Labs CEO Charles Bachtell said.
That evolving landscape Bachtell mentioned got more rocky for the industry last week after payment systems processor Mastercard told financial institutions to stop allowing marijuana transactions on its debit cards, Reuters reported, due to the fact that cannabis is still illegal at the federal level.
"The federal government considers cannabis sales illegal, so these purchases are not allowed on our systems," a spokesperson told Reuters.
Under current rules, financial institutions that provide services to legal cannabis businesses face strict regulatory and reporting requirements.
Rapper Sean "Diddy" Combs will miss out on a huge opportunity as a result of the Cresco/Columbia Care merger falling apart as the sides terminated definitive agreements to divest certain operations in New York, Illinois and Massachusetts worth $187 million to Combs.
