Two cannabis industry leaders have halted a $2 billion merger plan, they announced Monday.
Chicago-based Cresco Labs and Columbia Care of New York originally announced plans to merge in March 2022 and released a revised version of the plan in March of this year, but the plans are no longer in effect as of Monday, according to a joint press release from the two companies.
The CEOs and co-founders of both companies cited a changing market and industry, saying that calling off the deal was best for both firms and their employees.
“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,” Charles Bachtell, CEO and co-founder of Cresco Labs, said in the release.
The merger would have created the nation’s largest cannabis firm.
The merger agreement also had a provision to spin off $155 million of Cresco Labs’ assets to music and fashion mogul Sean “Diddy” Combs. That deal is no longer in effect.
Cresco Labs is the largest wholesaler of branded cannabis products in the U.S. It operates dispensaries in seven states, including 10 retail locations and three cultivation labs in Illinois.
Columbia Care is one of the original multi-state providers of medical cannabis in the U.S. It operates 126 facilities, including 94 dispensaries and 32 cultivation and manufacturing facilities.
The decision was mutual, according to the release, and each chief executive thanked the other’s company for working together thus far.
“After careful consideration, we are confident in the mutual decision to move forward as separate, standalone companies,” Nicholas Vita, CEO and co-founder of Columbia Care, said in the release. “This is the best path forward for Columbia Care’s employees, customers and shareholders.”
Since recreational cannabis use became legal in Illinois in 2020, the industry has jolted Chicago and Illinois, with dispensaries cropping up, pushes for increased minority ownership and dog-eat-dog business competition involving industry giants.
Most recently, Cresco filed a lawsuit accusing longtime rival Green Thumb Industries of poaching a top-level employee. According to the lawsuit, a former Cresco employee left for GTI and was allegedly luring other Cresco employees to follow suit. GTI denied the allegations.
Contributing: Associated Press
