The marijuana sector saw a breakout on Monday after it was learned by Wall Street that Cresco Labs has agreed to pay about $850 million to acquire cannabis distribution company Origin House.
Chicago-based Cresco Labs will be able to deepen its presence in California with the deal and will also be getting its products into 725 dispensaries around the nation.
“How to tackle a state like California and make sure you can establish a meaningful position in it is a challenge everybody is going to deal with,” said Cresco CEO and co-founder Charlie Bachtell. “Origin House … is the solution for Cresco’s approach to California.”
Cresco Labs announced the deal before the start of regular trade on Monday and bragged that it was the “largest public company acquisition in the history of the U.S. cannabis industry.”
Cresco will exchange 0.8428 of its shares for each Origin House share outstanding.
“[The deal] establishes Cresco Labs as the leading multi-state operator with one of the largest distribution platforms in California, which is projected to be a $7.7 billion cannabis market in 2022 by Arcview Market Research/BDS Analytics,” said Bachtell.
“Following the closing of this acquisition, Cresco brands will be in over 725 dispensaries across the country, giving us the largest and most strategic distribution footprint of any cannabis company in the United States.”
The deal is expected to close at the end of June.