ALBANY — Cresco Labs, a multi-state cannabis company that holds one of ten licenses to operate as a medical marijuana provider in New York, announced Wednesday it will acquire New York-based competitor Columbia Care following regulatory approvals.
Columbia Care has its own medical cannabis license in the state, and was one of the first five companies to get permission to operate in 2016. The acquisition, expected to close near the end of 2022, is set to hand one-fifth of New York’s active licenses to Chicago-based Cresco Labs, which has subsidiaries in multiple states.
The transaction could impact operations in New York: currently, licensed medical cannabis companies can open up to four dispensaries, and both Cresco Labs and Columbia Care have already reached that limit.
Given the proposed transaction, “the registration held by Cresco Labs in the State of New York … will undergo a regulatory review and approval process after a complete and adequate application is submitted,” said Freeman Klopott, a spokesman for the Office of Cannabis Management.
Both companies are publicly traded, and listed on the Canadian Securities Exchange due to federal restrictions that remain in place in the U.S. In a statement, Cresco Labs said they will acquire “all of the issued and outstanding shares” from Columbia Care.
“This acquisition brings together two of the leading operators in the industry,” said Charles Bachtell, CEO of Cresco Labs. “The combination … accelerates our journey to become the leader in cannabis in a way no other potential transaction could.”
With this acquisition, Cresco Labs would become the largest cannabis company by revenue in the nation.
The company entered the New York market when it acquired Valley Agriceuticals in 2019.
The company made headlines last week when its plans for a 380,000-square-foot facility to cultivate, manufacture and distribute cannabis in Ulster County was approved by local officials. The proposal estimates 679 employees will run that operation, which will be built on the site of the former Schrade Knife and Avnet Channel Master facilities.
Columbia Care has its own cultivation facilities in the state, with a significant footprint in Rochester and a newer acquisition in Long Island.
“I was surprised to learn of a potential merger between Columbia Care and Cresco Labs,” said state Sen. Jeremy Cooney, D-Rochester. “Columbia Care is an important part of the cannabis marketplace in Rochester.”
“I am in active discussions to ensure that jobs stay in Rochester and our medical patients continue to have access,” Cooney added.
While both companies are restricted to furnishing the state’s medical cannabis dispensaries with the marijuana they grow in New York, as-of-yet unreleased regulations for the new “adult-use” marketplace promise to allow for future sales to recreational users as well.
“Since our founding, our mission has been to deliver the best outcome for our stakeholders,” said Nicholas Vita, CEO of Columbia Care. “In an evolving industry, the opportunities to better achieve our mission through consolidation led us to this historic moment.”
Vita added that he thought the merger would make the combined company “the most investable” company in cannabis.
Columbia Care has medical dispensaries in Brooklyn, Manhattan, Riverhead and Rochester; Cresco Labs’ New York outlets are in Brooklyn, Bardonia, New Hartford and Huntington Station.