By Ally Marotti / Chicago Tribune
CHICAGO — Cresco Labs has agreed to pay about $850 million to acquire cannabis distribution company Origin House in a deal that will deepen the Chicago company’s presence in California and put its products on shelves at more than 725 dispensaries around the country.
California is the nation’s leading marijuana market, and recreational use is legal there. The state’s industry is more mature than most, and the number of companies already established there, plus the size of the state, poses challenges for companies trying to enter the market. Cresco already grows marijuana and sells its products in California, and employs more than 60 people there.
“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.”
The deal is expected to close at the end of June, Bachtell said.
Marijuana companies are on buying sprees to establish themselves as national contenders in the still federally illegal industry. Though acquisitions nearing the $1 billion mark have become somewhat common, Chicago-based marijuana companies more commonly have been the sellers, not the buyers. Also, the motivation for other deals has been to allow companies to expand to other states.
Earlier this month, a Phoenix-based company agreed to pay $850 million for Chicago-based cannabis operator Verano Holdings, and Chicago-based Grassroots Cannabis announced it had raised $90 million to fuel growth. Last year, national operator MedMen bought Oak Park’s PharmaCann for about $680 million.
Cresco debuted on the Canadian Securities Exchange last year, and has since made acquisitions that expanded its footprint in Illinois and other states. In December it bought two Illinois dispensaries, bringing its total to five in the state. Earlier this month, it announced that it would pay $120 million for a Florida marijuana company.
When the Origin House deal and several others that Cresco has in the works are finalized, the company will have operations in 11 states.
Origin House is headquartered in Canada, but has its foundations in California, where it grows marijuana, develops brands and distributes cannabis products to the majority of dispensaries in the state.
Cresco employs more than 750 people around the country, and Origin House employs more than 350.
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