Cresco Labs Inc CRLBF recently announced plans to acquire Columbia Care Inc CCHWF, marking another round of industrial consolidation in the cannabis sector.
Cresco CEO Charlie Bachtell, a keynote speaker at the 2022 Benzinga Cannabis Capital Conference, said on Tuesday that the acquisition is imperative to its strategic rapid footprint, as Cresco now has a presence in 18 markets.
“We’re executing our thesis and our strategy, which is to build the most strategic geographic footprint that we can,” Bachtell said. “When we bring the Columbia Care footprint and Cresco together — that’ll contribute to at least $100 million at the level of geographic diversification.”
From a shielding standpoint, the acquisition makes sense given the situation of the market at the moment. Risks associated with regulatory change and unforeseen supply chain problems will be less of a concern for Cresco.
Greater depth and leadership positions throughout numerous states will be made possible by the combination of the two businesses. With an estimated $1.4 billion in annual revenue, the combined company said the purchase will give Cresco the highest yearly revenue in the sector.
The merger comes as the marijuana business continues to struggle due to the federal government's resistance to legalizing the drug, a lack of regular financial services, and high taxation. According to Bachtell, federal reform of some kind would increase the flow of money to marijuana businesses.
“If you look at the big four [marijuana companies], all of us could’ve saved between an extra $40 and $80 million in cash if we were taxed as a normal industry,” the CEO said. “That’s a lot of cash flow that could be used.”
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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