Sean Combs, also known as Diddy, is set to conclude a $185 million deal to acquire the cannabis business operations of Cresco Labs and Columbia Care. Diddy said he is buying the assets to address inequality in the cannabis industry, where 81 percent of businesses are white-owned. The transaction is subject to several conditions, including regulatory approval, and antitrust clearance.
Entertainment mogul Sean Combs, also known as Diddy, announced he was launching what is being touted as the largest black-owned cannabis brand by purchasing $185 million for cannabis production sites and stores in three U.S. states.
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Diddy to Expand Business Portfolio in $185 Million Deal
Diddy is buying the business operations of Cresco Labs and Columbia Care. These two U.S. cannabis companies operate in multiple states and must divest their assets to complete the previously announced merger of the two companies.
In March, Cresco Labs announced it would acquire Columbia Care in a $2 billion stock deal. The merger of the two companies forms one of the largest cannabis companies in the U.S., with operations in 18 states where cannabis is legal, including pioneers Colorado and California.
However, regulations governing the cannabis industry and business licenses require the companies to divest certain assets in states where their operations overlap, such as Arizona, Florida, Illinois, Massachusetts, New York, and Ohio.
As part of the deal, a new company controlled by Combs will acquire nine retail cannabis stores and three production facilities in New York, Illinois, and Massachusetts.
In return, Combs will pay $110 million in cash and an additional $45 million in debt financing, plus future payments based on growth criteria, for a total of up to $185 million.
If approved by federal and state regulators, the deal will add to Sean Combs’ portfolio of businesses, including entertainment, media, fashion, and alcohol ventures.
Diddy Says Deal Addresses Inequality
Diddy, chairman and CEO of Combs Enterprises, said he is buying the assets to address inequality in the cannabis industry, where 81 percent of businesses are white-owned, according to a legislative report released in Maryland this week.
“My mission has always been to create opportunities for black entrepreneurs in industries where we have traditionally been denied access, and this acquisition provides the immediate scale and impact needed to create a more equitable future in cannabis,” Combs said.
“Owning the entire process – from cultivation and manufacturing to marketing, retail, and wholesale distribution – is a historic win for the culture that will allow us to empower diverse leaders throughout the ecosystem and be bold advocates for inclusion.”
Combs said he would leverage the new company to help increase black participation in the cannabis industry, a goal supported by Cresco CEO Charlie Bachtell.
“For an industry that needs greater diversity of leadership and perspective, the substantial presence of a minority-owned operator in some of the country’s most influential markets and led by one of the most prolific and influential entrepreneurs of our time is momentous… and incredibly exciting,” Bachtell said in a statement Friday.
“We are thrilled to welcome Sean and his team to the industry.”
The Largest Black-owned Cannabis Company
The transaction is Combs’ first venture into the cannabis industry. It will create the first vertically integrated, minority-owned and operated multi-state cannabis operator in the U.S., in a sector that analysts tip to grow to $72 billion by 2030.
The vertically integrated operations in New York, Illinois, and Massachusetts will allow Combs’ new company to grow and manufacture cannabis products. At the same time, the wholesale and distribution assets will market these branded products to licensed dispensaries in major metropolitan areas, including New York, Boston, and Chicago. The agreement also includes retail stores in the three states.
“These assets give the Combs team a significant presence in the market, allowing them to have maximum impact on the industry as a whole,” said Nicholas Vita, CEO, and co-founder of Columbia Care.
Combs Must Now Wait for Regulatory Approval
“It’s clear to us that Sean has the right team to continue the strong legacy of these Columbia Care and Cresco Labs facilities, and we look forward to seeing how he helps shape the cannabis industry in the future through his entrepreneurial leadership and innovation.”
The transaction is subject to several conditions, including regulatory approval, antitrust clearance, and the closing of Cresco Labs’ acquisition of Columbia Care. The companies are also in the process of divesting other assets to meet regulatory requirements before the close of the transaction.
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