A worker trims leaves of young cannabis plants in a greenhouse at a Cresco Labs Inc. facility in Indiantown, Florida, U.S., on Monday, March 28, 2022.
Eva Marie Uzcategui | Bloomberg | Getty Images
A $2 billion mega-deal between cannabis multistate operators Cresco Labs and Columbia Care has gone up in smoke more than a year after the companies announced the acquisition, the companies said Monday.
The merger, announced in March 2022, would have created the largest cannabis company in the U.S. and been a boon for an industry showing signs of slowdown as it weathers economic and regulatory challenges.
“In light of the evolving landscape in the cannabis industry, we believe the decision to terminate the planned transaction is in the long-term interest of Cresco Labs and our shareholders,” Cresco CEO Charles Bachtell said in a statement.
The termination was agreed upon mutually, the companies added, and neither party will pay any related penalties or fees.
The plan for Chicago-based Cresco to buy New York-headquartered Columbia Care in an all-stock transaction began to unravel when the companies failed to divest enough assets necessary for regulatory approvals by a June 30 deadline.
The companies said Monday they’ve also scrapped a $185 million deal with Sean “Diddy” Combs that would see the hip-hop mogul acquire some divested operations in New York, Massachusetts and Illinois.
The cannabis landscape has been in downturn recently, as sales decline in many legal states and investment money dries up. The industry isn’t seen as the safe bet it once was amid a lack of federal regulation and banking reform that has kept operators from scaling.
Bachtell said in the press release this is a “tough economic time” for the industry and that Cresco will double down on its core business, including “swift restructuring of low-margin operations.”
Columbia Care CEO and co-founder Nicholas Vita added in the press release that after careful consideration, the decision to remain solo is “the best path forward for Columbia Care’s employees, customers, and shareholders.”