Cresco CEO Touts Massachusetts Expansion, Buys Cultivate Licensing, BL Real Estate For $158M

Cannabis company Cresco Labs CL CRLBF is taking over Massachusetts-based Cultivate Licensing LLC and BL Real Estate LLC for a total of $158 million.

The sum includes an upfront payment of $90 million, consisting of $15 million in cash and $75 million in Cresco’s shares, as well as an earnout of up to $68 million, subject to reaching particular EBITDA target thresholds in 2021.

The transaction brings roughly 42,000 square feet of the flowering canopy with additional 20,000 square feet of potential indoor expansion, two operating dispensaries in Leicester and Framingham, and one Worcester-based store, expected to launch in the second quarter of 2021.

Cresco Labs CEO Charles Bachtell told Benzinga that no outside financial advisors were used for the transaction.

"We’ve spent a lot of time developing our internal M&A and integration teams, and part of the reason is we wanted to be able to source deals and vet them ourselves so should we move forward we already have a deep understanding of the company and what it takes to integrate in to our existing model," Bachtell explained.

Cresco expects to close the acquisition during the last three months of 2021.

Pursuing Top Market Share

Bachtell anticipates that this acquisition will put Cresco in a "top 3 share position in Massachusetts" — the third $1 billion-plus cannabis market where Cresco "achieved this status.”

"Cultivate provides a more responsible use of capital and more expeditious way to reach scale," Bachtell said.

Despite some pandemic-induced setbacks, the Chicago-based company continues to pursue opportunities in the Bay State since it is a billion-dollar annual run rate state, the 15^th highest population, the 12^th highest GDP, and "is a very dense state with appropriate cannabis regulations," Bachtell disclosed.

The move came on the heels of the confirmed acquisition of Florida-based Bluma Wellness Inc. BWEL BMWLF in an all-share transaction worth $213 million.

Cresco expects to finalize the months-long process during the second quarter of this year.

Bachtell disclosed they are "happy with our strategic footprint," having a presence in seven of the top ten population states that have a cannabis program.

"For now our focus is on achieving a top 3 market share in every one of our existing states," he added.