Cresco Labs CRLBF is strengthening its presence in California and other markets through the acquisition of Origin House, which is the trade name for CannaRoyalty Corp ORHOF.
The value of the all-stock transaction is estimated at C$1.1 billion (about $825 million USD), which makes it one of the largest in the U.S. cannabis industry. Under the terms of the deal, shareholders of Origin House will receive 0.8428 subordinate voting shares of Cresco Labs for each share they hold.
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After the transaction is complete, Origin House shareholders will own 20 percent of the combined company. The deal was approved by the boards of directors of both companies and officers and significant shareholders entered into irrevocable voting and support agreements in favor of the transaction.
In June, Origin House shareholders will hold a special meeting to vote on the acquisition. If all the closing conditions are satisfied, the deal is expected to be completed by the end of June.
Why This Is Important
With this acquisition, Cresco Labs will gain access to a company with a large distribution network in California, which is the largest cannabis market in the world. It will also provide Cresco with a large portfolio of brands to work with. Origin House delivers more than 130 branded products from over 50 brands to most licensed dispensaries.
In addition, Origin House has been looking into expanding its presence internationally and has recently acquired Canadian retailer 180 Smoke.
Following the combination of both companies, Cresco will have operations in 11 states, including Michigan where it's in the licensing phase and Florida where it has a pending acquisition. The company will operate 23 facilities, more than 1.5 million square feet of cultivation and will have licenses to operate up to 51 dispensaries.
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