Cresco Labs Acquisition Of Columbia Care Creates Huge Cannabis Conglomerate And Enormous Pay-Out For This CEO

On Friday, Columbia Care Inc. CCHW CCHWF (FSE:3LP) announced the approval of the previously announced plan of arrangement under which Chicago-based Cresco Labs Inc. CL CRLBF will acquire all of the issued and outstanding shares of Columbia Care.

The deal has been called “transformational” as it will create one of the largest multistate marijuana operators in the United States, combining wholesale, retail and operations in the nation's largest and fastest-growing cannabis markets. 

The combined footprint of the two companies will include more than 130 cannabis retail locations across 17 states and DC, reaching up to 55% of the U.S. population, the companies said in a March press release at the time of the announcement.

Cresco CEO Charlie Bachtell, a keynote speaker at September’s Benzinga Cannabis Capital Conference in Chicago, is expected to become chief executive of the merged company.

Transformational For Columbia Care’s CEO As Well?

Nicholas Vita is expected to emerge with more than $100 million in cash and stock. The details of Vita’s pay package were released in a regulatory filing prior to Friday’s special shareholders' meeting. Vita has long been one of the highest-paid CEOs in the marijuana industry.

Fred Whittlesey, a compensation expert and founder of the Compensation Venture Group in Seattle, called parts of the CEO’s compensation package “atypical,” reported MJBiz Daily. “What is atypical is for a founder-CEO who is such a significant shareholder to have any arrangements for change in control … when he’s getting nearly $100 million (in stock in the deal).”

Details Of Pay Package

According to the regulatory filing, Vita’s stock holdings and potential compensation include the following:

• Stock valued at $95.5 million at the time of the all-stock merger in March.  Cresco’s acquisition price represented a 16% premium at the time. The initial price tag was some $2 billion, although stock prices have since fallen.
• A change-in-control benefit valued at $12.2 million as of May 24, to be paid in monthly installments over three years.
• Accelerated vesting of restricted and performance stock awards. The filing indicates that Vita had 15.6 million restricted stock units and 8.6 million performance stock units.

The merger, pending various regulatory approvals, is expected to close near the end of this year.

Meet Cresco's CEO Charlie Bachtell and a slew of other cannabis execs, entrepreneurs, CEOs, investors, etc. at the September Benzinga Cannabis Capital Conference, Sept. 13-14 in Chicago. Get your tickets HERE and reserve your spot at the Palmer House Hotel HERE

Photo Benzinga via Shutterstock