According to a transaction announced on Friday, Sean “Diddy” Combs would buy assets in three states from Columbia Care and Cresco Labs, creating the largest Black-owned cannabis firm in the nation.
With the $185 million acquisition of current registered marijuana companies in three states, entertainment tycoon Sean “Diddy” Combs said on Friday that he is starting what is claimed as the largest Black-owned cannabis brand in the world. In order to finalise a previously announced merger of the two businesses, Cresco Labs and Columbia Care, two multistate cannabis operators, must sell their commercial operations to Combs.
If state and federal officials accept the deal, Combs’ portfolio of businesses, which already includes holdings in the entertainment, media, fashion, and alcoholic beverage industries, would grow. According to a legislative study published in Maryland this week, 81% of firms in the cannabis market are controlled by white people. Combs, the chairman and CEO of Combs Enterprises, stated that he is buying the assets to solve the injustices of the sector.
Numerous Black company owners have said that the cannabis sector is tough for anyone except the wealthiest business owners to thrive in due to funding issues. Following decades of marijuana prohibition, which saw a disproportionate number of Black and Brown persons arrested and imprisoned for cannabis-related charges, there are now hurdles to accessing the legal market.
Combs told the Wall Street Journal, “It’s evil.” How can you imprison whole communities of people, destroy their family units and futures, legitimise it, and ensure that those very same individuals never get the ability to profit from it or rebuild their lives?
Combs stated in a statement, “My objective has always been to open doors for Black entrepreneurs in sectors where we’ve been historically excluded from, and this purchase gives the instant size and influence needed to establish a more equitable future in cannabis. We will be able to promote diverse leaders throughout the ecosystem and be fearless champions for inclusion because we will own the whole process, from growing and manufacturing to marketing, retail, and wholesale distribution.
Deal for $185 million
In accordance with the agreement, a new company owned by Combs would purchase three cannabis manufacturing facilities in Massachusetts, Illinois, and New York as well as nine cannabis retail locations. Combs will give back $185 million in total, which includes $110 million in cash, $45 million in loan financing, and potential future contributions based on growth targets. Combs stated that he will use the new company to promote Charlie Bachtell, CEO of Cresco, in his effort to boost Black involvement in the cannabis market.
“The substantial presence of a minority-owned operator in some of the most influential markets in the country being led by one of the most prolific and impactful entrepreneurs of our time is momentous…and incredibly exciting,” Bachtell said in a statement on Friday. “For an industry in need of greater diversity of leadership and perspective.” We are pleased to have Sean and his colleagues join the business.
Cresco Labs announced in March that it will buy Columbia Care for $2 billion in shares. With operations in 18 states where cannabis is legal, including early adopters Colorado and California, the combination of the two businesses creates one of the biggest cannabis corporations in the United States. However, the firms must sell certain assets in states where their activities overlap, including as Arizona, Florida, Illinois, Massachusetts, New York, and Ohio, in order to comply with legislation controlling the cannabis sector and business licences.
The agreement with Combs, according to Bachtell, is more significant than the transaction itself and “couldn’t come at a time of greater relevance and momentum.”
The announcement “adds to that momentum” Bachtell said, “We’ve seen executive power exercised to address matters of cannabis injustice, we’re seeing bipartisan support for elements of federal reform, and we’re seeing some of the largest and most influential states in the country launch cannabis programmes prioritising social responsibility.” “The deal is a significant milestone for Cresco in completing the Columbia Care purchase and securing our leading position in one of the future’s most important consumer product categories,” said Cresco.
Largest Cannabis Company Owned by Black People
Combs’ first foray into the cannabis market, the purchase would result in the creation of the first minority-owned and run, vertically integrated multistate cannabis operator in the US in an industry expected to reach $72 billion in sales by 2030. Combs’ new company will be able to grow and produce cannabis products thanks to its vertically integrated operations in Massachusetts, Illinois, and New York. Meanwhile, its wholesale and distribution assets will market its branded goods to authorised dispensaries in well-known cities like New York City, Boston, and Chicago. Retail establishments in each of the three states are also part of the arrangement.
According to Nicholas Vita, CEO and Co-Founder of Columbia Care, “These assets provide the Combs’ team considerable market presence, enabling them to make the maximum effect on the industry as a whole.” We are certain that Sean has the proper staff to continue the facilities’ proud histories as Columbia Care and Cresco Labs, and we look forward to seeing how his innovative leadership will help define the cannabis sector moving ahead.
The acquisition of Columbia Care by Cresco Labs and clearance from antitrust authorities are two of the requirements that must be met for the deal to go through. Prior to the deal’s closure, the firms are also in the process of selling off other assets to satisfy regulatory criteria.
