Proprietary Cannabis Producer Cresco Approaches $2 Billion Purchase of Columbia Care – Sources | Investment News

(Reuters) – U.S. cannabis producer Cresco Labs Inc is in advanced talks to buy rival Columbia Care Inc for around $2 billion, three people familiar with the matter said on Tuesday.

If a deal is finalized, it would be one of the biggest in the US cannabis industry to date. The industry, still in its infancy, continues to operate in a regulatory environment defined by a patchwork of laws that vary from state to state.

A deal could be announced as early as Wednesday, the sources said. The exact terms of the agreement could not be known.

People have warned that the talks could still fall apart and pointed out that the companies have overlapping footprints in several states, including in the key New York market, and could require significant divestments – a possible obstacle to closing the deal. ‘a deal.

The sources requested anonymity as the discussions were confidential.

Cresco Labs and Columbia Care did not respond to multiple requests for comment.

Cannabis sales in the United States have exploded and are expected to reach $46 billion by 2026, according to industry research firm BDSA, as states like New York and New Jersey open up.

Still, margins and profits remain thin, and analysts and investors have called for consolidation to improve profitability by finding economies of scale.

The AdvisorShares Pure US Cannabis exchange-traded fund has lost 19% of its value so far this year.

Columbia Care’s stock is up about 9% this year, but is down nearly 70% since it began trading in 2019. Cresco Labs shares are down 63% from a 2021 high.

Both companies are listed in Canada and trade over-the-counter in the United States, as marijuana remains illegal federally, and the two major US stock exchanges cannot allow companies that grow or sell the plant to list their shares.

Cresco is due to release its fourth-quarter financial statements on Wednesday, while Columbia Care last week delayed its results to Thursday.

(Reporting by Shariq Khan in Bengaluru; Editing by Kenneth Maxwell)

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