Cannabis giant Cresco Labs has announced it will acquire Columbia Care, the company that operates a medical marijuana dispensary and a cultivation facility in Riverhead, in a $2 billion deal.
The agreement will make Cresco Labs the largest cannabis company by revenue, the largest wholesaler of branded cannabis products, the second-largest nationwide retail operation in the country, and the largest retail operator outside of Florida, according to a March 23 Cresco press release. The acquisition, subject to regulatory approvals, is expected to close in the fourth quarter of 2022.
Cresco Labs, which is based in Chicago, holds nine different brands of cannabis products that are available wholesale and through retail locations across the country.
“This acquisition brings together two of the leading operators in the industry, pairing a leading footprint with proven operational, brand and competitive excellence. The combination is highly complementary and provides unmatched scale, depth, diversification and long-term growth,” said Charles Bachtell, CEO of Cresco Labs.
Columbia Care, which is based in Manhattan, operates 131 facilities including 99 dispensaries and 32 cultivation and manufacturing facilities. This includes a medical marijuana dispensary on East Main Street in Riverhead that opened in 2016 and a 34-acre farm and greenhouse facility on Sound Avenue, which Columbia Care bought last May for $42.5 million.
“Since our founding, our mission has been to deliver the best outcome for our stakeholders,” said Nicholas Vita, CEO of Columbia Care. “In an evolving industry, the opportunities to better achieve our mission through consolidation led us to this historic moment.”
The acquisition will allow the company to have a presence in the adult-use market in key states, including New York, New Jersey, Pennsylvania and Florida, according to the Cresco press release. Adult-use marijuana was legalized in New York last year through the Marihuana Regulation and Taxation Act.
“The combination of Cresco Labs and Columbia Care accelerates our journey to become the leader in cannabis in a way no other potential transaction could,” Bachtell said.
New York State will start to distribute its first conditional licenses for adult-use cannabis dispensaries in the late summer or early fall of this year to business owners who had been “justice involved” due to a marijuana-related offense.
It is unclear when the Cannabis Control Board, the governing body of the state Office of Cannabis Management, may issue licenses to larger businesses like Cresco to sell adult-use marijuana.
Both Columbia Care and Cresco hold licenses to grow and sell medical marijuana in New York.
Adult-use dispensaries will be allowed to set up shop in Riverhead Town, after a vote to opt-out of adult-use establishments in the town’s jurisdiction failed to gain majority support of the town board last summer. The state law allows municipal governments to impose time, place and manner restrictions for adult-use sites in its bounds, as long as the restrictions don’t make the operation of the businesses “unreasonably impracticable” as determined by the Cannabis Control Board.
Surrounding towns, like Southold, opted out of the sales, while other municipalities, including Brookhaven passed zoning laws restricting marijuana businesses to industrial areas.
In Riverhead, Councilman Ken Rothwell hosted three advisory forums with community members and business leaders over the past few months to decide on recommendations for time, place and manner restrictions to the town board for adoption. The group finalized recommendations last week and will propose to the town board that marijuana businesses be integrated into current zoning districts and kept away from certain land uses, including schools, libraries, places of worship, parks and beaches, with 500-foot to 1,000-foot setbacks.
Riverhead Town will receive 3% of the 14% sales tax imposed on marijuana establishments in its jurisdiction under the state law.
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