Chicago-based Cresco Labs Inc. has closed the previously announced acquisition of CannaRoyalty Corp., which does business as Origin House, by way of a plan of arrangement. With the closing of the deal, Cresco has significantly increased its footprint and accelerated its entry into the California cannabis market.
“This is a transformational deal for Cresco and represents the culmination of the better part of a year’s work for both the Cresco and Origin House teams,” said Charlie Bachtell, Cresco’s CEO and co-founder, in a statement. “With the closing of this transaction, Cresco is in a position to accelerate its entry into one of the largest legal cannabis markets in the world, while adding valuable expertise in wholesale distribution and brand development, which we expect will drive significant value for all of our shareholders as we scale across the country in the coming years. We also see meaningful synergies across our national footprint through the addition of Origin House’s ultra-premium indoor cultivation team, which we expect will assist us in our goal to consistently outperform the market on yield and quality metrics.”
Origin House Chairman and CEO Marc Lustig added: “Cresco’s focus on the middle two verticals of the value chain — brands and wholesale distribution — as the key to creating long-term shareholder value, is aligned with the philosophy we had at Origin House. Speaking as one of the largest former shareholders of Origin House and now an enthusiastic and significant Cresco shareholder, I am looking forward to the opportunity for this combined team to create value for all of our shareholders.”
Cresco intends to appoint Lustig to the its board of directors, following receipt of certain U.S. regulatory approvals. The acquisition of Ottawa, Canada-based Origin House is expected to make Cresco a leading wholesale distributor in California, selling into over 575 dispensaries, representing approximately 65% of California’s storefront dispensaries. Origin House’s Continuum distribution platform distributes 13 third party brands, including Kings Garden.
Origin House’s 92,000 square feet of ultra-premium indoor cultivation and production facilities is expected to allow Cresco to expand its offering of Cresco-branded products across California rapidly; growing market share, generating brand equity and driving shareholder value.