Cresco Labs has signed a binding agreement for the sale-and-leaseback of two properties in Ohio and Michigan, for total additional non-dilutive funding of approximately $38 million. The company also announced the mutual termination of the equity purchase agreement pursuant to which a subsidiary of Cresco Labs would have acquired the ownership interests or assets of VidaCann Ltd. and/or affiliated entities in a transaction that was originally announced in March 2019.
“We recognize that responsibly allocating our shareholders’ capital is fundamental to long-term success,” Cresco Labs CEO and Co-Founder Charlie Bachtell said in a statement. “While it sometimes means making tough decisions, we are committed to executing on a superior capital agenda, responsibly accelerating the top and bottom-line, executing thoughtful and accretive M&A transactions, and generating efficiencies as we scale. With the flexibility to continue to leverage non-dilutive funding options like sale-lease-back agreements, we are well-positioned to continue executing on our strategy to build the most important, enduring company in U.S. cannabis.”
Bachtell continued: “With these two announcements, we have effectively strengthened our balance sheet to the tune of nearly $158 million between new non-dilutive funding and the elimination of a significant near-term cash outlay earmarked for the transaction. The team and operations at VidaCann are phenomenal, but with a focus on managing our cost of capital, and insuring the most efficient and highest return on invested capital, the ability to deploy resources to other, existing, Cresco markets that are widely considered some of the top markets in the US, like Illinois, Pennsylvania, California and Nevada, has to take priority.”
Cresco Labs has signed binding agreements to sell its Yellow Springs, Ohio and Marshall, Michigan properties to Innovative Industrial Properties, Inc. for approximately $38 million in total, which includes funding for additional tenant improvements at both properties. Concurrent with the closing of the sale, Cresco Labs will enter into long-term, triple-net lease agreements with IIP and will continue to operate each property as a licensed cannabis cultivation and processing facility. The two properties represent approximately 166,500 square feet of industrial space in aggregate. The sales of the properties are expected to close within the next 30 days, with closings subject to IIP’s completion of diligence and satisfaction of customary closing conditions.
Cresco Labs is one of the largest vertically-integrated multi-state cannabis operators in the United States.
