Cresco Labs Strengthens Position in Robust Ohio Market With Transaction to Acquire Four Additional Operating Dispensaries
CHICAGO, May 26, 2020–(BUSINESS WIRE)–Cresco Labs (CSE:CL) (OTCQX:CRLBF) (“Cresco” or “the Company”), one of the largest vertically integrated multi-state cannabis operators in the United States, announced today that it has entered into agreements with Verdant Creations, LLC and its affiliates (collectively “Verdant”) that will give Cresco the option to purchase four additional Ohio dispensaries (the “Dispensaries”) currently operated by Verdant (the “Transaction”). Completion of the Transaction is subject to approval by the Ohio Board of Pharmacy and, upon closing, Cresco will have a total of five dispensaries in Ohio – the maximum allowed by the State.
Upon completion of this Transaction and completing the final phase of buildout at our cultivation facility, we expect to drive increased revenue growth and operating leverage in this limited license state. We continue to value vertical integration and retail to create leverage for our wholesale and brand building while providing front-line feedback directly from our consumer base.
Charlie Bachtell, Cresco Labs CEO and co-founder
Ohio is the seventh most populated state in the country, now has over 100,000 registered patients and experienced over 30% growth in average weekly sales from February to April. With our experience in Illinois and Pennsylvania, we think Ohio is on its way to joining these states as one of the strongest performing regulated cannabis programs in the country.
Verdant currently operates dispensaries in Cincinnati, Chillicothe, Marion, Newark, and Columbus, Ohio. The Columbus location is not part of the Transaction.
The Transaction is consistent with Cresco’s stated strategy of going deeper in key states. Cresco has 25,000 square feet of cultivation, currently undergoing upgrades, which are fully funded by a sale-and-leaseback agreement with Industrial Properties REIT. The four additional dispensaries increase Cresco’s vertical integration in the State and act as crucial customer touchpoints to increase recognition of Cresco’s portfolio of brands. Cresco products are currently offered in nearly 60% of dispensaries in the State.
Under the Transaction, Cresco agreed to provide certain consulting services and financing to Verdant for the development and operation of the Dispensaries in consideration of Verdant’s grant to Cresco of an option to acquire the Dispensaries when permissible under Ohio regulations. Cresco’s financial obligations in the Transaction are substantially fulfilled and the consideration payable by Cresco upon exercise of the option for each Dispensary consists of $375,000 in cash and $500,000 of Cresco subordinate voting shares. Subject to approval by the Ohio Board of Pharmacy, Cresco expects the Transaction to close in the fourth quarter of 2020.
About Cresco Labs:
Cresco Labs is one of the largest vertically-integrated multi-state cannabis operators in the United States. Cresco is built to become the most important company in the cannabis industry by combining the most strategic geographic footprint with one of the leading distribution platforms in North America. Employing a consumer-packaged goods (“CPG”) approach to cannabis, Cresco’s house of brands is designed to meet the needs of all consumer segments and includes some of the most recognized and trusted national brands including Cresco, Remedi and Mindy’s, a line of edibles created by James Beard Award-winning chef Mindy Segal. Sunnyside*, Cresco’s national dispensary brand, is a wellness-focused retailer designed to build trust, education and convenience for both existing and new cannabis consumers. Recognizing that the cannabis industry is poised to become one of the leading job creators in the country, Cresco has launched the industry’s first national comprehensive Social Equity and Educational Development (SEED) initiative designed to ensure that all members of society have the skills, knowledge and opportunity to work in and own businesses in the cannabis industry. Learn more about Cresco Labs at www.crescolabs.com.