CHICAGO – Cresco Labs, one of the largest vertically integrated, multistate cannabis operators in the United States, today, March 18, announced it plans to buy 100% equity in Cultivate Licensing LLC , which operates a retail store in Framingham.
“At the precipice of a transformational moment in U.S. cannabis, now is the time to further our leadership in the country’s largest and most important markets. Through this acquisition, Cresco Labs will immediately vault to a top 3 share position in Massachusetts, the third$1 billion-plus cannabis market where we’ve achieved this status,” said Charles Bachtell, CEO of Cresco Labs.
“We continue to demonstrate our ability to execute operationally and make accretive investments to accelerate growth. Cultivate has been a trailblazer and an operational standout since the early days of the Massachusetts market. Like us, the Cultivate team is focused on growing premium flower, offering a full suite of branded products, delivering the best customer experience at retail, and elevating the cannabis industry to a new level of professionalism and social responsibility.” Mr. Bachtell continued, “This will also mark the fourth state in which we operate the maximum number of retail stores. Once again, we look forward to executing our playbook and demonstrating the growth and leverage that can be achieved by going deeper in strategic states. At a period of industry inflection, we are cementing our leadership in a deliberate manner as the most important company in cannabis.”
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Cultivate Highlights:
- Approximately 42,000 sq. ft. of flowering canopy.
- Planned indoor expansion of approximately 20,000 sq. ft. of additional flowering canopy.
- Premium flower and edibles offerings in addition to concentrates and medicinals across well known, owned brands.
- Two operational dispensaries in Leicester and Framingham.
- Third dispensary in Worcester, estimated to be opened in Q2 2021.
Massachusetts Market Highlights:
- 15th most populous state in the U.S. with 6.9 million people1.
- Nearly $1bn in total retail sales in 2020, including robust expansion of medical program and despite 6 weeks of lost sales due to COVID-19 restrictions on the adult-use market
- $83.4M in adult use sales for the 4 weeks ending 3/7/21 – the largest 4 week total to date
- Second-highest per-gram pricing within U.S. adult-use markets
- Strong margin profile achievable through vertical integration and emphasis on wholesale.
- Supply constrained market and largest adult use market in the North East.
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The maximum consideration amount for the transaction is $158 million.
The Transaction will be completed on a cash-free, debt-free basis with a mutually agreed upon normalized target level of working capital.
A portion of the Purchase Price would be payable upon closing of the Transaction, subject to the adjustments and lock-up agreements contained in the definitive agreement, and will be comprised of:
- $15 million in cash in cash (the “Cash Amount”); and
- Shares of Cresco (“Cresco Shares”) having an aggregate value equal to $75 million based on the volume-weighted average closing price of Cresco Shares reported on the Canadian Securities Exchange for the ten (10) consecutive trading day period ending on the trading day immediately preceding the date of execution of the definitive agreement.
The remaining portion of the Purchase Price shall be structured as an earnout based on the achievement of certain EBITDA target thresholds in 2021, up to $68 million.
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An amount equal to approximately 12.5% of any earnout payments earned by seller shall be paid in cash. The remaining portion of any earned earnout payments shall be satisfied via issuance of Cresco Shares.
Cresco Labs is one of the largest vertically integrated, multistate cannabis operators in the United State. The company’s HQ is in Chicago.
MassBay Community College 
MetroWest Medical Center