Shares of U.S. cannabis multistate operator Cresco Labs (CRLBF) were falling Tuesday after the company closed its $90 million acquisition of Cultivate, a vertically integrated company that operates three dispensaries in Massachusetts.
Cresco is acquiring about 42,000 square feet of active flowering canopy in the deal, bringing its total combine canopy in the state to 64,000 square feet.
“The closing today constitutes another important step for Cresco Labs as we deepen our presence in large, attractive states like Massachusetts and increasingly tailor and strengthen our state-level strategies to optimize growth and profitability,” said CEO Charlie Bachtell in a statement late Friday.
Under the terms of the deal first announced in March, Cresco is paying $15 million in cash, plus shares of Cresco valued at $75 million. In addition, the purchase includes the opportunity for a $68 million earnout based on achievement of EBITDA target thresholds in 2021.
Cresco is taking over three operational dispensaries located in Leicester, Framingham and Worcester. Cresco now has four retail storefronts in Massachusetts.
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The acquisition gives Cresco a platform to pursue market share growth in Massachusetts, the largest adult use cannabis market in the northeast, the company said.
“Expanding operations in the most strategic U.S. cannabis markets is at the heart of our growth strategy and we’re thrilled to have the opportunity to show what can be achieved through a maximized footprint in Massachusetts,” Bachtell said.
Cresco has been active in the cannabis M&A space in recent weeks.
The closing of its acquisition of Cultivate comes just weeks after the company agreed to acquire Blair Wellness, a medical cannabis dispensary located in Baltimore.
That deal gave the Chicago company a foothold in a mature cannabis market that realized medical cannabis retail sales of over $500 million.
Cresco shares were falling 3.2% to $9.36 per share in afternoon trading Tuesday at last check.
