Just announced via Bloomberg, US Chicago-based cannabis producer Cresco Labs Inc. (CSE:CL) (OTCQX:CRLBF) is acquiring Canada’s Origin House (CSE:OH) (OTCQX:ORHOF) in an all-stock deal with $1.1 billion USD. What will an Origin House takeover mean for the company?
Let’s check this out.
Origin House Takeover
The deal will see the two cannabis operators join forces, with an aim to establish a North American cannabis conglomerate.
Origin House owns and distributes more than 130 cannabis brands and is also involved in financing through its subsidiary Trichome Financial Corp.
According to Canaccord Genuity analyst Matt Bottomley, the deal focuses heavily on the US’s largest legal market—California. It is here where Origin House already distributes most of the state’s top cannabis brands.
Origin House Chairman and Chief Executive Marc Lustig also places emphasis on the California market:
“This transaction is directly aligned with our strategy to build a leading portfolio of cannabis brands in California and to rapidly and accretively take those brands to the rest of the US market, as well as the Canadian market.”
California is one of the most important and lucrative markets for any cannabis company looking to dominate in the US. With sales surpassing $2.5 billion last year, it represents the mecca for cannabis producers.
“Securing distribution into California’s wide network of cannabis retailers will be critical to carving out meaningful market share in what is now the largest legal cannabis market in the world.”
Origin House Takeover to Build a Conglomerate
A major impetus for Origin House to partner with Cresco Labs is to “supercharge its growth” within the US market. In the press release, Origin House Chairman and Chief Executive Marc Lustig said the following:
“By partnering with one of the largest and most innovative US multi-state operators in existence today, Origin House will supercharge its growth and be in a position to offer its brand partners access to 10 additional states, with licenses and supporting infrastructure already in place.”
Only last month, Cresco acquired Florida’s VidaCann Ltd. for $120 million USD. With that acquisition, the company has access to almost two-thirds of the US legal cannabis market. The addition of Origin House will create one of the largest cannabis companies in the US. With a combined 23 facilities across 11 US states and over 50 brands on sale in over 750 dispensaries, this cannabis conglomerate will be an industry behemoth.
What do you think of Cresco Labs taking over Origin House?
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