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The Chicago-based cannabis company Cresco Labs, who went public in Canada in December, is buying Origin House, a Californian company, for $850 million. This comes just two weeks after Cresco said it would buy VidaCann, a Florida-based grower and distributor, for $120 million. Origin House is an acquisition of purely stock while VidaCann was a mix of cash and stock.

Cresco’s buying spree comes amid a continued land grab in the cannabis industry in which early players scrambled to win licenses in multiple states and raise money, ultimately going public.

Cresco, along with Green Thumb Industries, is one of two Chicago-based companies to go public over the last year. Origin House is the largest distributor of cannabis products in California, which is the biggest state to legalize recreational use. It gives Cresco both additional reach and a plethora of new consumer brands that could help it become one of the survivors in an industry that’s seen rapid consolidation in the past six months.

“We’ve been doing geographic expansion for the past two and a half years,” said Charlie Bachtell, CEO of Cresco, which operates in 11 states. “This is our first acquisition beyond geography. This is strategic channel expansion.”

Like Cresco, Origin House (which was founded in 2015 as CannaRoyalty) has licences to grow and distribute cannabis in California. While Origin House has several of its own brands, it’s a large distributor of other companies’ products too, delivering more than 50 cannabis brands to more than 500 dispensaries. The company estimates it has 60% of market share in the state.

The cannabis market is siloed, with growing, consumer product manufacturing, wholesale distribution and retail operations.

“If you want to be a major player, you have to do all of those,” Bachtell says. “You have to have the ability to distribute both your own branded product and find distribution onto other people’s shelves. Following the closing of this acquisition, Cresco brands will be in over 725 dispensaries across the country, giving us the largest and most strategic distribution footprint of any cannabis company in the United States. This significantly accelerates our efforts to build the first national house of brands with broad and deep positions in the largest cannabis markets in the country.”

Source: https://www.chicagobusiness.com/consumer-products/cresco-buying-californias-largest-distributor-cannabis-products

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