By Chloe Aiello
Chicago-based cannabis company Cresco Labs will focus on distribution and brand building on the heels of a major acquisition announcement, because those parts of the industry will be least disruptible as U.S. cannabis matures, according to the company's CEO.
"When it comes to cultivation and brick and mortar retail, we think those are are probably the most disruptable elements in the value chain. So focusing on brand building and making sure that we can get our brands into other dispensaries that we don't own is critical," Cresco CEO and co-founder Charlie Bachtell told Cheddar.
Cresco Labs announced it will acquire cannabis distribution company Origin House, formerly known as CannaRoyalty, in an $823 million deal that will deepen Cresco Labs’ footprint into the California market. Following the deal, Cresco will have 51 retail licenses and about about 1.5 million sq. ft. of cultivation across 11 states. The company's brands, which include Remedi, Mindy's Artisinal Edibles, and Reserve, will be sold in as many as 725 dispensaries nationwide.
The deal, which Cresco says is the largest public company acquisition in U.S. cannabis, will make Cresco one of the top distribution companies in California ー a relatively mature market that has been difficult for young companies to crack. Bachtell told Cheddar the company will likely focus on cementing its hold over pre-existing markets, like California, before jumping into new ones.
"Our focus for the immediate future is going to be really designed to go deeper into all of those states. We like being number one market share in Illinois, number one market share in Pennsylvania, biggest distributor in California," he said. "We like that story, so well continue to go deeper in the states that we currently have."
On the innovation front, Cresco will be working on what Bachtell calls "less conspicuous, easier to manage product forms" that will be key to capturing dollars from a new wave of cannabis users.
"There's a culture of cannabis that has to be acknowledged and respected, but the future of participants of this space, you learn a lot from them. And they want an experience they are comfortable with that looks familiar to them," he said.
It's these users that Bachtell says will fuel the growing U.S. industry, which investment banking firm Cowen anticipates will generate $80 billion in sales by 2030.
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