CHICAGO — Rapper Sean “Diddy” Combs could become a dominant African American player in the cannabis industry with a pending deal for production and retail outlets in the Chicago area and in New York and Massachusetts.
In a deal worth at least $155 million, Combs is buying assets being spun off by Cresco Labs as part of its acquisition of a competitor, Columbia Care. Combs and company officials said the sale announced Friday will diversify the licensed weed business. Regulators in Illinois and other states have been under pressure to approve more cannabis licenses for minority-owned enterprises.
In the Chicago area, Combs would take over three Columbia Care properties: stores at 4758 N. Milwaukee Ave. in Chicago’s Jefferson Park and at 133 Roosevelt Road in Villa Park that use the name Cannabist, and a production facility in Aurora.
Cresco said the sale makes Combs the nation’s first Black investor in marijuana with multistate operations and would create the largest Black-owned business in cannabis. Through his Combs Enterprises, the rapper’s other business interests include entertainment, fashion, liquor and media.
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“My mission has always been to create opportunities for Black entrepreneurs in industries where we’ve traditionally been denied access, and this acquisition provides the immediate scale and impact needed to create a more equitable future in cannabis,” Combs said in a statement Cresco provided. “Owning the entire process – from growing and manufacturing to marketing, retail, and wholesale distribution – is a historic win for the culture that will allow us to empower diverse leaders throughout the ecosystem and be bold advocates for inclusion.”
The companies said the sale involves $110 million in cash and $45 million in seller financing. They said the sale could be worth another $40 million if Combs reaches performance targets.
The sale could be completed by the end of March 2023, concurrent with the closing of the Columbia Care acquisition, which requires various regulatory approvals.
Aside from Chicago, the deal gives Combs a presence in the New York City and Boston markets. He would get retail and production assets in New York and Massachusetts from Cresco or Columbia Care.
Cresco CEO Charles Bachtell said the sale carries both business and social benefits. “For Cresco, the transaction is a major step towards closing the Columbia Care acquisition and our leadership position in one of the largest consumer products categories of the future,” he said.
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“For an industry in need of greater diversity of leadership and perspective, the substantial presence of a minority-owned operator in some of the most influential markets in the country being led by one of the most prolific and impactful entrepreneurs of our time is momentous … and incredibly exciting.”
Tarik Brooks is president of Combs Enterprises and a member of Cresco’s board. Cresco said he recused himself from the company’s consideration of the deal with Combs. The company said other board members approved the sale on the recommendation of an independent directors committee.
(Source: Sun-Times Media Wire – Copyright Chicago Sun-Times 2022.)
ABC7 Chicago contributed to this report.
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