With a prospective arrangement for manufacturing and retail shops in the Chicago region and New York and Massachusetts, rapper Sean “Diddy” Combs might become a dominating African American player in the cannabis sector.
Combs is paying at least $155 million for assets split out by Cresco Labs as part of its acquisition of a competitor, Columbia Care. According to Combs and company executives, the deal will diversify the licensed cannabis industry. Illinois and other states have been under pressure to grant additional cannabis licenses to minority-owned businesses.
Combs would take over three Columbia Care sites in the Chicago area: Cannabist storefronts at 4758 N. Milwaukee Ave. in Chicago’s Jefferson Park and 133 Roosevelt Road in Villa Park, as well as an Aurora manufacturing facility.
Cresco stated that the deal makes Combs the nation’s first Black marijuana investor with multistate operations and the largest Black-owned cannabis firm. Other commercial ventures of Combs Enterprises include entertainment, apparel, liquor, and media.
“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.”
According to the firms, the deal includes $110 million in cash and $45 million in seller financing. They estimated that if Combs meets performance criteria, the transaction might be worth an additional $40 million.
The transaction might be completed by the end of March 2023, concomitant with the completion of the Columbia Care purchase, which is subject to various regulatory clearances.
Combs now has a presence in New York City, Boston, and Chicago. Cresco or Columbia Care would provide him with retail and production assets in New York and Massachusetts.
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.
“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 the president of Combs Enterprises and a member of the Cresco board of directors. Cresco stated that he had recused himself from the company’s consideration of the Combs sale. According to the corporation, the transaction was accepted by other board members based on the proposal of an independent directors committee.