Cresco Labs (CSE:CL,OTCQX:CRLBF) and Columbia Care’s (NEO:CCHW,CSE:CCHW,OTCQX:CCHWF) planned deal was already in jeopardy, but now it’s official — the companies will end the proposed transaction with no penalties or fees.
Also this week, a medical cannabis real estate investment trust (REIT) issued another successful quarterly report, adding an investor dividend. Keep reading to find out more cannabis highlights from the past five days.
Cresco Labs and Columbia Care call off deal
On Monday (July 31), Cresco Labs and Columbia Care confirmed the end of a US$2 billion agreement that was set to create a cannabis behemoth in the US market, which is set to achieve legal sales of US$35 billion in 2023.
The tie-up was set to be one of the largest in the still-young cannabis industry, and was seen as indicative of the consolidation period the industry is going through.
‘While this is not the outcome we originally hoped for, we are confident Cresco Labs is in a stronger position moving forward,” Charles Bachtell, CEO and co-founder of Cresco Labs, said.
For his part, Nicholas Vita, CEO and co-founder of Columbia Care, was appreciative of the experience for his firm and said his company has become a better operator from being involved in the process.
‘Over the last 16 months we have reviewed every aspect of our business, remained decisive and have made substantive changes that significantly improved our operations — positioning us with significant strategic and operational strength at this inflection point in the company’s history,’ Vita said in a press release.
The main issue dragging down this deal relates to ongoing capital issues for cannabis operators. According to Matt Bottomley, a cannabis analyst with boutique investment firm Canaccord Genuity, a ‘relatively shallow pool of investment dollars coming into the industry made the required pending asset dispositions less attractive than originally anticipated.”
Following the dissolution of the deal, Columbia Care notified investors it will be moving forward with expansion plans in Virginia, as well as with a voluntary delisting from the Canadian Securities Exchange.
Cannabis REIT reports financials
Leading medical cannabis REIT Innovative Industrial Properties (IIP) (NYSE:IIPR) issued its Q2 financial results.
On Wednesday (August 2), the company reported revenue of US$76.5 million, an 8 percent increase over the same period last year. IIP was able to achieve a net income line of US$40.9 million.
Thanks to these results, the company was able to pay a quarterly dividend of US$1.80 per share on June 30.
‘The (revenue) increase was driven primarily by activity in prior periods for the acquisition and leasing of new properties, additional building infrastructure allowances provided to tenants at certain properties that resulted in increases to base rent, tenant reimbursements and contractual rental escalations at certain properties,’ the company said in a statement.
Cannabis company news
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.