Please ensure Javascript is enabled for purposes of website accessibility

Cresco Labs Acquires Cultivate, Winning Market Share in Massachusetts

By Eric Volkman - Updated Mar 18, 2021 at 4:02PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The marijuana company is going the acquisition route yet again.

Cresco Labs (CRLBF 3.11%) is enlarging its footprint in an important marijuana state. The company announced Thursday that it has signed an agreement to acquire Cultivate, a vertically integrated cannabis grower and retailer.

The up-front acquisition cost for Cresco is $90 million, and it's on the hook for as much as $68 million more in earnouts. That initial $90 million is comprised of $15 million in cash and $75 million in Cresco stock.

The money assets in the deal are Cultivate's two operating dispensaries, one of which is in the central Massachusetts town of Leicester, and the other in the Boston-vicinity municipality of Framingham. A third store in Worcester, near Leicester, should open for business by the end of June.

A Cultivate sign in front of one of the company's dispensaries.

Image source: Cultivate.

"At the precipice of a transformational moment in U.S. cannabis, now is the time to further our leadership in the country's largest and most important markets," Cresco CEO Charles Bachtell said. "Through this acquisition, Cresco Labs will immediately vault to a top 3 share position in Massachusetts, the third $1B+ cannabis market where we've achieved this status."

Bachtell is referring to recent data indicating that marijuana sales hit $1.1 billion in the state in 2020. This indicates a market that has grown fast, as sales of recreational marijuana began there barely over two years ago.

Cresco is one of several multistate operators (MSOs) vying to be an important nationwide dispensary chain operator. This is hardly the first time it has opened its wallet to buy an asset; in January, for example, it signed a $213 million deal to buy Florida medical marijuana grower and retailer Bluma Wellness.

In midafternoon trading on Thursday, Cresco stock was up by 0.8%, in contrast to the 0.9% dip of the S&P 500.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Cresco Labs Inc. Stock Quote
Cresco Labs Inc.
CRLBF
$3.98 (3.11%) $0.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
327%
 
S&P 500 Returns
116%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.