Cresco Labs (US) is a multistate cannabis company that produces cannabis plants. It is a grower, processor and retailer of cannabis and operates across the United States. Origin House (US) is a distributor and provider of brand support services in California, the world’s largest regulated cannabis market. The company delivers more than 130 branded products through over 50 brands to most licensed dispensaries. The acquisition will provide Cresco with a large portfolio of brands to work with and on the other hand, Origin House will be able to expand its geographic presence. The acquisition will help in combining the expertise of both the companies that will help them in becoming a key North American cannabis company and one of the largest cannabis brand distributors.
MarketsandMarkets™ View Point:
The acquisition will enable each company to distribute its in-house products on a wider scale. Cresco Labs will benefit from gaining 500 dispensary distribution network of Origin House in California that will significantly enhance its market penetration and sales. Furthermore, this acquisition will help Origin House in building a portfolio of cannabis brands in California and Cresco’s distribution infrastructure will provide the company a valuable framework to scale its operations in other states of the US – said Ms. Shefali Sonker, (Strategy Growth Analyst – Food and Beverage at MarketsandMarkets™).
Impact of Acquisition:
The acquisition represents the largest public company acquisition in the history of the US cannabis industry. The combined entity will be one of the largest vertically integrated multi-state cannabis operators in the US and one of the largest cannabis brand distributors. This will also help Cresco in enhancing its capital market presence by significantly increasing its scale and the liquidity in the Company’s stock which will result in improved ability to attract institutional investment. Moreover, Origin house will benefit from the well-established distribution infrastructure of Cresco Labs which will enable the company to grow by offering its products to additional states.
The figure below shows the opportunity in the cannabis market in terms of value. The North American cannabis market is estimated to account for the largest share in 2018. The market in this region is primarily driven by growth in the US and Canadian markets. The cannabis market in this region is also driven by the increasing legalization of cannabis for both medical and recreational purposes all over North America and the rising awareness among consumers regarding the health benefits of cannabis.
FIGURE 1 CANNABIS MARKET FORECAST TO 2023
e – Estimated; p – Projected
The consolidation effect of the organized cannabis market has just begun. As such, its usage in recreational and medical space is set to increase multi fold in the next decade. Marijuana as a medicine has the power to cure millions of lives across the world suffering from epilepsy, Dravet syndrome and Lennox- Gastaut syndrome. Also, the recreational usage of cannabis is growing very fast and the companies are finding optimum strategies to meet the super high demand. Overall, this is promising market in the near future – said Mr. Nagesh Manepalli, (Head- Food, Beverage, Animal Nutrition and Agriculture at MarketsandMarkets™)
Some of the major competitors in cannabis market are Canopy Growth Corporation (Canada), Aurora Cannabis Inc. (Canada), Tikun Olam (Israel), Cannabis Science Inc. (US), Aphria Inc. (Canada), Maricann Group Inc. (Canada), Tilray Inc. (Canada), VIVO Cannabis Inc. (Canada), Medical Marijuana, Inc. (US), STENOCARE (Denmark), Cronos Group Inc. (Canada), Terra Tech Corp. (US), and MedMen (US).
The collaboration of Cresco Labs and Origin House is likely to result in the establishment of the cannabis industry’s first national house of brands with a growing multi-state footprint that includes leading distribution market share in some of the largest states in the US, including California, Pennsylvania, and Illinois. The acquisition would help in creating a footprint of a key cannabis company in the United States.