Cresco Labs Inc., a multi-state cannabis operator, said it has entered into agreements with Verdant Creations, LLC that will provide it the option to purchase four additional medical marijuana dispensaries in Ohio currently operated by Verdant.
Cresco will pay $375,000 in cash and $500,000 of its subordinate voting shares to Verdant for each dispensary. The company expects the transaction to close in the fourth quarter of 2020, subject to approval by the Ohio Board of Pharmacy.
Upon closing of the transaction, Cresco will have a total of five dispensaries in Ohio, the maximum allowed by the State.
Verdant currently operates dispensaries in Cincinnati, Chillicothe, Marion, Newark, and Columbus, Ohio. The Columbus location is not part of the transaction, Cresco noted.
“Upon completion of this Transaction and completing the final phase of buildout at our cultivation facility, we expect to drive increased revenue growth and operating leverage in this limited license state,” said Charlie Bachtell, Cresco Labs CEO and co-founder.
Bachtell noted that Ohio, the seventh most populated state in the U.S., now has over 100,000 registered patients and recorded over 30 percent growth in average weekly sales from February to April this year.
Cresco has 25,000 square feet of cultivation, currently undergoing upgrades, which are fully funded by a sale-and-leaseback agreement with Industrial Properties REIT.
Cresco noted that the four additional dispensaries will increase its vertical integration in Ohio and act as crucial customer touchpoints to increase recognition of the company’s portfolio of brands. Cresco products are currently offered in almost 60 percnt of dispensaries in the State.
Under the deal, Cresco has agreed to provide certain consulting services and financing to Verdant for the development as well as operation of the dispensaries, in consideration of Verdant granting Cresco an option to acquire the dispensaries when permissible under Ohio regulations.
In April, Cresco Labs said it reached a mutual agreement to terminate its acquisition of Las Vegas-based seed-to-sale cannabis company Tryke Companies LLC. In September 2019, Cresco Labs had announced a deal to acquire Tryke Companies for $282.5 million.
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