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Diddy Moves into Cannabis Industry with $185 Million Purchase

Well-known rapper and business mogul Sean “Diddy” Combs recently agreed to purchase Columbia Care and Cresco Labs marijuana retail and production assets for $185 million. Outside observers believe the deal will create the largest Black-owned cannabis company nationwide.

Cresco and Columbia Care are closer to finishing a merger after selling their production and retail facilities. The companies announced the roughly $2 billion deal in March. Federal antitrust regulators must approve this transaction before it can be completed.

Combs plans to acquire three production facilities and nine retail stores in New York, Massachusetts, and Illinois. The lack of representation in the cannabis industry by minorities influenced his decision.

An MJBizDaily report found that minorities account for only 12.1 percent of executives within the cannabis industry, well below the 20.1 percent across all industries.

Cresco to Acquire Columbia Care

Cresco must sell off its assets to meet regulatory requirements to complete the acquisition of Columbia Care. Combs can finalize his deal once Cresco closes its purchase of Columbia Care.

The terms of the Cresco asset sale include the following:

  • Approximately $45 million in seller notes and $110 million in cash will be payable upon closing the transaction.
  • Meeting short-term market-based and objective milestones makes the rest of the $185 million payable.
  • The transaction includes Columbia Care stores in Rochester, Brooklyn, and Manhattan, including a production facility in Rochester.
  • The transaction also includes a Cresco store in New Hartford.
  • The deal involves a Cresco Labs production facility in Leicester, Massachusetts, and stores in Leicester and Worcester.
  • A Columbia Care store in Greenfield is also involved in the transaction.
  • The deal includes three assets Columbia Care owns in Illinois: an Aurora production facility and two stores in Chicago.

With the sale of assets, Combs can:

  • Operate retail stores in Illinois, Massachusetts, and New York
  • Distribute and wholesale the branded products to licensed retailers in the three states
  • Manufacture and cultivate cannabis products

Cresco Benefits from the Combs Deal

Combs’ deal to purchase multiple assets brings Cresco closer to acquiring Columbia Care and becoming a leader in the cannabis product industry. It also places a minority-owned operator and influential entrepreneur at the forefront of some of the biggest cannabis markets in the country.

Although Combs hasn’t ventured into the cannabis industry before, he is no stranger to promoting brands and running successful businesses. His Combs Enterprises portfolio includes the clothing brand Sean John, film and television company Revolt, and Ciroc vodka and DeLeon alcohol brands.

Of course, Combs first came to attention for the music he released under the stage name Puff Daddy. His musical endeavors extended into Bad Boy Entertainment, a business venture responsible for introducing hip-hop music by Notorious B.I.G., Craig Mack, and other popular ’90s artists. 

Well-Known Moguls in the Cannabis Industry

The $185 million deal is a landmark investment for Combs. However, it’s not the first time a Black entertainment mogul stepped into the cannabis industry.

In 2020, hip-hop artist Jay-Z launched the Monogram brand in California. A deal involving marijuana brand Caliva and the cannabis production and investment company Left Coast ventures hired him to promote inclusion and equity in 2021.

The rapper Berner is co-founder of Cookies, a national flower brand company based in the San Francisco Bay Area. Cookies owns 38 cannabis retail stores in seven states. It also has stores in the Netherlands, Israel, and Spain. Recently, Berner announced a partnership with cannabis businesses in Portugal and Canada.

Wiz Khalifa, another successful rapper, has turned his love of marijuana into an empire. He launched Khalifa Kush Enterprises in 2016. His cannabis line now includes vapes, concentrates, flower, and edibles through an exclusive partnership with Cookies. These products are on shelves in Arizona, California, Utah, and Nevada. Khalifa also launched HotBox by Wiz, a restaurant delivery brand specializing in munchie menu items.

Snoop Dogg’s name is practically synonymous with marijuana for many fans. In 2015, he launched a line of cannabis products called Leafs By Snoop. He also created a venture capital firm called Casa Verde Capital to help fund marijuana startups.

Updates on the Cresco Merger

Recent failed deals involving Ascend Wellness’s acquisition of MedMen’s New York assets and Verano Holdings’ acquisition of Goodness Growth cast doubts about the Cresco-Columbia deal, as both companies must divest themselves of assets to finalize the deal.

An equity analyst for a New York-based investment bank believes the risk of Cresco not completing its acquisition of Columbia Care is low, with only assets left in Maryland, Florida, and Ohio to be sold off. The merging companies should inch closer to their projected $300 million by selling off assets including:

  • One Florida license, valued at about $50 million
  • Five stores in Ohio plus production, worth as much as $30 million
  • A small Maryland processor, estimated at $5 million

A managing partner at an investment banking firm in New York believes these sales could net $300 million, especially factoring in assets in Pennsylvania and Florida. A Toronto-based analyst thinks the number the companies reach might be lower than the projections.

If the deal goes through, Combs might be the first Black owner of a vertically integrated cannabis operator in multiple states. He will have the ability to manage the entire process, from growing the raw materials to processing them and from marketing the products to distributing them in wholesale and retail locations. He hopes to empower diverse leaders and create opportunities for Black entrepreneurs in industries that might have rejected them in the past.

Learn More About the Cannabis Industry

CannabutterDigest.com covers all things cannabis-related. Stay updated on your favorite topics by reading our recipes, educational articles, product reviews, and other pages.

More celebrities are getting in on the action by investing in the industry, partnering with companies, and creating their own cannabis brands. Check out the latest celebrity cannabis news today for more information.

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