While the Canadian cannabis market has received plenty of attention over the past several months, it’s easy to overlook based on the amount of media attention it’s received that in comparison, there are many states within the U.S. which are much larger than the entire country of Canada in cannabis users.
California is one of these which comes to mind, with a state population that eclipses that of the northern nation, and other areas like Florida, New York, and more are all potentially more viable candidates for expansion than Canada. Cresco Labs (CSE: CL), a major vertically integrated cannabis company in the U.S. that operates in many states, announced today that they are entering the Florida market with a $120 million acquisition of VidaCann, a major medical cannabis producer in the state.
With this acquisition, Cresco Labs will have access to around 65 percent of the total cannabis market in the country. The deal would see the company acquire seven dispensaries and expects to have up to 14 operational by the end of June 2019. They also will be adding a fully operational, state-of-the-art Greenhouse, processing, and analysis lab amongst their assets in the state with around 70,000 square feet in cultivation capacity.
“Entering the Florida market is consistent with Cresco Lab’s strategy of entering markets with outsized demand with strong regulatory structures and is an important milestone for the Company that dramatically impacts our growth trajectory and will be accretive to our earnings in 2019,” said Cresco Labs CEO and co-founder Charlie Bachtell. “Since relaunching its cannabis program in 2017, Florida has seen tremendous growth in patient registration and is one of the most important markets in the country. VidaCann is the perfect blend of an established operational footprint and infrastructure of professionals that will allow Cresco to execute its disciplined and strategic Florida plan expeditiously. We look forward to welcoming all of the 100 VidaCann employees to the Cresco Labs family.”
Overall, Florida’s medical cannabis market is expected to reach $1.7 billion by 2022 according to Arcview Market Research and BDS Analytics. At the same time, Cresco Labs was one of the best performing cannabis companies in February, according to New Cannabis Venture’s American Cannabis Operator Index, whose shares increased by 30 percent.
“Matching our proven ability to execute operationally with unparalleled speed to the foundation already established by VidaCann, we expect to efficiently scale our Florida operations, immediately impact the market, and get the same high rate of market share that we have achieved in other states in which we operate,” added President and Co-founder Joe Caltabiano. “We are excited to bring the Cresco Labs’ brand of professional cannabis to the patients of Florida and to all stakeholders involved with this program.”
In response to the news, shares of Cresco Labs jumped 6.4 percent in today’s trading session, adding C$0.74 and ending the day at a price of C$12.36 per share. Around a week ago, Cresco Labs made news when it’s US shares got upgraded to a listing on the OTCQX exchange, something the management team expects will open up the company to additional investment pools.