Sean ‘Diddy’ Combs to buy Cresco, Columbia Care marijuana assets for up to $185 million

Just Released! Get realistic market forecasts, state-by-state insights and benchmarks with the new 2024 MJBiz Factbook member program, now with quarterly updates. Make informed decisions.

Image of Sean "Diddy" Combs

(This story was updated at 2:40 p.m. ET to include additional details, background and analyst quotes.)

Business mogul and rapper Sean “Diddy” Combs agreed to buy marijuana retail and production assets owned by Columbia Care and Cresco Labs for up to $185 million to create what is being called the largest Black-owned cannabis company in the U.S.

The sale of the retail and production facilities in three states also will bring New York-based Columbia Care and Chicago-headquartered Cresco closer to completing their merger. That deal was announced in March and valued at the time at roughly $2 billion.

The transaction must be approved by regulators and receive clearance from federal antitrust regulators.

According to a Friday news release, Combs is buying nine retail stores and three production facilities in Illinois, Massachusetts and New York – a move that will allow the Black entrepreneur to launch “the country’s first minority-owned and operated, vertically integrated multistate operator.”

Requests from MJBizDaily for comment from the mogul’s Combs Enterprises were not returned.

But Combs told The Wall Street Journal he’s disappointed by the lack of minority representation in the cannabis industry and aims to make it more equitable.

“It’s diabolical,” he said.

“How do you lock up communities of people, break down their family structure, their futures, and then legalize it and make sure that those same people don’t get a chance to benefit or resurrect their lives from it?”

MJBizDaily’s new report, “Diversity, Equity & Inclusion in the Cannabis Industry,” shows that 12.1% of executives in the U.S. marijuana industry are racial minorities, down from 13.1% in 2021.

That’s well below the average for all U.S. businesses: According to the U.S. Bureau of Labor Statistics, approximately 20.1% of all CEOs nationwide are racial minorities.

Cresco’s acquisition of Columbia Care is contingent on Cresco’s divestiture of assets to meet regulatory requirements.

Additional asset sales are expected.

The deal with Combs will close if Cresco’s purchase of Columbia Care closes, the release noted.

According to the terms of the Cresco asset sale:

  • Roughly $110 million in cash and $45 million in seller notes will be payable when the transaction closes.
  • The rest of the $185 million will be payable if certain “short-term, objective and market-based milestones” are met.
  • In New York, the transaction includes Columbia Care’s Brooklyn, Manhattan and Rochester stores as well as a Rochester production facility. The deal also includes a New Hartford store owned by Cresco.
  • In Massachusetts, a Cresco Labs Leicester production facility plus stores in Worcester and Leicester are part of the deal. The transaction also includes a Columbia Care store in Greenfield.
  • In Illinois, three assets owned by Columbia Care are included: two stores in Chicago and a production facility in Aurora.

According to the release, the asset sale gives Combs the ability to:

  • Cultivate and manufacture cannabis products.
  • Wholesale and distribute those branded products to licensed retailers in big metropolitan areas including Boston, Chicago and New York City.
  • Operate retail stores in all three states.

The transaction comes as New York prepares to launch its new adult-use marijuana market, which is expected to be one of the largest in the nation.

New York adult-use retailers are projected to generate $1 billion-$1.2 billion in sales next year and growing to $2.2 billion-$2.7 billion by 2026, according to the 2022 MJBiz Factbook.

Illinois already has a robust recreational market, while legalization advocates have long eyed Pennsylvania as ripe for adult use – although efforts to launch such a market have run into opposition from Republican legislators.

The Combs deal has benefits for Cresco, too.

“For Cresco, the transaction is a major step towards closing the Columbia Care acquisition and our leadership position in one of the largest consumer products categories of the future,” Cresco Labs CEO Charlie Bachtell said in a statement.

“For an industry in need of greater diversity of leadership and perspective,” he continued, “the substantial presence of a minority-owned operator in some of the most influential markets in the country being led by one of the most prolific and impactful entrepreneurs of our time is momentous… and incredibly exciting.

“We’re thrilled to welcome Sean and his team to the industry.”

No stranger to business

While it’s Combs’ first foray into cannabis, the chair and CEO of New York-based Combs Enterprises last week was declared a billionaire and the second-richest hip-hop artist in North America.

The Combs Enterprises portfolio includes alcohol brands DeLeón tequila and Cîroc vodka, the Oscar-winning Revolt film and television company and clothing brand Sean John.

But Combs, who performed and recorded music under the name Puff Daddy, is probably best known for his oldest business venture, Bad Boy Entertainment.

That division put out some of the most popular hip-hop music in the 1990s by artists such as the Notorious B.I.G., Craig Mack and Ma$e.

Combs isn’t the first Black entertainment mogul to enter the cannabis industry.

Fellow New York native Shawn “Jay-Z” Carter – the wealthiest hip-hop artist in North America, according to ex-Forbes editor Zack O’Malley Greenburg – entered California’s cannabis industry with the Monogram brand, which launched in 2020.

In 2021, as part of a special purpose acquisition company (SPAC) deal involving Left Coast Ventures, a cannabis investment and production company, as well as marijuana brand Caliva, Carter was hired to promote equity and inclusion.

Berner, the founder of cannabis producer and retailer Cookies, is fourth on the list of North America’s richest hip-hop artists.

But Combs could be the first Black owner of a vertically integrated multistate cannabis operator.

“My mission has always been to create opportunities for Black entrepreneurs in industries where we’ve traditionally been denied access, and this acquisition provides the immediate scale and impact needed to create a more equitable future in cannabis,” Combs, said in a statement.

“Owning the entire process – from growing and manufacturing to marketing, retail, and wholesale distribution – is a historic win for the culture that will allow us to empower diverse leaders throughout the ecosystem and be bold advocates for inclusion.”

It’s not yet clear how Combs will navigate the New York market, where he will hold both production and retail licenses.

Last week, state regulators advised that vertically integrated cannabis companies will be banned from participating in adult-use sales, which are scheduled to begin this year.

Cresco acquisition looking good

Shaleen Title, a former Massachusetts cannabis regulator and the founder of drug policy think tank Parabola Center, tweeted that rather than focusing on wealthy acquisitions, it’s more important to note that in order for Cresco Labs to acquire Columbia Care, the two companies would have to divest multiple assets in several states to complete the merger.

Equity analyst Owen Bennett of New York-based investment bank Jefferies Group wrote in a note that that the company is “very bullish” on the merged Cresco-Columbia company now that it has assets in only Florida, Maryland and Ohio to be sold.

With the collapse of two M&A cannabis deals in recent months – Verano Holdings’ acquisition of Goodness Growth and Ascend Wellness’s acquisition of MedMen’s New York assets – there have been doubts that Cresco’s acquisition could also fall through.

“While more assets to be offloaded, today’s announced sales now materially reduce the risk of the deal not completing, in our view,” Bennett wrote.

“What is also very encouraging against the backdrop of the more challenging industry conditions outlined is the fee to be received, more so given the much documented headwinds for New York.”

Bennett wrote that he believes the two companies will get close to the projected $300 million from their respective divestitures.

Derek Dley, a Toronto-based analyst with Canaccord Genuity Group – acting as financial adviser to Columbia Care through the acquisition – warned that it could be lower.

“Following this morning’s announcement, we believe that total number is now lower as we estimate the assets referenced today make up the vast majority of the value of the total asset divestiture package,” Dley wrote in a note.

Pablo Zuanic, managing partner at New York-based investment banking firm Cantor Fitzgerald, outlined in a Friday note what’s left to divest:

  • Five Ohio stores plus production.
  • A small processor in Maryland.
  • One Florida license.

“The company may opt, although it is not required, to also sell part of its assets in Florida and Pennsylvania for efficiency purposes,” he wrote.

“Based on comps, we think the Florida license could be worth $50 million (although comps may be dated), Ohio for more than $30 million and Maryland for around $5 million,” he added.

“If we add other assets to be sold (Florida/Pennsylvania, we think the company may reach the guidance of $300 million in gross proceeds from asset sales.”

Shares of Columbia Care were up by 2.34% on the Canadian Securities Exchange (CCHW) and by 4.23% on the U.S. over-the-counter markets (CCHWF) on Friday afternoon.

Shares of Cresco were down by 1.16% on the CSE (CL) and by 0.32% on the OTC markets (CRLBF).

Kate Robertson can be reached at