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Sean ‘Diddy’ Combs Acquires Assets To Launch Largest Black-Owned Cannabis Company

Entertainment mogul Sean “Diddy” Combs announced on Friday that he is launching what is billed as the world’s largest Black-owned cannabis brand with the $185 million purchase of existing licensed marijuana operations in three states. Combs has purchased the businesses operations of Cresco Labs & Columbia Care. These are multistate cannabis operator that must dispose the assets as part of a merger.

The transaction, if approved by state and federal regulators, would add to Combs’ portfolio of enterprises, which includes ventures in entertainment, media, fashion, and alcohol. Combs Enterprises’ chairman and chief executive officer, Combs, stated that he was purchasing assets in order to correct inequalities in the cannabis sector, in which 81% are owned by whites according to this week’s Maryland legislative report. 

Many Black entrepreneurs believe that financing difficulties make it hard for anyone but the most well-off to enter the marijuana market. After decades of prohibition, Black and Brown individuals were disproportionately jailed and arrested for marijuana-related crimes.

“It’s diabolical,” Combs told the Wall Street Journal. “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?”

“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.”

$185 Million Purchase

Combs, the new owner of Combs, will buy nine marijuana retail shops and three production plants in New York, Illinois, Massachusetts. Combs will return $110,000,000 in cash as well as $45,000,000 in financing through debt. Future payments will be based upon growth benchmarks and could reach $185 Million. Combs indicated that he plans to leverage the company’s new venture in order to expand Black participation in cannabis, which is a goal supported Charlie Bachtell, Cresco CEO.

“For an industry in need of greater diversity of leadership and perspective, 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,” Bachtell said in a statement on Friday. “We’re thrilled to welcome Sean and his team to the industry.”

Cresco Labs, a stock trading company that specializes in cannabis acquisitions, announced it was purchasing Columbia Care for $2 billion. With operations across 18 states, the combined company will be the biggest cannabis business in America. This includes early adopters Colorado (and California) and Colorado Care. The companies must divest assets from states in which their operations overlap under the regulations that govern the cannabis industry. These include Arizona, Florida and Illinois as well as New York and New York.

Bachtell said that the deal with Combs is bigger than the transaction itself, “and it couldn’t come at a time of greater significance and momentum.”

“We’ve seen executive power exercised to address matters of cannabis injustice, we’re seeing bi-partisan support for elements of federal reform, and we’re seeing some of the largest and most influential states in the country launch cannabis programs prioritizing social responsibility– this announcement adds to that momentum,” Bachtell said. “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.” 

Biggest Black-Owned Cannabis Company

The transaction is Combs’ first venture into the cannabis industry and will create the United States’ first minority-owned and operated, vertically integrated multistate cannabis operator in a sector projected to grow to $72 billion by 2030. The vertically integrated operations in New York, Illinois, and Massachusetts will provide Combs’ new company the ability to grow and manufacture cannabis products, while wholesale and distribution assets will market those branded products to licensed dispensaries in major metropolitan areas including New York City, Boston, and Chicago. This deal includes all retail shops in the three states. 

“These assets offer the Combs’ team significant market presence, enabling them to make the most impact on the industry as a whole,” said Columbia Care CEO and Co-founder, Nicholas Vita. “It’s been clear to us that Sean has the right team to carry on the strong legacy of these Columbia Care and Cresco Labs facilities, and we can’t wait to see how he helps shape the cannabis industry going forward through his entrepreneurial leadership and innovation.”

The deal is subject to several conditions, including regulatory approval, clearance under antitrust rules and the closing of Cresco Labs’ acquisition of Columbia Care. Both companies are in process of disposing of assets that they do not need to comply with regulatory requirements prior to closing.