Surna Announces Largest Contract In Its History

Announces $2.8 million Sales Contract in July

COLORADO: Surna announced today that it recently signed a sales contract valued at $2.8 million.

The project in Illinois is for a multi-state operator with whom Surna has worked on previous facilities in other states. The facility is approximately 88,000 square feet, of which approximately 66,000 square feet is dedicated to cultivation, drying and processing areas. Surna is under contract to provide a full suite of climate control products and technologies for the cultivation and processing spaces (the mechanical engineering design was done by Surna through a previous contract), supply of major mechanical equipment, SentryIQ environmental controls, and system start-up. While Surna can and does provide MEP design and equipment for a wide range of climate control approaches, in this case the priorities of reducing electrical infrastructure requirements and reducing roof loading, along with the desire for precise control of the facility’s environment, resulted in the selection of a 4-pipe hydronic system. The design has integrated dehumidification, in which Surna is providing its proprietary line of multi-function fan coils, destratification fans, dehumidifiers and heat recovery chillers.

Tony McDonald, CEO commented: “The team at Surna has worked diligently to secure the largest single contract in the Company’s history. Now our operations and controls departments will be hard at work ensuring the delivery of a precisely controlled environment and on-time delivery of equipment to meet our customer’s requirements.”

Illinois: Pritzker Administration Releases 2019 Hemp Harvest Numbers

ILLINOIS: The Illinois Department of Agriculture (IDOA) has released final harvest numbers from the 2019 hemp growing season. IDOA issued 651 Hemp Growers licenses for the 2019 season. All but 137 of those licensees planted at least an acre during the inaugural season resulting in over 2.27 million pounds of total yield, with 73% of acres planted being harvested.

“We are encouraged by these yield numbers and optimistic for the 2020 growing season,” said Jerry Costello, IDOA Acting Director.  “The Department has been diligently working to open markets for growers to sell their hemp.  We recently developed a policy allowing licensed hemp growers to sell product to licensed cannabis cultivators for use in medical and adult-use cannabis products.”

Harvest numbers have been broken down into four distinct categories and a fifth to account for undefined variables in reporting.  Farmers reported harvesting 1,482,489 pounds of Biomass, 595,128 pounds of flower, 65,489 pounds of seed and 15,107 pounds of stalk.  Biomass and flower are typically used for their CBD oil, stalks for industrial uses, and seed will be planted this year or used for hemp seed oil.

The Illinois Department of Agriculture is currently accepting applications for the 2020 Hemp growing season.  If you are interested in growing or processing hemp, please visit our website.

Illinois: Pritzker Administration Announces Revenue Figures For First Month Of Adult Use Cannabis

Screenshot 2020-02-25 16.04.04

ILLINOIS: The Illinois Department of Revenue announced that adult-use cannabis sales generated $7,332,058 in cannabis tax revenue during the month of January, with an additional $3,147,928.29 generated in retail sales tax revenue. Governor Pritzker’s recently released budget conservatively estimated the state would collect $28 million in cannabis tax revenue during the remainder of the fiscal year, ending June 30, 2020. Today’s announcement puts the state on track to surpass that estimate.

Once administrative fees are accounted for, 45% of the adult-use cannabis tax revenue will be reinvested in communities disproportionately impacted by the failed war on drugs and used to fund substance abuse and mental health programs. The $3,147,928.29 in sales tax revenue will be divided between the state’s general revenue fund and the local governments where purchases were made.

“Today marks another milestone in the successful launch of Illinois’ legal cannabis industry. Our goal has been to build the nation’s most socially equitable program that includes new opportunities for the communities most harmed by the failed war on drugs. Revenue raised in this first month will soon begin flowing back into those communities to begin repairing the damage done by the failed policies of the past and creating new opportunities for those who have been left behind for far too long,” said Toi Hutchinson, Senior Advisor to Governor Pritzker for Cannabis Control.

The state collects cannabis revenue in two ways: a variable excise rate dependent on THC potency and type of product, and a 7% cultivators excise tax imposed on the sale of cannabis to retailers. Earlier this month, the state announced that over $39 million in adult-use cannabis product was sold at retail stores.

Last Wednesday, Governor Pritzker released his Fiscal Year 2021 budget, which projected cannabis sales would generate $28 million in cannabis tax revenue for the remainder of Fiscal Year 2020 (ending June 30, 2020). As the industry matures, revenues are estimated to grow to $127 million in FY21, of which $46 million will go to General Funds.

Background:

CANNABIS TAX RATES

• Cannabis Cultivation Privilege Tax:

o 7% of the gross receipts from the sale of cannabis by a cultivator or a craft grower to a dispensing organization

• Cannabis Purchaser Excise Tax:

o 10% of the purchase price – Cannabis with a THC level at or below 35%
o 20% of the purchase price – All cannabis infused products
o 25% of the purchase price – Cannabis with a THC level above 35%
o This tax is not imposed on cannabis that is subject to tax under the Compassionate Use of Medical Cannabis Pilot Program Act.

ALLOCATION OF STATE REVENUE

• Minus administrative costs, the remaining state revenue will be allocated as follows:

o 35% for the General Revenue Fund,
o 25% for the Criminal Justice Information Projects Fund to support the R3 program,
o 20% for the Department of Human Services Community Services Fund to address substance abuse and prevention, and mental health concerns,
o 10% for the Budget Stabilization Fund to pay the backlog of unpaid bills,
o 8% for the Local Government Distributive Fund to support crime prevention programs, training, and interdiction efforts, including detection, enforcement, and prevention efforts, relating to the illegal cannabis market and driving under the influence of cannabis, and
o 2% for the Drug Treatment Fund to fund public education campaigns and to support data collection and analysis of the public health impacts of legalizing the recreational use of cannabis.

Cresco Labs Makes History On January 1st With First Sale Of Adult-Use Cannabis In Illinois

ILLINOIS: Cresco Labs, one of the largest vertically integrated multistate cannabis operators in the United States, announced today that the Company served 3,145 people on New Year’s Day at its five Sunnyside* Dispensaries located in Lakeview, Elmwood Park, Champaign, Buffalo Grove and Rockford, Illinois. Sunnyside* also sold 9,258 cannabis products, including Cresco’s house of brands and items from other Illinois suppliers, with an average ticket price totaling $135.

Customers began to form lines outside Sunnyside* locations as early as 8 PM on New Year’s Eve, and lines wrapped around the buildings throughout the day as recreational customers showed their excitement to be part of this historic day. The dispensaries opened at 6 AM to immediately start serving recreational customers, with the first sale in the state of Illinois taking place shortly thereafter at Sunnyside* Lakeview. Jacqueline Ryan from Forest Park was the first customer to purchase adult-use cannabis, followed by siblings Elise and Aaron Swopes, two participants in Cresco’s Chicago incubator program, which is part of the Company’s SEED (Social Equity and Educational Development) initiative, and Illinois Lt. Gov. Juliana Stratton, who played a critical role in shaping the state’s cannabis legislation.

“We’re ecstatic for our Sunnyside* dispensaries to begin serving recreational customers on such a historic day that launches a new era of cannabis and the development of an industry that will bring greater justice, social equity and business ownership opportunities throughout the state,” said Charlie Bachtell, Cresco Labs CEO and Co-founder. “With 13 million residents and 100 million annual tourists, Illinois is predicted to be one of the largest recreational cannabis markets in the United States. Cresco is uniquely positioned in the supply-constrained state, with permission for the largest cultivation footprint at 630,000 square feet and ten retail dispensaries, including three in high traffic areas in the city of Chicago.”

Joe Caltabiano, Cresco Labs President and Co-founder, added, “We’re thrilled to be part of this historic day and to witness firsthand so much excitement from people on the first day of legal cannabis sales. Our dispensaries served thousands of customers on day one by educating new cannabis consumers, making product recommendations and making sure they had a seamless shopping experience. With five newly re-concepted Sunnyside* locations and an additional five dispensaries opening soon in high profile locations such as one next to Wrigley Field and two in Chicago’s downtown Central District, we expect to serve thousands more customers in response to strong demand. Our Sunnyside* concept is designed to move traffic efficiently, so despite the fact that long lines will likely continue in the first few days of adult-use legalization, we are positioned to ensure that each of our customers gets only the best possible service and the products they are looking for. Cresco is already the leader in Illinois, and we expect to be able to maintain this leadership position as the recreational cannabis market grows, contributing solidly to our overall revenue and our profitability.”

Cresco Labs Recieves Adult-Use Approval For All Five Existing Illinois Dispensaries

ILLINOIS: Cresco Labs, one of the largest vertically integrated multi-state cannabis operators in the United States, today announced that it has received Early Approval Adult-Use Dispensing Organization Licenses for all five of its existing Illinois medical cannabis dispensaries. Cresco received approval for adult-use cultivation on September 30th making it the only company approved for both adult-use cultivation and adult-use dispensary operations in the state.

“Illinois is Cresco’s home state and with the transition to a legal adult-use market in January of 2020, the state is expected to produce between $2 – 4 billion in sales at maturity (BDS Analytics)i, making this one of the single largest opportunities in the U.S. cannabis space today,” said Charlie Bachtell, Cresco Labs CEO and Co-founder. “Cresco is well-positioned to capture a significant share of this revenue opportunity for shareholders. We have 25% wholesale share of the current medical market, a portfolio of recognized brands and three cultivation facilities that can represent 630,000 square feet at completion, in what is expected to be a supply-constrained market.”

Mr. Bachtell added, “Illinois has put forth a model that will make it one of the most intelligently regulated states in the U.S. and we hope this blueprint will serve as a path for states transitioning over the next few years. Illinois was the first large state to legalize cannabis through legislative processes instead of through referendum. One of the primary reasons the government was able to achieve this was due to its focus on social equity, which is directly aligned with Cresco’s core values and approach to the market.”

Cresco Labs currently has five medical dispensaries in the state of Illinois, including: Phoenix Botanical; MedMar Lakeview; MedMar Rockford; PDI Medical; and FloraMedex. Each of these dispensaries has received approval for adult-use sales. As an existing medical cannabis dispensary operator, the Company will receive an additional adult-use license for each of its current medical dispensaries, which will bring Cresco Labs’ total adult-use footprint to 10 total retail dispensary locations. In July, Cresco Labs announced the formation of a new national retail brand Sunnyside*, a wellness-focused retailer designed to build trust, education and convenience for both existing and new cannabis consumers. All of the Company’s Illinois dispensaries will transition to this new retail concept.

The Company’s three cultivation licenses located in Joliet, Kankakee and Lincoln, can represent a total combined cultivation space at completion of 630,000 square feet per Illinois state regulations.

 

Cresco Labs Announces Increased Profitability In Q2 2019 With Revenue Growth Of 253% Year-Over-Year and 42% Quarter-Over-Quarter

ILLINOIS: Cresco Labs, one of the largest vertically integrated multi-state cannabis operators in the United States, today released its unaudited financial results for the second quarter ended June 30, 2019. All financial information presented in this release is in U.S. dollars, unless otherwise noted.

Cresco-Logo_Blue

Second Quarter 2019 Highlights and Subsequent Events

Revenue

  • Second quarter revenue of $29.9 million, up 253% year-over-year and 42% quarter-over-quarter.
  • Second quarter pro forma revenue1 increased 55% quarter-over-quarter to $52.7 million, which includes the impact of pending acquisitions and investments.

EBITDA

  • Second quarter Adjusted EBITDA2 of $14.5 million, compared to $4.8 million in the prior-year period. Excluding the impact of biological assets, adjusted EBITDA for the second quarter was $2.3 million.
  • Second quarter 2019 financial results included $3.2 million related to share-based incentive compensation, acquisition and other non-recurring costs of $3.2 million and $0.7 million in one-time charges related to the Company’s expansion in California.

Net Income

  • Second quarter net loss of $3.9 million, compared to net income of $1.6 million in the prior-year period.

Balance Sheet

  • As of June 30, 2019, the Company had total assets of $355.0 million, including cash and cash equivalents of $61.1 million and a working capital position of $128.7 million with zero debt on the balance sheet.

Operations

  • The Company is operational in seven U.S. states, with binding transactions pending in New York, Massachusetts and Florida, as well as approved expansion into Michigan.
  • The Company expects its acquisition of Origin House to close during the fourth quarter of 2019, which greatly expands its distribution network in California.
  • Cresco received regulatory approval for its acquisition of Valley Agriceuticals, LLC., providing the Company with one of 10 vertically integrated licenses granted in the State of New York.

Talent

  • Continued hiring top talent including a new Chief Information Officer and a new Chief People Officer, bringing total staff headcount to approximately 1,400 employees at the end of the second quarter of 2019, including pending acquisitions.

Management Commentary

“We delivered an outstanding quarter that reflects the leading positions we have established in some of the most attractive markets in the cannabis industry,” said Charles Bachtell, Co-founder and CEO of Cresco Labs. “We are seeing accelerating revenue growth driven primarily by market share gains and strong trends in registered patients in our established markets of Illinois and Pennsylvania, as well as our expanded presence and distribution in California. As we scale our operations in our established markets, we are seeing the positive impact on gross profit margin that we projected. The higher revenue and margins helped to drive a substantial increase in Adjusted EBITDA compared to the prior quarter.

“While our increasing profitability demonstrates our ability to effectively execute and leverage the attractive model we have developed, we continue to operate with a long-term perspective and make investments to position Cresco Labs to lead the cannabis industry in the years to come. We are transforming the retail cannabis experience with the national rollout of our Sunnyside* dispensaries, expanding into the CBD market with the launch of our WellBeings product line, and expanding our cultivation and retail operations in Illinois to capitalize on adult-use legalization beginning in 2020. As we continue to capitalize on the strong organic growth trends in our current markets and complete our pending acquisitions of Origin House and VidaCann, we expect to deliver continued improvement in revenue and profitability, resulting in further value being created for our shareholders,” said Mr. Bachtell.

Financial Results for the Second Quarter Ended June 30, 2019 (Unaudited)

Revenue for the second quarter of 2019 was $29.9 million, an increase of 253% compared to revenue of $8.5 million for the second quarter of 2018. The increase in revenue was driven by expansion into new markets and continued growth in the states where the Company operates. Second quarter 2019 revenue increased 42% compared to $21.1 million for the first quarter of 2019, primarily driven by higher revenue generated in Pennsylvania, Illinois and California. On a pro forma basis, revenue for the second quarter of 2019 increased 55% from the first quarter of 2019 to $52.7 million, which includes the impact of pending acquisitions and minority investments.

Second quarter 2019 operational gross profit2, before the impact of biological assets accounting, was $14.4 million, or 48.1% of revenues, compared to $9.4 million, or 44.6% of revenues, for the first quarter of 2019. The improvement in operational gross profit margin was driven by greater scale in the Company’s established markets, increasing efficiencies in cultivation, processing and packaging, partially offset by the impact of initial costs associated with expansion into newer markets like California, Ohio and Arizona, where the Company expects to see higher margins as these operations continue to scale.

Total expenses for the second quarter of 2019 were $20.6 million, compared to $3.2 million for the prior year period. Total expenses in the second quarter of 2019 included $3.0 million in expenses related to share-based incentive compensation, $3.2 million in acquisition and other non-recurring costs and $0.9 million of depreciation and amortization. The balance of the increase represents investments made in talent and operational infrastructure to support the Company’s continued revenue growth.

Net loss for the second quarter for 2019 was $3.9 million, compared to net income of $1.6 million for the prior-year period. Current period net income included income tax expense of $5.6 million, primarily driven by discrete tax items related to the legal close of the acquisitions of MedMar Inc. and PDI Medical.

Adjusted EBITDA for the second quarter of 2019 was $14.5 million, compared to $4.8 million for the prior-year period. Excluding the net impact of the fair value of biological assets, Adjusted EBITDA for the second quarter of 2019 was $2.3 million.

Balance Sheet and Liquidity

As of June 30, 2019, the Company had total assets of $355.0 million, including cash and cash equivalents of $61.1 million and a working capital position of $128.7 million with zero debt on the balance sheet. Use of cash in the second quarter of 2019 included significant investments in the expansion of cultivation, processing and retail facilities in the Company’s existing markets, payments for the legal close of the MedMar Inc. and PDI Medical acquisitions, and funding provided to pending acquisitions to drive the continued development of facilities.

Conference Call and Webcast

The Company will hold a conference call and webcast to discuss its business and financial results on Wednesday, August 21, 2019 at 5 p.m. Eastern Time. The conference call may be accessed via Cresco’s investors website at investors.crescolabs.com or by dialing 866-688-4235 (409-216-0711 for international callers) and entering conference ID 3385937. Archived access to the webcast will be available for one year on Cresco’s investors website.

Consolidated Financial Statements 

The financial information reported in this news release is based on unaudited management prepared financial statements for the three and six months ended June 30, 2019. The Company will file its condensed interim consolidated financial statements on SEDAR by August 29th, 2019. Accordingly, such financial information may be subject to change. All financial information contained in this news release is qualified in its entirety with reference to such financial statements. While the Company does not expect there to be any material changes, to the extent that the financial information contained in this news release is inconsistent with the information contained in the Company’s financial statements, the financial information contained in this news release shall be deemed to be modified or superseded by the Company’s financial statements. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation for purposes of applicable securities laws. Further, the reader should refer to the additional disclosures in the Company’s audited financial statements for the year ended December 31, 2018, previously filed on SEDAR.

Cresco references certain non-IFRS financial measures throughout this press release, which may not be comparable to similar measures presented by other issuers. Please see the “Non-IFRS Financial Measures” section at the end of this press release for more detailed information.

 

Cresco Labs Announces Opening Of VidaCann Dispensaries In Pensacola And Jacksonville

Cresco-Logo_BlueILLINOIS:  Cresco Labs, one of the largest vertically integrated multi-state cannabis operators in the United States, today announced the opening of new VidaCann medical cannabis dispensaries in the cities of Pensacola and Jacksonville, Florida. With the opening of the new dispensaries, VidaCann now has 12 operating dispensaries throughout the state of Florida. Cresco Labs has entered into an agreement to acquire the ownership interests of VidaCann, one of the largest and most advanced providers of medical cannabis in Florida. The acquisition of VidaCann is expected to close within the next 30 to 90 days, subject to the satisfaction of customary closing conditions including approval by the Florida Department of Health.
“Since announcing the acquisition in March, VidaCann has continued to execute on the expansion of its retail footprint,” said Cresco Labs CEO and Co-founder Charlie Bachtell. “The new dispensaries in Pensacola and Jacksonville provide a retail presence in two of the largest cities in Florida, which will improve our ability to capitalize on the very strong growth in the Florida market with more than 10,000 new patients being registered each week. Upon the closing of the acquisition, we project that Cresco Labs will have the fifth largest network of retail dispensaries in the state of Florida, which will provide us with an immediate meaningful presence in this market and an excellent platform for driving future growth. By the end of 2019, we expect to have up to 20 dispensaries operating in Florida, and that number will grow significantly in 2020 when our license converts to an unlimited number of dispensaries.”

New Dispensary Locations and Hours of Operation

Pensacola
2401 Langley Ave, Unit A
(850) 741-2895
Monday through Friday 10:00 a.m. – 7:00 p.m., Saturday 10:00 a.m. – 5:00 p.m., closed on Sunday

Jacksonville
5298 Sunbeam Road, Unit 6
(904) 337-0554
Monday through Friday 10:00 a.m. – 7:00 p.m., Saturday 10:00 a.m. – 5:00 p.m., closed on Sunday

In addition to Pensacola and Jacksonville, VidaCann operates dispensaries in Orlando, St. Petersburg, Port Charlotte, Bonita Springs, Tampa, Tallahassee, Daytona Beach, Deerfield Beach, Bradenton and Palm Bay.

With over 30 premium strains, each VidaCann dispensary offers a variety of products including flower, tinctures, capsules, vapes and concentrate syringes in a range of cannabinoid ratios from completely non-psychoactive to higher levels of THC.

 

Illinois Passes Transformative Adult-Use Cannabis Legalization with Sales Starting January, 2020

ILLINOIS: Cresco Labs Inc., one of the largest vertically integrated multistate cannabis operators in the United States, today provided comments on the legalization of adult-use cannabis in its home state of Illinois. Cresco Labs CEO & Co-Founder Charlie Bachtell served on the Cannabis Legalization Subcommittee of Illinois Governor JB Pritzker’s transition team as the sole representative for cannabis operators in the state.

“The legislation passed today legalizing adult-use cannabis in the state of Illinois beginning in 2020 represents a thoughtful expansion of access to cannabis in Illinois and we expect it will have a positive impact on both social justice issues and from a tax revenue perspective by expanding the employment and ownership opportunities for cannabis businesses in the state,” said Mr. Bachtell. “As the current market leader in the rapidly expanding medical-use cannabis program in the state, we look forward to also serving what will no doubt represent one of the largest adult-use cannabis customer bases in the U.S. The legalization of adult-use cannabis continues to be strongly supported by voters across the country and the legislation passed in Illinois represents a good model for other states to legalize cannabis by statute rather than developing a program only after a ballot initiative is passed. Cresco Labs fundamentally supports legalized and responsible access to cannabis, as we have seen proof of the resulting societal benefits of lowering crime rates and helping curb opioid addiction and fatalities. We’re very excited about the new opportunities adult-use cannabis will bring to Illinois and we’re also anticipating some very beneficial improvements to the existing medical program as well.”

Mr. Bachtell continued, “This legislation also includes important social equity provisions that are close to our collective heart at Cresco Labs. These provisions will enable a broader segment of our population to pursue employment opportunities in the growing cannabis industry. As the first company in the cannabis industry to introduce a comprehensive national social equity & education initiative (SEED), we are fully committed to supporting the social equity provisions within the current legislation. Our team has already taken the initiative to partner with community organizations to hold expungement events, created educational programs for college students on the fundamentals of the cannabis industry and launched a community impact incubator to assist with funding and support for people wanting to own businesses in this emerging industry.”

Illinois Adult-Use Legislation

The legislation passed by the state of Illinois legalizes cannabis for adults 21 years and older, beginning on January 1, 2020. It is forecasted that the Illinois adult-use market will be 10-20 times the size of the state’s medical program.

Illinois is currently the fifth most populous state in the U.S., with a population of nearly 13 million. Cresco Labs currently has a presence in 11 states including four of the five most populous states1.

Impact on Cresco Labs in Illinois

Under Cresco Labs’ current medical-use license in Illinois, it will have the ability to open five additional retail dispensaries for the sale of adult-use cannabis, bringing its total number of dispensaries in the state to 10 and the total cultivation footprint to three facilities, the maximum any one company is permitted to have.

The market share leader in Illinois, Cresco currently distributes its suite of wholesale brands to every dispensary in Illinois:

  • Cresco  an everyday cannabis brand with above-average quality
  • remedi  products designed for the medically-minded patient, with forms similar to traditional pharmaceuticals
  • Reserve – a premium cannabis line
  • Mindy’s Artisanal Edibles  a line of culinary-backed, cannabis-infused edibles created by James Beard Award-winning chef Mindy Segal
  • Mindy’s Kitchen  a line of fun, fruity confections

Cresco Labs Continues Its Illinois Expansion With Regulatory Approval For Three Dispensaries

ILLINOIS: Cresco Labs Inc., one of the largest vertically integrated multi-state cannabis operators in the United States, today announced that it received approval from the Illinois Department of Financial and Professional Regulation (IDFPR) for Cresco’s previously announced acquisitions of licensed medical cannabis dispensaries MedMar Rockford and MedMar Lakeview, located in the popular Wrigleyville neighborhood of Chicago. The IDFPR also approved Cresco’s acquisition of PDI Medical, a medical cannabis dispensary located in Buffalo Grove, Illinois, which was purchased by the Company in November 2018. The MedMar dispensaries are Cresco Labs’ fourth and fifth dispensary acquisitions in Illinois bringing the Company’s footprint to five dispensaries in its home state.

“Illinois is at the forefront of our nation’s evolution of the cannabis industry, and with these three dispensary approvals, Cresco has reached the maximum level of dispensaries any single company can own and operate in our home state,” said CEO & Co-Founder Charlie Bachtell. “We have already achieved the highest market share of any operator in Illinois and our prospects for accelerated growth are promising with the recent implementation of the Alternatives to Opioids program that began on February 1st. Illinois has opened access for patients by eliminating the three-month waiting period as well as requirements for fingerprinting and background checks for all patients with any qualifying condition. With a doctor’s approval, a patient can now receive a medical-use cannabis card in just one day.”

In addition to its five dispensaries in Illinois, Cresco operates three cultivation and processing facilities across the state.

Cresco Labs To Acquire Origin House In Largest-Ever Public Company Acquisition In The U.S. Cannabis Sector

ILLINOIS: Cresco Labs Inc. and CannaRoyalty Corp. announced that they have entered into a definitive agreement pursuant to which Cresco Labs will acquire all of the issued and outstanding shares of Origin House. Under the terms of the Agreement, holders of common shares of Origin House will receive 0.8428 subordinate voting shares of Cresco Labs for each Origin House Share.

The Transaction represents a total consideration of approximately C$1.1 billion on a fully-diluted basis, or C$12.68 per Origin House Share (based on the Exchange Ratio and the closing price of Cresco Labs Shares on March 29, 2019, the last trading day prior to the announcement of the Transaction). The Transaction represents the largest public company acquisition in the history of the U.S. cannabis industry. The combined entity will be: one of the largest vertically-integrated multi-state cannabis operators in the United States; a leading North American cannabis company, by footprint; and one of the largest cannabis brand distributors.

Origin House has become a leading distributor and provider of brand support services in California, the world’s largest regulated cannabis market. Origin House’s proven strategy has been to build relationships with established dispensaries, build partnerships with established market-leading brands, develop promising cannabis product companies, and then leverage its full suite of support services to transform those products into strong California consumer brands. Origin House delivers over 50+ cannabis brands to more than 500 dispensaries in California, representing approximately 60% market penetration.

KEY TRANSACTION HIGHLIGHTS & BENEFITS:

  • Combination of Cresco Labs and Origin House will result in the premier distribution company serving California, the largest cannabis market in the world;
  • Accelerates Cresco Labs’ entrance into the California market with the addition of Origin House’s vast distribution platform;
  • Establishes the cannabis industry’s first national “house of brands” with a growing multi-state footprint that includes leading distribution market share in some of the largest states in the country including California, Pennsylvania and Illinois;
  • Combines the expertise of two industry leaders in branded product development and distribution;
  • Positions Cresco Labs as the preferred partner for additional premier cannabis brands seeking distribution on the industry’s most expansive platform;
  • Enhances Cresco Labs’ capital markets presence by significantly increasing its scale and the liquidity in the Company’s stock, resulting in improved ability to attract institutional investment and lower its cost of capital;
  • Continued participation by Origin House shareholders who will hold approximately 20% of the issued and outstanding Cresco Labs Shares on a pro forma, fully-diluted and as converted basis, enabling Origin House Shareholders the opportunity to participate in the expected value created through the Transaction; and
  • Immediate premium to Origin House shareholders of approximately 26% over the 30-day volume weighted average price of the Origin House Shares on the Canadian Stock Exchange ending March 29, 2019 (based on the Exchange Ratio and the closing price of Cresco Labs Shares on March 29, 2019).