Cresco Labs Launches California Advertising Campaign, Marking Its Most Significant Marketing Push To Date

Campaign touting the brand’s high quality and consistency supports new packaging and products in the market as Cresco strives to become one of the leading cannabis brands in the country’s largest recreational state

CALIFORNIA: Cresco Labs, one of the largest vertically integrated multi-state cannabis operators in the United States, today debuted its largest advertising initiative created to bolster consumer awareness in California of its namesake cannabis brand, Cresco. Called “Excellent Everyday Cannabis”, the multi-channel campaign spans cannabis and mainstream media and features break-through branding that highlights the importance of quality and consistency for everyday cannabis consumption—a marketing message that closely aligns with Cresco Labs’ mission to normalize and professionalize cannabis use. The campaign supports the market introduction of updated packaging featuring an elevated look and feel for Cresco’s portfolio of products that include flower, cartridges and solid concentrates.

As Cresco quickly moves to solidify its position as one of the largest cannabis brands in California, this initiative comes at a particularly significant time. Cresco has historically operated in medical markets such as Illinois and Pennsylvania, and the brand is making its first marketing push in a recreational market where cannabis companies can advertise and speak directly to consumers. Cresco aims to set itself apart from other brands with straightforward messaging that demonstrates its quality and consistency.

“We’re focused on delivering the most consistent, high quality products for consumers who use cannabis to complement their daily rituals. Whether it’s to relax, focus or sleep, people are looking for a cannabis brand they can trust,” said Cory Rothschild, SVP of Brand Marketing at Cresco Labs. “At a time when many brands are focused on the most exceptional moments in life – the parties or the unattainable – we’re proud to deliver excellent everyday cannabis that Californians can count on to help enhance their lives. The new campaign will live in many of the channels where you would expect to see traditional CPG products, helping to destigmatize cannabis use at a time when so many people benefit from thoughtful, responsible consumption.”

“Excellent Everyday Cannabis” aims to captivate consumers through straightforward language that favors product attributes over the occasion and a modern approach to content creation and media placement. Cresco Labs worked with Steelworks, a Los Angeles-based studio specializing in Computer Generated Imagery (CGI), to develop high quality, visually stunning imagery that highlights the refined aesthetic of Cresco’s new packaging. Imagery positions Cresco products to pop off bold, colored backgrounds, with straight-forward and straight-on angles that cast a big angular shadow garnering attention. Copy placed behind the product uses striking fonts and repetition to underline the campaign’s primary message, “excellent everyday cannabis,” with other copy variations to reinforce quality, consistency and everyday usability.

The company tapped digital advertising company Centro to implement a programmatic strategy leveraging algorithmic learnings and machine buying to reach target audiences in the right mindset and environment in real-time with precision and efficiency. High-impact digital displays in cannabis websites, such as Leafly and Weedmaps, as well as in best-in-class media partners Penske Media and Condé Nast, enable the company to reach target audiences consuming high quality content in these premium and rich contextual environments. The advertising initiative also includes digital out-of-home ads in elevator and lobby areas throughout Los Angeles, San Diego and San Francisco; print advertising in daily newspapers, such as the San Francisco Chronicle, and two custom, hand-painted wall murals in Santa Monica by artist Lefty Out There, a celebrated Chicago-based artist known for his intricate pattern work, contemporary aesthetic and attention to detail.

The “Excellent Everyday Cannabis” campaign coincides with a national packaging relaunch and rebrand of Cresco. The new brand launches first in California, with plans for a nationwide expansion in the coming months.

Cresco Labs Announces Closing Of Acquisition In New York State

Acquisition Adds One of Only 10 Vertically Integrated Cannabis Business Licenses Issued by the State of New York

ILLINOIS: Cresco Labs, one of the largest vertically integrated multi-state cannabis operators in the United States, today announced that it has closed its acquisition of 100% of the membership interests of Gloucester Street Capital, the parent entity of Valley Agriceuticals, via a merger between Gloucester and a subsidiary of Cresco Labs. As a result of this acquisition, Cresco Labs now holds one of the 10 vertically integrated cannabis business licenses granted in the State of New York by the New York State Department of Health. Each license gives the operator the right to operate one cultivation facility and four dispensaries in New York. The New York market is projected to grow to $500 million by 20221.

“New York is one of the most influential consumer markets in the world and we expect the state to act as a cornerstone in Cresco Labs’ plan to continue building the most strategic and valuable geographic footprint in the U.S. cannabis industry,” said Charles Bachtell, CEO and Co-founder of Cresco Labs. “Since recently receiving regulatory approval for this transaction, Valley Ag has opened two new dispensaries in Williamsburg, Brooklyn and Huntington, Long Island. As a result, Cresco Labs enters the New York market with four strategically located dispensaries. These assets position us well to immediately generate meaningful revenue from this market. As we fully implement the world-class branding, marketing and distribution expertise that has helped us to develop leading positions in some of the most attractive cannabis markets in the country, we expect to steadily increase our share of a market that is projected to grow to $500 million by 2022.”

“Cresco Labs has an incredible vision for the future of the cannabis industry, and they were the obvious choice to partner with based on their superior management team, focus on compliance and experience working across hyper-regulated industries,” said Gloucester Street Capital CEO Stephen Ashekian. “I believe their strategic decision making, commitment to social equity and priority for putting the patients first will make them a leader in the New York market.”

In addition to the new dispensaries in Williamsburg, Brooklyn and Huntington, Long Island, Cresco Labs also has operating dispensaries in Bardonia and New Hartford.

Currently a medical-use only market, New York has approximately 107,000 certified patients and 2,500 registered practitioners. The State’s medical cannabis program has 15 qualifying conditions including chronic pain, post-traumatic stress disorder (PTSD), and opioid replacement.

Harvest Health & Recreation To Acquire Verano, Creating One Of The Largest U.S. Multi-State Cannabis Operators

ILLINOIS: Harvest Health & Recreation, a vertically integrated cannabis company with one of the largest footprints in the U.S., is pleased to announce that it has entered into a binding agreement to acquire Verano Holdings, an arm’s length third party, one of the largest privately held multi-state, vertically integrated licensed operators of cannabis facilities, in an all-stock transaction for an estimated purchase price of approximately USD $850,000,000 based on a share price of CND $8.79.

The combined company will be one of the largest multi-state operators in the U.S., as measured by licenses held and facilities permitted. Upon completion of the transaction and regulatory approval, Harvest will hold licenses that will allow it to operate up to 200 facilities in 16 states and territories across the country, including 123 retail dispensaries.

Harvest’s planned acquisition of Verano will include:

  • Licenses and operations in 11 states and territories, including seven cultivation licenses, 37 retail licenses and potential to reach 150+ million Americans;
  • Vertically integrated, cash-flow positive operations;
  • Proven executive team with retail, manufacturing, branding, logistics and operational experience and 300 employees. Hiring for approximately 300 new positions in 2019 with a focus on hiring minorities, women and veterans;
  • Game changing ethanol extraction technology at pharmaceutical grade levels providing new market opportunities for cannabis biotech, food and beverage verticals;
  • Portfolio of premium proprietary brands with 150 + product SKUs sold in 150 + retail locations;
  • Total cultivation expansion capacity of 900,000 sq. ft in Illinois, Nevada & Maryland;
  • Ownership of an interest in nine Zen Leaf™ dispensaries with average annual revenues 2.5x higher than retail cannabis industry averages;

Following completion of the transaction, the combined company is expected to be operating 30 dispensaries, eight cultivation facilities and seven manufacturing facilities, with expected further aggressive operational expansion. By the end of 2019, Harvest expects to have over 70 dispensaries, 13 cultivation facilities and 13 manufacturing facilities in operation. The company expects continued growth in 2020.

“The combination with Verano fits perfectly with our vision of creating the world’s most valuable cannabis company,” said Jason Vedadi, Executive Chairman of Harvest. “We are confident that this is an opportunity to continue to leverage each of our company’s strengths and drive continued shareholder value, while at the same time achieving the scale we know will give us a leadership position in one of the largest cannabis markets in the world.”

“This is a natural match between like-minded entrepreneurs who have built our companies from the initial facilities into two of the largest MSOs in the U.S., with an unwavering focus on operational excellence, superior quality products and service, and delivering value to customers and shareholders,” said George Archos, Verano Co-founder and CEO. “Our growth and unique positioning in key markets allowed us to evaluate some of the largest players in the space, but we only had one unanimous choice for a major transaction and that was Harvest.”

“Verano has been creating a brighter way for cannabis production, products and health and wellness by assembling a stellar team of experts drawn from the cannabis industry and the top echelons of Fortune 500 corporations,” noted Sam Dorf, Verano Co-founder and Chief Growth Officer. “We are excited to join forces with Harvest to leverage each of our strengths to share the benefits of cannabis in innovative new ways with an ever increasing customer base. Verano and Harvest independently have always focused on business fundamentals to drive year over year growth in both revenue and EBITDA. Together, we expect to accelerate that momentum and raise the bar even higher for the industry.”

The newly combined company plans to continue hubs of operation in both Arizona and Illinois and merge key leadership talent to create a team of the most professional operators in cannabis. Both companies have recently attracted management expertise across consumer-packaged-goods, beverage, spirits, logistics, branding, horticulture, and extraction technologies from some of the largest most influential companies in the world, all supporting the companies’ explosive growth. Similarly, the combined company expects to grow new and existing brands throughout its expanded territory.

“From day one, we have operated as a fundamentally sound business focused on consistent revenue and profit growth. We are excited to bring Verano’s premium brands and operations into Harvest,” said Steve White, CEO of Harvest. “We have the unique opportunity to create truly national brands by deploying these products within the future combined footprint of states and dispensaries. Most importantly, we share the same mission as one new company to improve people’s lives through the goodness of cannabis.”

Pursuant to the binding agreement entered into between Harvest and Verano on March 10, 2019, the parties agreed to enter into a definitive agreement within the next 30 days (the “Definitive Agreement”).

Upon closing, Verano shareholders will receive, in the aggregate, a combination of Harvest subordinate voting shares and Harvest multiple voting shares as mutually agreed between the parties, acting reasonably, for a total estimated purchase price of USD $850,000,000 based on a CSE share price of CND $8.79. It is anticipated that the acquisition will close in the first half of 2019.

Closing is subject to the negotiation and execution of a Definitive Agreement, applicable shareholder or unitholder approval, approval of the Canadian Securities Exchange, as well as any other approvals that are customary for a transaction of this nature. There can be no assurances that the transaction will be completed as proposed or at all. Harvest and Verano have agreed to a mutual termination fee in the amount of US $20 million in the event either party fails to enter into the Definitive Agreement within 30 days from the date of this agreement (other than as a result of an uncured breach by the other party). The transaction was negotiated entirely at arms-length. Verano has approximately US$3.2 million in long term debt which will remain in place following completion of the transaction. Further, completion of the transaction will not result in a change of control of Harvest.

Eight Capital is acting as Harvest’s financial advisor in connection with the transaction and INFOR Financial Inc. is acting as financial advisor to the special committee of Harvest’s board of directors. In addition, Eight Capital and INFOR Financial Inc. have each provided an opinion to the board of directors of Harvest that, as of the date of the opinion and subject to the assumptions, limitations and qualifications on which the opinions were based, the consideration being paid by Harvest in connection with the Transaction is fair, from a financial point of view to Harvest.