Despite the economic headwinds and regulatory challenges that have come with a deal as large as Cresco’s planned acquisition of Columbia Care, Col-Care’s CEO Nicholas Vita remains optimistic about the benefits to come.
In a recent earnings call with investors, Vita spoke about the company’s financial and operational performance and the ongoing integration process with Cresco Labs.
One of the key priorities for Columbia Care has been to balance the competing shareholder priorities of driving the business forward as an independent market leader while pursuing the deal with Cresco, he said.
Regarding the status of the divestiture process related to the Columbia Care deal, Vita stated that there is a “pathway to a transaction,” and the two have agreed to extend the outside date to the end of June.
There is significant interest in the assets that are up for sale, he said, and the company is sticking with the timelines in the public domain. Vita also noted that parties not familiar with cannabis have also expressed interest due to the quality of the assets.
The company has also focused on cost management and efficient capital deployment, with most investments going towards store openings and cultivation projects in growth markets.
It divested its interest in the Missouri market for $6.9 million, with $3.5 million paid upfront in March 2023.
CFO Derek Watson told investors that the company had taken early and significant actions to strengthen its balance sheet, reduce its overall cost of capital, and negotiate a lower interest rate on any future capital lease needs. Additionally, the company decreased its finance lease obligations on its balance sheet by over $18 million.
“We’ve not taken on any significant liabilities since announcing the Cresco transaction,” Watson said.
The pending acquisition also has forced management to view its business through a new lens.
“Obviously, with the merger on the horizon, the decisions we’re making are decisions in collaboration with Cresco,” Vita said.
He added that the company doesn’t necessarily have a defined timeline “based on the regulatory elements of the approval process” and that the company has focused on getting its SG&A in line and improving its manufacturing and cultivation capabilities to introduce more products and be more competitive in each market.
The company plans to lean into markets where it has leadership, such as New Jersey and Virginia, and to increase its participation in wholesale while expanding its retail footprint.