Cannabis firms Cresco, Columbia Care to terminate $2 billion merger

(Reuters) -Cannabis producers Cresco Labs (OTC:) and Columbia Care (OTC:) Inc have mutually terminated their $2 billion merger announced in March last year, the companies said on Monday.

The deal was seen as a bet on a U.S. pot industry boom, and executives then said the combined entity had the potential to be a brand as big as Coca-Cola (NYSE:) or Johnnie Walker, with the merger helping it dominate a market likely to hit $46 billion by 2026.

“In light of the evolving landscape in the cannabis industry, we believe the decision to terminate the planned transaction is in the long-term interest of Cresco Labs and our shareholders,” Cresco CEO Charles Bachtell said in a statement.

The regional banking crisis earlier this year dried up a crucial source of funding as marijuana remains illegal at the federal level in the U.S. while a legislation to ease lending norms for legitimate cannabis-related businesses remains stuck.

Cresco and Columbia last month said they would not be able to complete the divestitures necessary to secure regulatory approvals to close the transaction.

There are no penalties or fees related to the termination, the companies said.

Additionally, the companies also terminated a deal with hip-hop mogul Sean “Diddy” Combs to acquire some divested operations in New York, Massachusetts and Illinois for up to $185 million.

Meanwhile, Columbia Care separately said it had closed its Downtown Los Angeles facility and completed a previously announced corporate restructuring plan, including a 52-person headcount reduction.