Cresco Labs Inc. and Columbia Care Inc. on Friday confirmed plans by rap music mogul Sean “Diddy” Combs to pay up to $185 million for licensed pot companies in New York, Massachusetts and Illinois to create the first multi-state cannabis operator in the U.S. owned by an African American.
Combs would acquire stores on the selling block as a result of the pending all-stock merger between Cresco Labs
The deal includes four retail stores and one production asset in New York State, three retail stores and one production facility in Massachusetts and two retail stores and one production asset in Illinois.
Combs said Blacks are underrepresented in the cannabis industry despite decades of being disproportionately arrested for cannabis law violations.
“It’s diabolical,” Combs told The WSJ. “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?”
Combs has long been seeking ways to create more opportunities for Black entrepreneurs in industries that they’ve never traditionally had access to, according to a source familiar with the music star. Combs has been studying the cannabis industry to find the right opportunity, the source said.
“This is only the beginning of what will become a global leader in cannabis,” the source said.
Cresco Labs CEO Charles Bachtell described the deal as “momentous” and said Combs was “one of the most prolific and impactful entrepreneurs of our time.”
Overall, the percentages of women and nonwhite executives in the cannabis business remained mostly stagnant in 2022 and were well below their peak levels from three years ago, according to a fresh report on diversity, equity and inclusion from MJBizDaily.
The percentage of women bosses in the cannabis industry rose by 1% to 23.1% in 2022 over 2021 but remained well below the 2019 high of 36.8%, the study said.
Racial minorities made up 12.1% of executives in the cannabis industry in 2022, down from 13.1% in 2022 and from a height of 28% in 2019.
“Cannabis industry experts suggest that competitive markets tend to favor businesses with white men in ownership and leadership positions, primarily because of their established access to capital,” MJBizDaily said.
The total percentage of women and minority executives in the cannabis industry remains well below national averages for all types of companies, MJBizDaily said.
Some cannabis programs run by states have been trying to reverse this trend by providing minorities licenses to operate cannabis businesses. But many have run into problems with financing and have had to sell.
In New York State, officials have vowed to award the first cannabis licenses to people of color and families affected by the war on drugs. The state is also setting up a fund to provide capital to those businesses.
The deadline for cannabis license applications was back in September and the Empire State is hoping to open the first licensed cannabis businesses for adult use by the end of 2022, although some remain skeptical that this deadline will be met.
Cresco Labs stock is down by 52.5% in 2022 and Columbia Care has fallen 45.8%.
Combs joins other Black celebrities and sports figures who have moved into the cannabis business. Snoop Dogg launched Casa Verde as a venture capital firm in cannabis; so did ex-football player Ricky Williams and long-time NBA player Al Harrington.