Cresco Labs and Origin House Make Amendments to their Arrangement Agreement and Non-brokered Financing of Shares

Cresco Labs announces that they have made amendments to their agreement with Origin House

 Cresco Labs Inc, today announced that, in connection with the previously announced plan of arrangement pursuant to which Cresco Labs will acquire all of the issued and outstanding shares of Origin House in an all-stock transaction (the "Arrangement"), the parties have agreed to an amendment (the "Amendment") to the arrangement agreement dated April 1, 2019 (as amended, the "Arrangement Agreement") to provide for certain changes to the covenants and agreements contained therein.

In connection with the Amendment, Origin House will also complete a non-brokered financing (the "Financing") of up to 9,705,882 common shares of Origin House ("Common Shares") at a price of C$4.08 per Common Share for aggregate gross proceeds of C$39,600,000 (approximately US$30 million) to strengthen the balance sheet of the combined company.

The Financing is fully subscribed, and the proceeds of the Financing will be held in escrow pending closing of the Arrangement. In addition, certain persons, including services providers, have agreed to be paid amounts owing to them by Origin House in Common Shares.

Pursuant to the Amendment, the consideration payable under the Arrangement will be reduced from 0.8428 of a subordinate voting share of Cresco Labs (a "Cresco Share") for each Common Share and 84.28 Cresco Shares for each class A compressed share of Origin House (a "Class A Share"), to 0.7031 of a Cresco Share for each Common Share and 70.31 Cresco Shares for each Class A Share. The closing of the Arrangement remains subject to satisfaction or waiver of all applicable conditions.

"This is a transformational deal, which will significantly accelerate Cresco Labs' growth in California, while providing a launchpad for the combined company to develop and distribute best in class brands across the country" Charlie Bachtell, CEO and Co-founder of Cresco Labs.

"We are very pleased that our groups were able to mutually develop elegant solutions enabling this very important transaction to progress toward closing. Origin House has successfully built the premier cannabis distribution platform (Continuum) in one of the largest cannabis markets in the world. Distribution in California is of utmost importance and a material position in the California market is a requirement for a cannabis industry leader.

In addition, Origin House's cultivation assets, FloraCal Farms and Cub City, are world-class and not only give Cresco Labs access to ultra-premium indoor cannabis for the California market, with quality and yields per square foot rarely seen in this industry, but bring access to a leadership team and cultivation system that will materially increase yields and quality standards across the rest of Cresco Labs' national footprint."

Mr. Bachtell continued, "Cresco Labs has cultivated a successful track record of disciplined execution and diligent stewardship of our shareholders' capital.

We recently launched a new advertising campaign in California which marks the beginning of the growth our combined company can generate in the state. The addition of Origin House will accelerate Cresco Labs' California entry and aids our long-term plan to be successful in the two middle verticals in the value chain – distribution and branded products – a position which we expect will enable us to generate superior margins and returns on capital for our shareholders.

We look forward to closing in January 2020 and working with Marc and the team at Origin House to create the strongest vertically integrated cannabis company in California and the most important cannabis company in the U.S."

Marc Lustig, Chairman and CEO of Origin House added, "Having had an opportunity to re-engage and collaborate with the Cresco Labs team since the expiry of the Hart-Scott-Rodino Antitrust Improvements Act waiting period in October, we are even more excited about the opportunities available to the combined company both in California and beyond.

The strategic footprint that Cresco Labs has built across the U.S., backed by a portfolio of the country's top consumer brands, is a perfect match for Origin House's distribution leadership in one of the most dynamic cannabis markets in the world – California. This deal represents an opportunity for Origin House to accelerate its growth and margin profile by gaining access to Cresco Labs' leading portfolio of brands, joining what I believe is the most innovative U.S. multi-state operator in existence today, to build value for our California brand partners, our combined customer bases and for our shareholders."

Mr. Lustig added, "The equity market environment has changed meaningfully since we first announced this proposed transaction. While this has presented challenges, it will also present opportunities for companies with quality assets and brands to quickly gain market share and build long-term shareholder value.

The Financing announced in connection with this transaction will provide additional capital that the combined company expects to be in a position to use to prudently accelerate growth as opportunities continue to arise.

Origin House continues to leverage its statewide brand support and distribution platform, while Cresco Labs has built a footprint that covers over 70% of the available U.S. customer base, backed by a portfolio of leading in-house brands and one of the best teams in the business. We believe that continuing with the Arrangement on the amended terms is in the best interest of Origin House and all of its shareholders."

Origin House expects to hold a second meeting of its shareholders to approve the Arrangement, as amended, and it is expected that the Meeting will be held in late December, 2019. Assuming satisfaction or waiver of all closing conditions, it is expected that the Arrangement will close by the middle of January, 2020. Additional details concerning the Arrangement, including the Amendment, will be contained in the management information circular to be sent to Origin House shareholders in connection with the Meeting.

The Board of Directors of Origin House unanimously recommends that Origin House shareholders vote in favor of the resolution to approve the Arrangement, as amended.

To learn more about Cresco Labs Inc visit their Company HQ here

Disclaimer: Past performance is not an indicator of future performance.

Disclaimer: past performance is not an indicator of future performance
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Niki Mohazeb
Niki Mohazeb

Niki is a Sydney based writer, with a passion for promoting the health benefits of medicinal cannabis. Niki also enjoys researching and writing about the future of cannabis along with the many other benefits that the plant provides, such as the diverse utilities of hemp.

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