Good day, ladies and gentlemen, and welcome to the Cresco Labs Origin House acquisition call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. If anyone requires assistance during the conference, please press star then zero on your touchtone telephone. As a reminder, this conference call will be recorded. I would now like to introduce your host for today's conference, Aaron Miles, Vice President of Investor Relations. You may begin, sir.
Thank you. Good afternoon, and welcome to Cresco Labs Origin House conference call. We look forward to speaking with you today. I'm joined on the call today by our Chief Executive Officer and Co-founder, Charlie Bachtell; our President and Co-founder, Joe Caltabiano; and Marc Lustig, CEO of Origin House. Before we begin our remarks, I'd like to remind everyone that certain statements made on today's call may contain forward-looking statements information within the meaning of the applicable Canadian securities legislation, as well as within the meaning of the Safe Harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include estimates, projections, goals, forecasts, or assumptions, which are based on current expectations and are not representative of historical facts or information.
Such forward-looking statements represent the company's beliefs regarding future events, plans, or objectives, which are inherently uncertain and are subject to a number of risks and uncertainties that may cause our actual results or performance to differ materially from such forward-looking statements, including economic conditions and changes in applicable regulation. Additional information about the material factors and assumptions forming the basis of our forward-looking statements and risk factors can be found under Risk Factors in Cresco's CSE Listing Statement filed with SEDAR on November 30th 2018 , and available at www.sedar.com. Cresco does not undertake any duty to publicly announce the results of any revisions to any of its forward-looking statements or to update or supplement any information provided on today's call.
In addition, during today's conference call, Cresco will refer to some non-IFRS financial measures, such as Adjusted EBITDA, which do not have any standardized meaning prescribed by IFRS. We believe these non-IFRS financial measures assist management and investors in understanding and analyzing our business trends and performance. Please refer to our earnings press release or for calculation of these measures and reconciliations to the most directly comparable measures calculated and presented in accordance with IFRS. These non-IFRS financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should only be considered in conjunction with the IFRS financial measures presented on the financial statements listed on the website. Please also note that all financial information on today's call is presented in U.S. dollars, unless otherwise noted. With that, I will now turn the call over to CEO Charlie Bachtell.
Charlie, please go ahead.
Thanks, Aaron. Good morning, everybody. Thanks for joining us on the call today to discuss the acquisition of Origin House. We've prepared a presentation with a lot of information about the transaction, and hopefully, you've had a chance to look at that. I'm going to use our time on the call today to provide a general overview of the deal and our vision and plans for the combined company going forward. Being the largest public company acquisition in U.S. cannabis history, this is obviously a transformational deal for both of our organizations and for the broader industry. Marc Lustig, the CEO and founder of Origin House, and his whole team, have done an incredible job of building a very strategic and unique business through their M&A program and making very purposeful investments over the last year.
Marc will be joining the Cresco executive management team and also serving on the board of directors. We're really excited about having the platform that Origin House has built and look forward to working closely with them in the coming months and years. Before I go on, I'd like to ask Marc to provide his perspective on the transaction. Marc?
Thanks, Charlie, and good morning, everyone. Right up front, I'd like to echo Charlie's kind words and say that my team and I are very excited to be joining the Cresco organization. From an Origin House perspective, this transaction is directly aligned with our strategy to build a leading portfolio of cannabis brands in California and to rapidly and accretively take those brands to the rest of the U.S. market. In January, several shareholders signed voluntary voting support agreements to ensure that when the time came, we would have an opportunity to choose the right partner to take what we've built to the next level while creating value for our shareholders. For Origin House, the time is now, and the partner is Cresco.
Our board has unanimously supported this acquisition, and certain Origin House directors and officers and other significant shareholders have entered into irrevocable voting and support agreements in favor of this transaction. As Origin House's largest individual shareholder, I'm very supportive of this transaction and strongly believe that joining with Cresco will multiply our growth opportunities, accelerate our business plans, and generate significant value for shareholders. Cresco is not only one of the largest U.S. multi-state operators in existence today, but through our extensive interactions together, we found common ground in our view of the customer as the catalyst for all brand and business development efforts. We share a common view that branded products and distribution are the keys to building long-term competitive advantage and shareholder value in this space....
The combination of Cresco's scale, expertise, and access to capital, with Origin House's proven track record of leveraging its California-wide distribution network and key retailer relationships to identify and build authentic brands in the largest cannabis market in the world, will be a launching pad to significant growth for the shareholders of both companies. I want to thank Charlie, Joe, and their team for welcoming us to Cresco, and would like to extend a special thanks to our loyal shareholders and each and every one of our employees. It's been a significant year of growth for Origin House, and I know I speak for our entire management team and board when I say I can't wait to turn the page with Cresco as a partner, with the goal of creating the most valuable cannabis company in the world together. So Charlie, I'll pass it back to you.
Thanks, Marc. To put the scale and strategic importance of this transaction in the proper context, I want to start off by providing a little background on the California market, which, as Marc noted, is the largest regulated cannabis market in the world. According to ArcView Market Research and BDS Analytics, California is projected to have $7.7 billion in annual sales in 2022, making it the crown jewel of the global cannabis market. Not just because of its size, it's also because of how consumer trends in California influence other markets. From beverages, to clothing, to cannabis, if you're successful in California, you're going to be successful on a larger national and international scale.
While the California market got off to a slower-than-expected start, the industry expects 2019 to be a year of substantial growth, due to enforcement in Southern California, which will create more opportunities for the licensed dispensaries operating in that regulated market that'll be served by Cresco. Figuring out how to effectively build distribution within the California market has been a key challenge that faces any cannabis companies with national and international aspirations. It's a difficult market to break into, and navigate, given its size, its regulatory framework, and its cultural diversity. It's virtually impossible to build a dominant national brand if you don't have a similarly dominant position in California. Origin House is one of the only cannabis players that figured this out early and took a pure-play approach, to the market as a base for national and international expansion.
We view Origin House's use of distribution as the ideal path to enter the California market, thereby locking in both a long-term pipeline of growth opportunities, as well as a sustainable competitive advantage. With today's announcement, we are adding an organization that has not only solved the California puzzle, but thrived in the execution of its strategy. Those of you that know us know how much of importance we put on execution. Origin House is a clear distribution leader in California, having made substantial investments to build up its infrastructure and develop an unsurpassed network of relationships over the past three years in the state. Origin House delivers more than 50 cannabis brands to over 500 dispensaries throughout the state, representing approximately 60% market penetration, with penetration rates higher in certain counties.
Through the acquisition of Origin House, Cresco immediately establishes itself as the leading multi-state operator in California, with a team and asset base that has a proven track record and ample room to grow. We're already making good progress in building our California distribution on a standalone basis, but clearly, this acquisition hits the accelerator and gives us an enormous lead over any other multi-state operator, and the distribution expertise that Origin House has developed in the most influential cannabis market in the world, will provide a valuable framework to leverage as we expand our presence in not only our current states, but in future states that Cresco is going into. As the largest distributor in California, we will have access to more data on consumer buying patterns than any other player in the industry.
The ability to use that data to inform product development strategies and reinforce our brand strength will ultimately make us a more successful consumer packaged goods company. As we think about how to deploy capital on behalf of our shareholders, we've always taken a very strategic approach to our transactions and ensure that every deal that we're executing is closely aligned with our approach to the cannabis industry. Origin House is a perfect complement to Cresco because they think about cannabis industry the same way that we do, meaning brands, brands, brands, and the distribution of those brands into other people's dispensaries. They share our focus on the middle two verticals of the value chain, the creation and distribution of branded products.
They believe, as we do, that developing brands and getting them in the stores that you don't own, is the most effective way to build a sustainable, highly profitable enterprise in the cannabis market. It's not about how many doors you own, it's about how many doors you have your products in. This focus has enabled Origin House to successfully identify and develop promising brands that resonate with consumers and distribute superior products to dispensaries across the state. It's resulted in the leading distribution platform in the world's largest regulated cannabis market. The team at Origin House includes a former executive vice president at Southern Wine & Spirits, which is the largest wine and liquor distribution company in California, as well as the U.S.
The best practices from the wine and liquor industry transfer very well to the cannabis industry, and have provided the roadmap that Origin House has used to build its unparalleled distribution platform in California. This acquisition reinforces and strengthens Cresco's existing approach to the market, and with the addition of Origin House's expertise, Cresco will have industry-leading brand development and distribution capabilities. Cresco brands will be on the shelves of over 725 dispensaries across this country, giving us by far the largest and most strategic distribution footprint of any cannabis company in the U.S., and significantly accelerating our efforts to build the first national brand in the industry. We'll be the second-largest U.S. cannabis operator, and the sixth largest North American cannabis operator by market cap on a pro forma basis.
In a market where size matters, we believe our increased scale will provide significant competitive advantages. In addition, with the shares issued in this transaction, we'll have one of the largest floats of any company in the cannabis industry and significant liquidity in our stock. As more institutions like BlackRock look to deploy capital into the cannabis space, we believe that Cresco's solid approach to building a global platform, along with the company's size and share liquidity, will make us an attractive investment vehicle for these institutional investors. Ultimately, as we are able to attract a larger universe of potential investors, we believe we'll also see a positive impact on our valuation, which will translate into a lower cost of capital. That creates a virtuous cycle where the economics of future transactions become increasingly favorable.
The combined company will have unparalleled expertise in a wide variety of areas critical to succeeding in the cannabis industry, including distribution, winning state application processes, rapidly bringing operations to market, and capturing leading market share and market penetration. Since we founded Cresco, we've been on a mission to attract top-level talent to the company and the best-in-class expertise across multiple disciplines. We've clearly done that with the marketing team we've built, and now we've added some of the best brand development and distribution experts in the industry. Origin House has completed five acquisitions and two capital raises since 2018, and has had a very experienced corporate development and capital markets team that will be invaluable to us as we continue to expand and add scale through a focused M&A strategy going forward.
Marc's been an incredible steward of capital and has a great track record for creating shareholder value, as evidenced by Origin House's ranking as the second best-performing stock on the OTCQX Best Market in 2018. His experience and background will certainly strengthen our capital markets relationships. With that as background and context, I want to ask Joe Caltabiano, Cresco's president and my fellow co-founder, to review the key highlights of the transaction and what the combined company will look like going forward. Joe?
Thanks, Charlie. We're excited to welcome Origin House team to the Cresco family. Following the completion of our pending acquisition in Florida and the final receipt of our licensure in Michigan, combined with Origin House, we will have operations in 11 states with dominant market share in California, Pennsylvania, Ohio, and Illinois, and we have well-established, vertically integrated operations across multiple other states. This transaction will give us a stronger presence across North America, with a total addressable consumer base of 185 million people. Through this transaction with Origin House, our North American operations will also now include well-established retail, online, and wholesale channels in Canada. Origin House recently acquired 180 Smoke, which is a dominant online and retail nicotine vape operator in Canada, with some of the best-positioned retail locations in the country, and a large and strategic retail footprint in Canada's largest market, Ontario.
We anticipate that 180 Smoke will serve as a vehicle to provide our sophisticated U.S. brand partners with rapid access to the expanding Canadian market. In particular, as Ontario's retail marketplace matures, 180 Smoke puts us in a great position to leverage our combined U.S. expertise and our brand portfolio into a rapid and accretive Canadian expansion when it makes sense to do so. Together, we will have a superior retail and distribution model with strong customer recognition of leading brand portfolio, comprised of more than 130 branded cannabis products. We expect significant revenue and cost synergies as we incorporate Cresco's brands into Origin House's California distribution platform, and as we add Origin House's brands into our existing channels in other states.
We will be able to continue to grow our brand portfolio, as Cresco will clearly be positioned as the preferred partner for additional premier cannabis brands seeking distribution on the industry's most expansive platform. From an organizational perspective, we will now have a meaningful presence in two key strategic geographic areas. The first being Toronto, which sits as the epicenter of capital markets for the cannabis industry, and the second being Santa Monica, California, where Origin House has a brand development team that sits right in the hub of the market for branding and the evolution of cannabis in California. From a financial perspective, we will continue to provide superior results relative to other cannabis companies through very strong revenue growth and a focus on generating industry-leading margins. With that, I would like to turn the call back over to Charlie.
Thanks, Joe. I want to wrap up by saying that I think we've fundamentally changed the competitive landscape in the cannabis industry with this deal. We've created a cannabis industry powerhouse with the largest footprint in North America and have transformed Cresco into the largest distributor of cannabis brands, serving the greatest number of dispensaries in the U.S. I think we're in a very strong position to create value for our shareholders as the market for medical use and regulated adult use cannabis continues to grow at a rapid pace. Thank you all for dialing in today. Operator, we're now ready for some questions. Please open up the call.
Thank you. Ladies and gentlemen, if you have any questions or comments at this time, please press the star and then the one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Once again, if you have any questions or comments, please press star then one. One moment for questions. And our first question comes from Derek Dley with Canaccord Genuity. You may proceed.
Yeah. Hi, guys. Congratulations on the acquisition announcement.
Thanks, Derek.
Can you talk about, just a little bit more in depth about some of your plans to leverage Origin House's distribution assets, both in terms of, you know, getting Cresco products into Origin House's dispensary partners and vice versa? I mean, how quickly after close could we expect to see some of these products appear on, you know, other shelves?
Thanks, Derek. This is Charlie. I'll take that one. You know, we're really excited about it, and to get a little further into depth and specific on timing, I think you'll see the implementation and that integration happen very rapidly. You know, we're already operational in the California market and are in a position where some SKU set, not the full SKU set, but some SKU set is ready for distribution immediately. So, you know, the platform that's been built there, you know, originally as River, and again, you know, constructed and built by one of the former EVPs of Southern Wine and Spirits, that platform, it's just a it's industry leading. You know, it's very traditional in structure.
It's built on the most successful distribution model of any CPG in the U.S. And so that, the fundamentals of that not only will help, you know, execution in California, but that's gonna help our distribution in every state that we operate in. And the second part of your question is when, you know, sort of with regard to the brands, the California brands, and whether they'll come out of California through this new footprint that'll add 10 states to really Origin House's distribution model. You know, absolutely, there will be a selective group that we're bringing into the other states, and I think it's gonna be an attractive opportunity for other premier brands in California that are struggling, figuring out how to get out of California to work with Origin House going forward.
So I really think those types of synergies that we're going to create by the combined entity. It really does have this sort of this cross-channel flow, where we're both... Again, we feel like we fit together like puzzle pieces here. The strategies were very aligned. Ours was more of a broad, multi-state approach, and then we go deep, and Marc's was a very singular focus on the largest cannabis market in the world and going as deep as possible, so we really do, we fit together well.
Okay, that's great. And just sort of following up on that last comment about, you know, in both cases, you tend to focus on markets and go deep. Can you provide some color just in terms of the penetration rate that you now have in California? You know, would it be similar to what we've seen in some of your, you know, other sort of focus states like Illinois, Pennsylvania, Ohio?
Yeah, so with that, I'll turn that one over to Joe.
Derek, we've had designs as Cresco to get up to a 70% market share in California this year. We had an incredible launch as we started distributing product on our own in February and March, getting into about 90 stores on our own. That market is a large market that has multiple different nuances from north to south. Having Origin House already penetrated approximately 60% of the market, we're confident we will be in that 70% and beyond by year's end. The Cresco products are ready to go. This will actually accelerate our distribution plans. I think we'll see Cresco exceeding our previous anticipated goals of 70% of the California market and continuing to grow as that state continues to bring on more dispensaries on a daily, weekly and monthly basis.
Okay. And in terms of your cultivation assets within California, both the combination now with Cresco, and obviously, you had plans to expand your cultivation there, how comfortable are you with, you know, the amount of supply that you have coming through your own vertical integration to supply what's now going to be a much bigger piece of the pie for the combined entity?
Yeah, so this is Charlie. Again, that's one of the benefits of this relationship, this new relationship, is with Origin House having such an established footprint and really, you know, it's an authentic California operator with the relationships that come with that. They understand the sourcing of inputs and the relationships that exist. You know, we were successful in establishing a really large greenhouse footprint as our entry into California. And what Origin House is gonna bring is a relationship with existing indoor growers and flower producers, along with, you know, unique manufacturers. And those are opportunities that are somewhat unique to California.
The other markets that we operate in, you know, they don't really allow for a lot of that, intercompany relationship and utilizing third parties to help create products, so they understand that world already, and that's gonna be a phenomenal resource for Cresco, not only just on the supply side, but from a variety of product standpoint, so very excited about it.
Okay. And then just a couple more for me, and then I'll jump back in the queue here. Just in terms of, you mentioned data analytics being, you know, a key component of this acquisition. Can you just give us some more color on, you know, how you would plan on leveraging the, you know, the distribution know-how, the fact that Origin House is now in 500 dispensaries, and how you can leverage those analytics across the U.S.?
You know, on this one, I think, I'll kick this one over to Marc.
Thanks, Charlie. So yes, you know, we've been building the distribution side of this business for the last year and a half. And with that, I would say that I'm not aware of another cannabis company that would have access to the information Charlie referred to it earlier, that is providing color for our own brand development and our own brand partnering strategies. And so, yes, we use independent data. But frankly, when you're in 70% of the dispensaries, and you're selling to buyers at that, so dispensaries daily, there is no better quality of information that we're getting than what Continuum, which is the distribution platform that we built in California, which is the combination of River with Alta Supply, two acquisitions that we made over the last year.
That's what that provides, and it's hugely valuable, not just for Continuum and for the branded product of Origin House, but now with this acquisition, using that data to provide value into the decisions that are being made with respect to Cresco's brands across the country.
Okay, and then just the last one for me, and I appreciate it if I'm putting you on the spot a little bit here, and you can't answer this. But what is the plan, Marc, you know, for your role within the executive team, going forward?
We haven't defined the exact role, but I can tell you with 100% certainty, I haven't met a management team that I'm as comfortable and confident in as Charlie and Joe and the rest of their team. And so it's been an absolute pleasure coming to this point. But I've said this now almost 100 times, I think yesterday, which is that I actually believe that the most exciting part of the Origin House story starts right now. And so, with respect to the role, you know, I'm ready to play any role possible. Obviously, they have phenomenal management team already across the board. I think if there's an area that I could be extremely valuable, it would be on the strategic and M&A and capital markets side.
This is a company that's obviously planning even more growth, so I think I can be very helpful there. But I, irrespective of that, I couldn't be happier to be joining the quality of the management team at Cresco.
Just to add to that, on the Cresco side, Marc was one of the bigger assets of Origin House that we were excited about doing the deal. So we're incredibly excited to have him as part of the executive team going forward.
Great. Thank you very much.
Thanks, Derek.
Thanks, Derek.
Our next question comes from Robert Fagan with GMP Securities. You may proceed.
Thanks, and, congrats on the acquisition, guys.
Thanks, Rob.
I was just wondering, Joe mentioned quickly with respect to cost synergies that could be stemming from the combination. I was wondering if you could maybe provide any color around potential cost synergies you guys see from the deal.
Thanks, Rob. This is Charlie. You know, what we really came to the conclusion of as we continued to, you know, from the initial conversations that we had together, and as we continued to work on the deal, the synergies that stood out to us most were just the way that we really did, as I mentioned earlier, we fit together like puzzle pieces. The focuses that they've had over the last couple of years and the execution that they've had in developing that very unique asset in California, that answers sort of an opportunity that we were in the midst of working on, which was how do we go deep in California? You know, we never just wanna be a participant in any state.
That's not our culture, so they just answer that for us in the same way that we sort of create the multi-state footprint for them, and then when you start having a conversation with other brands in California on who they wanna work with as a distributor, when you have a distributor that has the ability to take you into 11 states across the country, you know, it just starts. It's this cycle of value creation that we just saw over and over and over.
You know, even from a like a P&L standpoint, from a revenue-generating standpoint, you know, some of those, some of the products that are currently being distributed in the Origin House brand suite have lower margins, and aren't, you know, owned brands of Origin House. Now, if we replace some of those with owned Cresco brands that are gonna have significantly higher margins being distributed through the family, you just start to see again these positive synergies that get created. We're very excited about it.
Okay, great. Yeah, and that actually, I think, dovetails well into my next question, is that, you know, Before Origin House, you guys, you know, were positioned obviously, to attack the wholesale market in California. Now, obviously, you'll be able to capture more of the supply chain value. Is it fair to think that, you know, that could create some significant margin bump for your business in California, maybe, you know, 10 percentage points, even 20 percentage points? What kind of value capture can you get from owning the distribution and the cultivation in California?
That one, I'll turn over to Joe.
So, Rob, as we enter California, you know, developing your own distribution platform is an expensive endeavor. So you use a lot of services, whether it's last mile services for the actual logistics, whether it's the planning, and all of the other components that go with distribution. So on the Cresco side, we had a significant outlay of expense going towards those items. Now, having a platform that distribution's all about scale. So as Charlie mentioned, the more products that are on the truck when it leaves the distribution facility, the better opportunities you have for margin increase. So we certainly think that this acquisition will drive our margin increase in California by eliminating some of the double expenses that we would have had to have paid as Cresco, going forward.
Okay, great. Thanks for that color, guys. Just one more here while I get back to the queue. I think there's an attractive cash position, you know, for Origin House, that you guys are gonna be able to, I think, access. You know, we were estimating it, maybe somewhere in the area of about $55-$60 million, currently, not necessarily as of September thirtieth. But can you update us on what kind of cash availability there is combining with Origin House, and if any of that is significantly earmarked for big CapEx plans, outside of, you know, Cresco's?
Yeah, I'll turn that one over to Marc.
Yeah, thanks. So we've been, I think, very good allocators of capital. The last balance sheet update that we had was our Q3, which I think you're quoting, which was, I think, about CAD 70 million. That included the Trichome balance. But, irrespectively, you know, we've been careful and deliberate with capital. We also have, in addition to what you've just mentioned, we've got a number of assets that we own that I think you've seen in our history as always being able to monetize as well. So I would add that onto the point. And then in addition, we're going through the exercise now as a combined company of capital expenditure plans.
But together, the company has never had any issues with respect to the ability to raise capital. But in the very immediate term, you know, we're going through the exercise right now of how we plan to allocate the cash balances, as you said today.
Okay. Thanks again, guys. Just last quick one is, any ability for you guys to give us a little color on the percent of shareholders that are in support of the deal? That would be great if you could.
I turn that one back to Marc.
Yeah. It's a level that is somewhere between 15% and 25% that have signed the irrevocable voting support agreement.
Great. Thanks, Marc, very much. I'll get back in queue.
Thanks, Rob.
No problem.
Our next question comes from Russ, Russell Stanley with Beacon Securities. You may proceed.
Good morning, and congratulations.
Thanks, Russ.
Thanks, Russ.
Just wondering, first, I know you're probably very early days on this, but in addition to Marc, just wondering, who else you have staying on and where you're at with those discussions?
Yeah, I'll let Joe handle this one.
So Russ, all the acquisitions we've done, we, we try not to disrupt the apple cart. I think Origin House has done an incredible job with their business. Their management team, from top to bottom, we've been incredibly impressed with. The facilities we've visited, incredibly impressed with all of the team there as well. So we, we view this as an accretive transaction, both financially but also with the teams. So, you know, the, the goal is to keep everything intact and lend the resources that Cresco has built to what Origin House has built and come out with the, the world's strongest cannabis company.
Yeah, and I'll add just a little, a little bit on top of that. Having sort of firsthand knowledge of what it was like to get this transaction to announcement stage over the last 10-14 days, and you know, working in the war rooms up in Toronto over the last week with Marc's team. They are a stable of warriors. I mean, they were. It was night after night after night of 4 hours of sleep and doing what needed to be done to get the transaction ready. And it was, it was phenomenal to see because that's, that's Cresco. And the alignment and sort of approach and, you know, engagement is one of our core values at Cresco.
The engagement from Marc's team that we've seen so far is outstanding. That's another aspect of the transaction we're incredibly excited about, is the team that's coming on board.
That's great. Thanks for the, thanks for that color. That's very helpful. Just one more question from my end at this point, with respect to Origin's facilities. I understand, I think at least a few of them have successfully transitioned to annual licensing in California. I'm just wondering what progress has been made or what the latest status is on those facilities?
I'll pass that to Marc.
Thanks for that. All very solid and a continuation of how you've seen it from us, which is first in class. I think the permits that were issued in the last couple of weeks were the first issued by the state, and the other facilities are in that, too, as well.
Excellent. That's all I had. Congrats again.
Thanks, Russ.
Our next question comes from Jesse Pytlak with Cormark. You may proceed.
Hey, good morning, guys. Just in terms of the go-forward plans for the California market, and keeping with the theme of wanting to go deep in all your markets, do you have any plans to maybe complement the Origin House assets with any retail? And then, just stemming from that, now that you're gonna have these, you know, the Origin House brand portfolio in-house, does this kind of change any of your plans for how you might tackle Nevada or Massachusetts?
Yeah. Thanks, Jesse. This is Charlie. I'll take that one. So, you know, I think, again, this is where the strategies of the companies have complemented each other. You know, Cresco is vertical in our markets. We like that. At this stage of the industry, we think it's incredibly important to be in all sort of four verticals of the value and supply chain. And so our strategy in California has been to execute on a retail strategy that would include some, you know, key strategic locations and allow ourselves to present our house of brands- exactly the way that we want to present them at a brick-and-mortar retail level. So that will not change.
That'll be something that the combining entity works on together, and I anticipate executing well. And then sure, you know, I think the access to some strategic California brands that will work well in other markets, like in Nevada, like in Massachusetts, is definitely a phenomenal opportunity for us, for a variety of reasons. We're very excited about the access to combine strengths with some of the brands that have been able to create that positioning in California, which, as we've said it multiple times on the call, you know, it can't be overlooked as one of, if not the most important markets, in any CPG industry.
Yeah, very excited about that, and it will be incorporated into our plans in our other states.
Okay, great. And then just one follow on. Just kind of going forward, do you kind of plan to maintain maybe the pace or the plan of third-party brand onboarding in California for Origin House? Or do you think that over time, they'll try to kind of more streamline that to be more exclusively your own brands?
You know, I'll kick that over to Marc.
You know, it's an evolution, right? Like, when we, on the Origin House side, first built distribution, we then started focusing on our branded partners, and they're an essential part of what we built, and they will continue to be because, you know, we've invested into them. In some cases, we may acquire them. And most importantly, they give us a great view on how the market is operating, and it's good for them, and it's good for us. So I don't see that changing in the near or intermediate term.
Okay, great. Those are all my questions. Thanks, guys.
Yeah, real quick, just to add to that, you know, the opportunity to distribute and to have access into 725 dispensaries around the country. It really is unprecedented. And it, you know, to the order of magnitude of several multiples above the reach of, you know, the other MSOs. And in fact, we've had conversations with others, other MSOs about potentially distributing for them in other states. So I think it's just an interesting opportunity, and when you talk about brand mix, too, you know, that'll be. It is an interesting opportunity that we've provided ourselves with the breadth of reach.
Absolutely.
Our next question comes from Jason Zandberg with PI Financial. You may proceed.
Hi, guys, and I'll echo my congratulations as well on this transaction. Just wanted to you know, Marc Lustig has done a great job of making investments in the cannabis space, you know, from an early point and being able to monetize that. Just wanted to kind of get an idea as to... It sounds like the focus here is on the distribution side. Will there be a continued effort to sell off you know, more of these initial investments that have been made over the past years? You know, will this accelerate that plan or you know, what's that focus going look like going forward?
You know, I'll pass this over to Marc.
Yeah. Thanks, Charlie. So thanks, Jason. You know, the context for that, for mentioning that was in relation to an earlier question on balance sheet and what we obviously still possess from the original CannaRoyalty portfolio, is our position in AltMed, and our position in Resolve Digital. That's all that's left. Both of them are very solid investments. We've made great money from them. And so the only reference to that was just to say that in addition to our strong cash position, historically, we also have other strategic interests that, you know, we could monetize when the time is right for us.
But, you know, that is the legacy portfolio that, in a way, contributed to the building of Origin House, because we were able to use that cash, like the sale of Anandia or some of the other assets, to build out our distribution platform and brand platform. And that is solely the focus of Origin House, so that's how I would respond.
Okay, great. And a question for the Cresco team. You know, there are other distributors in California. You know, obviously, you know, I'm very biased on Origin House myself, given that I cover the stock. But I just wanted to get an idea of, you know, other than, you know, just the sheer number of doors that they have access to in the California market, and obviously a great management team, is there any other components that led you to this acquisition over some of the other distributors that were available or that could have been available in the state?
This is Charlie. I'll take that one. You know, to reiterate, what we loved so much about this transaction was the cumulative. It was everything about what Origin House not only had, but who they are, where they've been, where they want to go. In this industry, what we've, you know, and this is in every aspect of not only our internal operations, but when we look at M&A, when we know, you know, what new markets we want to move into, everything needs to work. Because in a hyper-growth industry like this, you need to be strategically aligned first and foremost, and you have to, again, like we were talking about here, fit together like puzzle pieces for it to be successful. So it was everything.
You know, I mean, that, that infrastructure, having been built by that, the former EVP of Southern Wine & Spirits, you can't overstate the importance of that type of an infrastructure and that type of an approach. And then when you talk about Marc's experience in the capital markets and his ability to create, you know, successful value for his shareholders, you know, the M&A team that they've put together, the authenticity of their positioning in that California market and the relationships that they have, you know, I think what we ended up doing here, and I hope this is recognized by the investment community, this is a transformative transaction.
This is not, you know, an MSO doing, you know, an acquisition in a new state to add to the geographic footprint. I think this is the first transaction of this kind in the U.S. market, where it's a strategic acquisition based on channel perspective and channel opportunity to lock down the relationship of a brand-focused company in the largest cannabis market in the world, with arguably the most successful multi-state operator that focuses on creating consumer brands in all market segmentations. It's a different type of transaction, and you know, we're really excited. I think this is the maturation of the U.S. industry. This is not just about going into another state.
This is about figuring out how you go deep in the largest cannabis market in the world, and also provide yourself the infrastructure to make your operations better in all of the other ten states that you're in, and also bringing on a management team that's top, top of the class, so couldn't be more excited about every aspect of the transaction.
All right, great. Thanks very much.
Thank you. Ladies and gentlemen-
Great. I think that that brings us to conclusion today, guys. I want to thank everybody for joining the call, and have a great rest of the day.
Ladies and gentlemen, thank you for attending today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.