Investment bank Cowen has downgraded its outlooks for major cannabis multistate operators Columbia Care and Cresco Labs after U.S. lawmakers declined to include marijuana banking reform in an omnibus spending bill.
Analysts at New York-based Cowen downgraded both companies’ ratings from “outperform” to “market perform” and lowered their price targets in research notes issued Tuesday.
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Chicago-headquartered Cresco is attempting to acquire New York-based Columbia Care in what would be a marijuana megamerger, but the deal has not yet closed.
Cowen “(believes) the 117th Congress’ failure to pass the SAFE (Banking) Act in omnibus makes (Cresco’s) acquisition of (Columbia Care) … incrementally less likely to close,” wrote equity analysts Vivien Azer, Victor Ma and Seamus Cassidy.
Although the companies have already announced some of the asset divestitures needed for the acquisition to close, the analysts wrote that other divestitures must be achieved in Florida, Maryland, and Ohio.
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