Sean "Diddy" Combs has always had an interest in businesses outside of music. His Combs Enterprises has had a hand in clothing lines, vodka brands, media organizations, gaming companies, and more. He was looking forward to adding cannabis to that portfolio, but that vision has hit a snag.
Two large cannabis companies, Cresco Labs and Columbia Care, were all set to merge — in a deal worth $2 billion — and form the largest cannabis entity in the United States. But with a shaky economy and worry over regulatory issues, the two sides called the deal off.
As part of the merger, Diddy would have owned nine stores across New York, Massachusetts, and Illinois. Each state would have also had its own production facility. He was ready to pay $185 million for the stores and facilities.
Unfortunately that deal is now up in smoke. And while he didn't lose his $185 million, that was just a planned investment, Diddy is the rare position of feeling shafted by a business opportunity.
Diddy isn't resting on his laurels, though. He and his Combs Global team are still looking at ways they can diversify the cannabis industry.
"My mission has always been to create opportunities for Black entrepreneurs in industries where we've traditionally been denied access," Combs said at the time the deal was announced. "This acquisition provides the immediate scale and impact needed to create a more equitable future in cannabis."
New York, Massachusetts, and Illinois have all legalized marijuana in the past seven years, but there are obstacles standing in the way of the industry's growth. Marijuana is still illegal at a federal level. It's also classified as a Schedule I drug, alongside much more harmful drugs like heroin and LSD.
The Schedule I classification states that these drugs have a high potential to cause addiction or abuse and serve no medical purpose. That classification hampers the availability of marijuana in some cases, and it's largely inaccurate. Cannabis isn't as addictive as many drugs, including tobacco and alcohol. And it's used to ease chronic pain and treat things like glaucoma and cancer.
For now, it's back to the drawing board for Diddy and company. Yet, with his passion for shaking up the industry, we expect to see another deal pop up soon.
Unfortunately this is Diddy's second business snafu in as many months.
Back in May, Diddy sued Diageo, his partner in a tequila brand called De Leon. The lawsuit essentially accused Diageo of being racist and suppressing De Leon while other equivalent tequilas, some of which Diageo also owned, grew into billion dollar brands. A few weeks later, Diageo severed all ties with Diddy, ending what had once been a very fruitful partnership that launched with the vodka brand Ciroc. In its public declaration of the partnership being ended, Diageo claimed Diddy only invested around $1,000 in De Leon and that's why the brand failed. Furthermore Diageo revealed that it had paid Diddy $1 BILLION in royalties over the course of their partnership.
Diddy can't win with tequila or weed. He lost his vodka brand. The guy is not having a great 2023 business-wise!