The deal will help the hip-hop mogul foster more Black and Brown entrepreneurs in the industry.
Sean “Diddy” Combs, the Harlem-born hip-hop mogul and businessman once known as “Puff Daddy”, may need to dust off his old moniker.
As the Wall Street Journal was the first to report on Friday, the 53-year-old Combs has agreed to buy cannabis retail stores and production facilities in New York, Illinois, and Massachusetts from Chicago-based Cresco Labs and New York-based Columbia Care for $185 million.
In doing so, Combs will become chairman and CEO of the largest Black-owned cannabis business in the $25 billion (2021 annual sales) industry once the transaction closes next year. Among his motivation for getting into cannabis is to help diversify a mostly white-owned industry. About 80% of legal weed businesses are currently owned by white people, while only 2% of businesses are Black-owned.
“The purpose is bigger than the moment,” Combs says from his home in Los Angeles. “When I looked at the staggering statistics, [Black people] get arrested four times the rate of white people. And when it got legalized, we only owned 2% of it, while 80% was owned by the people who incarcerated us. It inspired me and invigorated me to go fight as the scales are so unbalanced.”
Part of his plan will include hiring formerly incarcerated people, convincing lawmakers to create better social equity programs, and mentor and fund Black and Brown entrepreneurs.
“We don’t just want our fair share; we want what’s rightfully ours,” says Combs. “I honestly think that because of the impact that [cannabis prohibition] has had on our communities, something more fair would be 70% to Black and Brown owners and 30% to everybody else.”
Combs Enterprises will operate a total of nine dispensaries, with locations in Manhattan, Brooklyn, and Chicago, and three cannabis cultivation and production facilities in Illinois, Massachusetts and New York. Legal cannabis sales in the U.S. are expected to hit $65 billion by 2030, according to Cowen.
This marks Combs’ first investment in the marijuana industry, but he’s not the first hip-hop mogul who believes there’s money to be made in cannabis. Brooklyn-born billionaire Jay-Z has his own brand, Monogram, which he launched in 2020. He is also leading the company’s social justice program with a venture fund that has been seeded with $10 million. Bay Area rapper Berner cofounded one of the world’s biggest cannabis brands Cookies. Wiz Khalifa, Cypress Hill’s B Real and Method Man also have their own cannabis brands.
In March, Cresco announced that it had agreed to acquire Columbia Care for $2 billion. The assets to be purchased by Combs Enterprises are required divestitures for the acquisition agreement. Combs Enterprises will purchase the cannabis operations from both companies with $110 million in cash and $45 million in debt financing. Combs will own 100% of the equity at first but will eventually look for investors as he plans to expand the company, says Tarik Brooks, president of Combs Enterprises. (Brooks is also a board member at Cresco, however, the company said he recused himself from discussions related to the deal.)
Brooks echoes the sentiment that investing in Black-owned companies is a major motivation. “Black entrepreneurs are the fastest growing group of entrepreneurs in the country, but have the toughest time accessing capital,” Brooks says. “The only way to develop a diverse ecosystem is to make sure people have the capital and resources they need to succeed. Otherwise, they’re just set up to fail. It’s going be a big part of our mission to make the overall industry more diverse.”
Combs has been a serial entrepreneur for several decades. In the early 1990s, he started his music label, Bad Boy Records. One of his biggest stars was Christopher “The Notorious B.I.G.” Wallace (aka Biggie Smalls), the Brooklyn hip-hop artist known for hits like “Juicy.” Combs also started his own clothing company, Sean Jean in 1998, and five years later partnered with Diageo to launch his vodka brand, Ciroc. He recently launched a new R&B record label called Love and his own media company, Revolt.
Combs sees the new cannabis venture as something bigger than nine dispensaries and three cultivation facilities. He wants to build it into a Black-owned cannabis conglomerate known for its suite of brands.
“My mission is to become the Diageo of cannabis,” says Combs, “where I’m able to give people of all colors and races an equal opportunity to be entrepreneurs in this space.”
Once the deal closes, Combs will have a dispensary on Court Street in Brooklyn, across the street from Kings County Supreme Court, and a few miles from where The Notorious B.I.G. lived in Fort Greene. When asked what Biggie, who was assassinated in 1997 during a drive-by shooting in Los Angeles, would think of the new venture, Combs paused for a moment.
“I won’t lie—this would probably be one of his proudest moments,” he says. “For it to be legalized now, I’m quite sure that he would be my partner in this business. We’re going to make sure that New York is on fire—we will be number one in New York in honor of B.I.G.”