Cresco, along with Green Thumb Industries, is one of two Chicago-based companies to go public last year. Origin House is the largest distributor of cannabis products in California, which is the biggest state to legalize recreational use. It gives Cresco both additional reach and a stable of new consumer brands that could help it become one of the survivors in an industry that’s seen rapid consolidation in the past six months.

“We been doing geographic expansion the past two and a half years,” said Charlie Bachtell, CEO of Cresco, which operates in 11 states. “This is our first acquisition beyond geography. This is strategic channel expansion.”

Like Cresco, Origin House—which was founded in 2015 as CannaRoyalty—has licenses to grow and distribute cannabis in California. While Origin House has several of its own brands of products, it’s a large distributor of other companies’ products, too, delivering more than 50 cannabis brands to more than 500 dispensaries. The company estimates it has 60 percent market share in the state. The California cannabis market is expected to total $7.7 billion in sales by 2022, compared with $270 million for Illinois, according to Arcview Market Research/BDS Analytics, a research firm based in Oakland.

“We can plug into that and have distribution in California, and through us they can offer national distribution for their brands outside California,” Bachtell says.

The cannabis market is siloed, with growing, consumer product manufacturing, wholesale distribution and retail operations.

“If you want to be a major player, you have to do all of those,” Bachtell says. The consumer piece is critical. “You have to have the ability to distribute both your own branded product and find distribution onto other people’s shelves. Following the closing of this acquisition, Cresco brands will be in over 725 dispensaries across the country, giving us the largest and most strategic distribution footprint of any cannabis company in the United States. This significantly accelerates our efforts to build the first national house of brands with broad and deep positions in the largest cannabis markets in the country.”

GTI bought Los Angeles-based Beboe, a luxury cannabis-product line, in February for an undisclosed amount of stock. “(The deal by) Cresco signals that in a maturing cannabis market, there’s a commoditization that occurs,” said John Downs, director of business development at Arcview. “The way to fight that is to invest in brands to maintain profit margins and pricing power. This is a sign of the times.”

Because cannabis remains a controlled substance under federal law, companies that grow and distribute marijuana, even in states where it’s legal for medical or recreational use, aren’t able to go public on U.S. exchanges. Origin House went public on the Canadian Securities Exchange in 2016 as CannaRoyalty and changed its name to Origin House last year.