Bottom Line\r\nWe always expected a deal to get done and now we have confirmation Cresco Labs (CSE: CL) is going ahead with the acquisition of Origin House.\r\n\r\nThe deal terms have been renegotiated less than we expected with Origin House investors now receiving only 17% less shares of Cresco.\r\n\r\n\r\n\r\nThe news that Origin House is doing a new equity deal will dilute current shareholders by about 8%, but with the stock still 25% below the implied offering price, there is money to be made by buying Origin House.\r\n\r\nThis deal is going to close. The new terms are agreed, both parties are motivated and Origin House has already found investors for the $30 million equity raise that was a contingency for the deal to close.\r\n\r\nThe only risk remaining for Origin House investors is if Cresco stock keeps falling.\r\n\r\nThe $1.00\/sh gap between the implied deal price today and Origin House's stock price is likely explained by the borrow cost for shorting Cresco Labs. Let us explain.\r\n\r\n\r\n\r\nThe deal is expected to close in two months which is how we got to a borrow rate of 12% per month.\r\n\r\nSo if you were thinking of locking in your gains with a short and long position, there isn't any money left to be made.\r\n\r\nHowever, retail investors can still make a profit if the Origin House discount doesn't fade.\r\n\r\nThere are two ways to play this in our view.\r\n\r\n \tSit on the sidelines and buy Origin House in the middle of January if it continues to trade at more than a 10% discount to the deal terms. You limit the days your position can fall further by buying just before the deal closes.\r\n \tIf the U.S. cannabis market catches a bid and Cresco starts going up again, the risk that your converted Cresco shares are going down in value has been removed. Origin House stock should track Cresco and will go up as well.\r\n\r\nThis merger has been one of the more interesting cannabis stories to watch and we expect both stocks will continue to oscillate until the deal closes.\r\n\r\nVolatility creates opportunity.\r\n25% Return Still Up for Grabs in Origin House (Purple Area)\r\n\r\nNew Details of the Deal\r\nPreviously\u00a0in limbo\u00a0as stock prices have fallen since its original announcement back in April, the deal for Cresco Labs Inc. (CSE: CL; OTCQX: CRLBF) to pick up Origin House is now moving forward on amended terms.\r\n\r\nBoth sides returned to the negotiating table after the end of the Hart-Scott-Rodino Antitrust Improvements Act 30-day waiting period last month. Since the all-stock acquisition deal was first revealed, Cresco\u2019s stock price has fallen by more than 50% and the cannabis industry has seen major changes.\r\n\r\nUnder the newly amended acquisition terms, CannaRoyalty Corp. (CSE: OH, OTCQX: ORHOF) doing business as Origin House will enact a non-brokered financing of 9.7 million common shares at a price of C$4.08 a share.\r\n\r\nThat financing will end up at a price of C$39 million, with that full amount to be held in escrow until the acquisition formally closes and then used to strengthen the company\u2019s overall financial position. Money owed to previous Origin House service providers will also be paid on common shares ahead of the deal\u2019s closing.\r\n\r\nIn addition to those changes, the biggest impact to the overall terms is in a reduction of Cresco shares to be issued. The original 0.8428 subordinate shares of Cresco to be issued in exchange for each common share of Origin House has now been reduced to 0.7031 shares, a 17% reduction.\r\n\r\nDiscussing the importance of gaining increased California distribution through the Origin House Continuum platform as well as utilizing the\u00a0FloraCal\u00a0Farms cultivation site, Cresco CEO Charlie Bachtell commented:\r\n\r\n\r\n\r\nThe newly amended terms will need to be approved once again by current investors, with a special meeting to be held in December to get the nod from Origin House shareholders before moving forward.\r\n\r\nIf approved and no other regulatory hurdles delay the pending deal, Cresco is expected to acquire Origin House by mid-January of 2020.