To use hip-hop jargon, Sean Combs just “busted a move” in the cannabis industry. In addition to being a rap star, Combs (aka Puff Daddy, or Diddy) also is a business mogul with an estimated net worth of $740 million, so it’s safe to assume he possesses investment acumen.

Combs announced last Friday that he’s buying cannabis operations from Cresco Labs (OTC: CRLBF) and Columbia Care (OTC: CCHWF). The two companies are divesting their cannabis assets as part of their pending merger. The multi-state operations (MSOs) acquired by Combs are spread throughout New York, Massachusetts and Illinois.

The Combs deal, worth about $185 million, entails a fledgling empire of licensed cannabis operations, specifically: two retail stores and one production facility in Illinois; three retail stores and one production facility in Massachusetts; and four retail stores and one production facility in New York State. Combs also will have the ability to operate cannabis retail dispensaries in those three states.

The deal will result in the country’s first minority-owned, vertically integrated MSO in the cannabis sector.

MSOs enjoy economies of scale, streamlined regulatory compliance, and shared marketing infrastructure. Through the emergence of MSOs in new state-legal markets, the East Coast is starting to challenge the West Coast for cannabis industry primacy (see chart):

According to research firm New Frontier Data: “Since California legalized cannabis five years ago, public acceptance has grown exponentially. With MSOs having gained greater market share in newer legal markets (Connecticut, Florida, Maryland, New Jersey, New York, and Pennsylvania) than established markets in the West, industry stakeholders are taking note of the differentiating characteristics that set them apart as viable investments.”

Cresco Labs earlier this year agreed to purchase rival Columbia Care in a $2 billion deal that makes Cresco the top U.S. cannabis producer. Cresco already had the leading position in California’s legal marijuana industry, the largest pot market in the world,

These new assets give hip-hop entrepreneur Combs the wherewithal to manufacture branded cannabis products and distribute the products to dispensaries in major metropolitan areas, including New York City, Boston and Chicago.

Read This Story: Rappers, IPOs and Marijuana: The Blunt Facts

Marijuana represents a “stoner” sub-culture among rappers, epitomized by celebrity canna-preneurs such as Sean Combs and Snoop Dogg. The latter musician has even forged marijuana ventures with style maven Martha Stewart.

Marijuana makes for strange bedfellows. Martha Stewart’s cannabidiol (CBD) products are part of her partnership with Canopy Growth (NSDQ: CGC), the Canada-based cannabis company that enjoys the backing of U.S. alcohol beverage giant Constellation Brands (NYSE: STZ). Canopy also produces rapper Snoop Dogg’s “Leafs by Snoop” cannabis brand.

Rich and famous entertainers who have become marijuana entrepreneurs include Jay-Z, Ty Dolla $ign, Wiz Khalifa, Rock Ross, B-Real, Curren$y, Lil Wayne, Seth Rogan, Whoopi Goldberg, Willie Nelson, Mike Tyson, Tommy Chong (of Cheech & Chong fame), Melissa Etheridge, Montel Williams, Chelsea Handler, Gwyneth Paltrow, Jim Belushi…the list goes on.

As marijuana becomes increasingly legal and prevalent, it’s crucial for pot purveyors to distinguish themselves with distinctive brand names. Hence the rise of the ganja-celebrity.

Many of these celebrities have been forthright on national television about their own marijuana use, yet another sign that once-demonized cannabis has entered the mainstream.

Celebrities such as Combs have made the calculation that being associated with pot is actually good for their image. They’re adopting the dual role of businessperson and marijuana advocate, often lending their A-list prestige to legalization efforts. These ganja-celebrities also emphasize their function as job creators, as well as their contributions to state and local tax bases.

The voters give marijuana a boost…

The midterm elections were bad for MAGA, but good for marijuana.

In the November 8 midterms, voters in South Dakota, Arkansas, Missouri, North Dakota, and Maryland considered recreational marijuana initiatives.

Maryland and Missouri voters on Tuesday approved ballot measures to legalize recreational marijuana. Legalization initiatives failed in South Dakota, North Dakota, and Arkansas. Medical marijuana already is legal in Maryland and Missouri. Texas voters in five cities on Tuesday approved marijuana decriminalization ballot measures.

An initiative in Colorado to legalize psilocybin (the psychoactive ingredient in “magic mushrooms”) also won on Tuesday.

New state and local legal markets equal more customers, greater profits, and higher share prices for companies involved in the marijuana and psychedelics industries.

That’s why I just launched a brand-new service detailing how you can financially benefit from the legalization of cannabis and other psychotropic substances. Called Marijuana Profit Alert, it’s your guide to making money in these changing times. Click here to learn more.

John Persinos is the editorial director of Investing Daily. You can reach John at: mailbag@investingdaily.com

To subscribe to John’s video channel, click this icon: