Fast-growing cannabis company Ayr Wellness plans to enter the New York market

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Ayr Wellness is looking to expand into the New York market after a successful 2021 that saw the company’s footprint grow from two to eight states through a series of acquisitions.

“We’re not in New York right now, but we intend to be there,” Jon Sandelman, the company’s founder and CEO, told MarketWatch amid rising interest from the Empire State’s legal cannabis industry.

Sandelman, who launched Ayr Wellness AYRWF, -3.18% in 2017 and hopes to grow sales to $800 million in 2022, previously held senior positions at Bank of America Corp. BAC, +1.20%, serving as Head of Debt and Equities as President of Bank of America Securities.

He’s particularly optimistic about the upcoming acquisition of Cultivauna LLC — the owner of Levia-brand cannabis-infused seltzer and water-soluble tinctures — for up to $60 million. Levia drinks are currently available in Massachusetts, but Ayr plans to use the brand and its formula for sale in eight states in 2022 after the deal closes in February, as expected.

“In the states where we’re in, we’re already starting to find space and build the assembly lines — to build the first national brand,” he said. “No [cannabis] The beverage company has offices in eight states.”

Ayr Wellness

Although beverages make up about 1% of the legal cannabis business, Sandelman said he sees a big opportunity in this business as consumption of alcoholic beverages has declined in adult cannabis-using states.

Meanwhile, other cannabis companies such as Tilray Inc. TLRY, +4.16% and Constellations Brands STZ, +1.99% owned by Canopy Growth Corp. CGC, +5.56%, also invested in alcoholic beverages to enter the US market Adding cannabis-infused ingredients in the future.

Ayr’s string of acquisitions in 2021 included up to $200 million for GSD NJ LLC [Garden State Dispensary] for a seed-to-sale pharmacy business in New Jersey. It has also expanded its presence in Florida, Pennsylvania, Arizona, Illinois and Ohio over the past year. It ended the year raising $150 million for its balance sheet by selling 12.5% ​​senior secured debt to cover acquisitions and expansion costs, the company said Nov. 12.

In terms of cannabis flower, Ayr is positioning itself for the premium end of the legal cannabis-infused beverage and cannabis flower market.

“Our goal is to be the largest producer of high-quality flowers in the United States, which sets us apart,” said Sandelman. “None of the competitors talk about what’s in the box instead of in the box. We take a different approach. For Ayr everything starts with the plant. As with any other packaged consumer product, it’s all about quality and consistency.”

Looking ahead, Ayr is targeting growth in 12 to 15 states but will not be pursuing opportunities in those states Maine, Vermont, Washington State, Oregon or Oklahoma.

“Our work has shown us that the most efficient cannabis operating model is found in 12 to 15 states, which accounts for 80% of the consumer wallet,” he said. “We are willing to give the other 35 states and 30% of the purse to others.”

However, New York fits the company’s profile as a potentially lucrative market. The state is preparing to begin the process of awarding the coveted cannabis business licenses in 2022.

Ayr Wellness shares are down 40% over the past year but are up 9.7% so far in 2022. Cannabis ETF THCX, +2.85% is down 56.9% over the last 12 months and has lost 9.6% of its value in 2022.

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