It’s been a couple of months since we last checked in with Ayr Wellness (CNSX: AYR.A OTC: AYRWF) – formerly Ayr Strategies – but we are thrilled to welcome CEO Jonathan Sandelman back to our table. Ayr Wellness is gearing up for a booming 2022, with plans to open cultivation facilities in many states to capture a growing adult-use cannabis market.
Here’s some highlights from the interview.
On acquisition of Liberty Health Sciences
“Sometimes distressed assets are distressed for good reasons. … But when we did our deep dive and our diligence in the company, what we did notice is … what are the drivers, what would it take to make this an outstanding business and one of the top competitors in the state? What was clear to us as we looked carefully at this business, you can’t run a business by having flower in your store one or two days a week, because the week is actually 7 days and patients need their medicine on any one of those 7 days,” Sandelman says.
Sandelman says that they came up with a plan to reduce crop failures and increase grams per square foot, which would help Liberty with their primary sales problems. He anticipates flower in the stores 7 days a week by July in multiple strains.
Florida a lucrative market for Ayr, says Sandelman
With over 20 million people living in the state, Sandelman says that Florida is something he considers to be a very lucrative market. They have not allowed adult use yet, and the medical market alone is tremendous. So the potential of one day offering recreational use is one that Sandelman wants Ayr positioned to take advantage of, and he says this is why he is pushing his team to go faster there.
Sandelman on his growth strategy for Ayr: invest in more assets
When he started the business, Sandelman says, “I had to make a choice in capital allocation. Buy best in class assets in each state I was going in, and I could rebrand them immediately spending millions of dollars to do that. Or I could take that capital and continue to buy more assets. I made the choice at that time that buying more is better than rebranding the stores at that moment.”
March outlook is bright, and that has a lot to do with adding 5 states
In March, Ayr Wellness detailed an outlook for $725m in revenue and a $325m adjusted EBITDA in 2022. Sandelman says that it’s important to remember that the market is not giving them credit for the fact that they’ve added 5 states, and they’re not going to sit dormant.
“They’re built to produce in the second half of 2021. In the first half of ‘21 we closed our deals, we spent cap X, that starts to pay off in the second half of ‘21 and by the time you see our second half, you will see us already start to annualize into those bigger numbers in ’22,” he says.