Ayr Wellness reported a very strong 1Q21 and provided strong guidance for the balance of 2021, and implications for 2022 are equally strong. We will have a more detailed note out shortly. In short, we believe that stock has the potential to hit $100 in the next few years.
Trulieve MA Store
The Massachusetts Cannabis Control Commission has approved Trulieve's launch of operations in Massachusetts. The dispensary in Northhampton, MA, will open on June 3rd, 2021. MA, a limited license state, is a great expansion for Trulieve as it is just its fourth retail location outside of FL (Trulieve has 82 licenses in FL and 3 in PA). We estimate Trulieve will generate $15-$35 Million in additional revenue from just this location. Trulieve is also in the process of opening a cultivation facility in the state.
This opening comes after Trulieve's recent $2.1 Billion acquisition of Harvest Health, the largest cannabis acquisition in history. This deal is yet to close but will provide Trulieve with significant exposure outside of Florida. Harvest did not have any operations in MA, so Trulieve's expansion into the state was a smart one as MA has strong demand and not as much supply making it slightly underserved compared to the US average.
Cannabis Tax Revenue
States which have legalized and now regulate adult-use cannabis have tremendous tax revenues from sales. Since 2014, when sales began in Washington and Colorado, states have collected $7.9 Billion in tax revenues. Last year alone, the adult-use states collected $2.7 Billion in taxes from cannabis sales. This number is only expected to grow as the state's mature. Eighteen states have enacted laws legalizing, taxing, and regulating cannabis for adults 21+. Eight of the laws passed in 2020 or 2021, and in seven of those states, licensing and tax collections have not yet begun but soon will.
Power REIT
This is an interesting transaction from Power REIT (PW). The company announced yesterday that it has entered into an agreement to acquire what will be Michigan’s largest greenhouse cannabis cultivation and processing facility for approximately $18.5 million. According to the press release, "the Property is strategically located in an area that offers the potential for unlimited cannabis cultivation licenses and features 522,530 square-feet of high-tech greenhouse and processing space. The approximately 66-acre property has the capability to add significantly more cultivation and processing space, with plans in place to add 330,236 square feet as a potential next phase. This state-of-the-art facility features advanced greenhouse cultivation controls and a state-of-the-art irrigation/fertigation system. This is a turnkey setup that is ready to start growing immediately, offering an attractive speed-to-revenue opportunity. Power REIT is finalizing a budget for upgrades that will enhance the cultivation performance for cannabis as a crop.
