Maryland Cannabis Trends.
In the month of December, Maryland recorded ~$41M in cannabis sales, which represents a sequential increase of 7.7% and a YoY decline of 11.2%. Unit volumes in the month were up 8.2% sequentially and also up YoY by 10.4%. The average unit price decreased 0.5% sequentially and down 19.6% YoY.
Connecticut Politics.
Earlier in the week, Connecticut House Republicans introduced legislation that would tighten restrictions on the state’s cannabis market. These politicians have concerns over the anticipated increase in impaired driving incidents, health concerns, and access to children. The introduced legislation goes as far as having an outright ban on edibles in the state. There are 13 provisions in this legislation that also calls on the state to suspend retail cannabis sales until Connecticut’s drug recognition expert certification program becomes operational. “People are now realizing that it is no joking matter,” House Minority Leader Rep. Vincent Candelora said. “There’s conversations of actually expanding the program and making it even more accessible to the public at a time when we haven’t even gotten our arms around the enforcement and the safety pieces of this. [This] is looking to put some better guardrails around the system that we have in place.” We do not believe that anything will come from this, but rather just another example of how cannabis is a political statement.
AYR Cancels Acquisition
Ayr Wellness (AYRWF) announced this morning the termination of the Company’s previously announced proposed acquisition of the equity interests of Gentle Ventures. Following the mutual termination, Ayr will no longer be required to pay the previously announced purchase consideration of $55 million upfront, including $12 million of cash, $3 million of seller notes, and $40 million of stock. “The cannabis market has changed significantly in the 15 months since we agreed to acquire Dispensary 33. Both parties have acknowledged this reality and engaged in good faith dialogue as we came to the mutual decision to terminate the proposed arrangement,” said David Goubert, President at Ayr. “We are focused on optimizing our business and will prioritize our efforts in markets where we can build meaningful depth and drive strong revenue and cash flow in the near term. Additional plans for optimization include implementation of operating efficiencies, lowering costs across our business, and reorienting our investments into the markets, segments, and activities that are most impactful for our growth and profitability.”
