M&A heats up with both Ayr Strategies and Columbia Care announcing acquisitions (AYRWF, CCHWF)
AYRWF is a Hedgeye Cannabis Best Idea LONG.
Yesterday, Ayr Strategies and Columbia Care announced transactions worth over $600 million as they ramp expansion to capitalize on newly legalized adult-use markets and states poised to go recreational.
Ayr Strategies announced its expansion into Florida and New Jersey, bringing its retail footprint to seven states. Ayr has agreed to acquire Liberty Health Sciences, a vertically integrated operator in Florida, in a stock-for-stock transaction valued at $290 million. Additionally, Ayr announced the proposed acquisition of the membership interests in GSD NJ LLC (GSD), a licensed operator in New Jersey, for upfront consideration totaling $101 million. With these and other pending transactions, Ayr will have operations in seven states covering 73 million people, including four adult-use markets and three medical markets.
We will be hosting a conversation with Jon Sandelman, the CEO of Ayr Strategies, on Wednesday, January 6th, at 2 PM ET.
CCHWF is on the Hedgeye Cannabis LONG Bias List.
Columbia Care signed a definitive agreement to acquire Green Leaf Medical, LLC (“Green Leaf”), a privately held, fully-integrated cannabis multi-state operator (MSO) based in the mid-Atlantic region, for approximately $240 million with the potential for additional performance-based milestone payments. Following the close of two acquisitions that established Columbia Care as a market leader in the two largest cannabis markets in the world, California and Colorado, the acquisition of Green Leaf expands Columbia Care’s operational scale and footprint in four key, limited license markets (Pennsylvania, Maryland, Ohio and Virginia) by materially enhancing the scale and capabilities of its seed-to-sale operations.
Columbia Care CEO commented, “This combination affirms Columbia Care’s position as one of the largest cultivators, manufacturers, and retailers in four key states – PA, VA, OH, and MD – three of which are expected to convert from medical to adult-use in the next 24 months. The transaction is immediately accretive to gross margin, Adjusted EBITDA, and Cash Flow from Operations.”
Cresco Labs extends partnership with California’s Kings Garden (CRLBF)
Cresco Labs, one of the largest vertically integrated, multistate cannabis operators in the United States, announced today that it had entered into an extension of its distribution agreement with the leading California-based cannabis brand Kings Garden Inc. Cresco’s subsidiary, Continuum, which is one of the largest full-service distribution businesses in the state, will continue to serve as the exclusive distributor of Kings Garden packaged products. According to BDS Analytics, Kings Garden is a brand powerhouse in California, consistently ranked in the top five flower and concentrate sales. In the highly fragmented, competitive, and saturated California market, Cresco Labs has successfully positioned itself as one of the state’s leading wholesale distributors.
Health Canada’s 2020 cannabis survey
Health Canada recently published the results of its 2020 Canadian Cannabis Survey. The survey results provide a snapshot of Canadians' knowledge, attitudes, and behaviors towards cannabis and its use. Data were collected from April 30 to June 22, 2020.
Key highlights indicate:
- More than half of those who use cannabis report using it three days a month or less. 54% reported using cannabis three days per month or less, while 18% reported daily cannabis use. Responses were unchanged from 2019.
- More than half of those who use cannabis choose to obtain it through a legal source. 41% reported legal storefront as their usual source, increasing from 24% in 2019, whereas 13% reported obtaining cannabis from a legal online source.
- The COVID-19 pandemic has had some impacts on cannabis use. People who used cannabis in the past 12 months were asked if their cannabis use had changed due to the pandemic—56% reported using the same amount, while 22% reported using more and 22% reported using less.
- Smoking remains the most common method of consuming cannabis, but it has declined while eating cannabis products has increased since 2019.
- Almost 8 in 10 Canadians feel they have access to trustworthy information to make informed decisions about their cannabis use, increasing from 71% in 2019 to 77% in 2020. Information about the health risks associated with cannabis use is widely available and reaching Canadians.
- Driving after cannabis use has decreased among those who reported past 12-month cannabis use, as compared to 2019 results. 22% of those who use cannabis drove within two hours of smoking or vaporizing cannabis in their lifetime, and 13% reported driving within four hours of orally ingesting cannabis in their lifetime.
