Pot Biz Ayr Makes $81M Play In Ariz. Following Legalization

Law360 (November 4, 2020, 6:03 PM EST) -- Multistate cannabis operator Ayr Strategies on Wednesday said it jumped into the Arizona cannabis market with an $81 million acquisition, a move that came just hours after the state voted to legalize recreational marijuana.

The deal includes three dispensaries as well as cultivation and processing facilities, the company said. Ayr paid $10 million in cash, $41 million in stock and $30 million in deferred payments. The company will pay another 2 million shares if the properties hit certain cultivation targets.

Arizona voters approved a ballot measure legalizing recreational marijuana by a comfortable margin on Election Day. Three other states approved similar measures, while Mississippi legalized medical cannabis. Industry groups estimate Arizona's market will be worth $1.5 billion in the next five years.

Ayr has high hopes for the state, noting that Arizona's medical marijuana market generates roughly $800 million in annual revenue and has the nation's third-highest concentration of patients.

"Arizona has been a terrific medical market," Ayr chairman and CEO Jonathan Sandelman said in a statement Wednesday. "Yesterday, voters decided to make it a recreational use market as well."

Sandelman said Ayr is boosting its headcount by 110 with the acquisition. The company now has a presence in five states, including Massachusetts, Nevada, Pennsylvania and Ohio. It operates or provides services to 11 dispensaries and has over 140,000 square feet of active cultivation and processing facilities.

Ayr says it is focused on expanding in high-population states with limited licenses. Like many multistate operators, its acquisition targets are vertically integrated cannabis companies, or those that control each rung of their supply chain from seed to sale.

Last month, Ayr doubled down on its investments in Ohio and Pennsylvania with a set of deals valued at $39 million.

The company paid $18.2 million for a fully operational processing facility and 58,000-square-foot growing space under construction in Ohio. It also acquired a processing and extraction facility in Pennsylvania for $20.8 million.

Ayr made its first bet on Pennsylvania in August, when it inked a $57 million deal to acquire and develop six retail dispensaries and a cultivation and production campus. Ayr said the dispensaries will be clustered in the Pittsburgh and Philadelphia areas and are expected to open in January.

Counsel information for Ayr was not available Wednesday. 

--Editing by Aaron Pelc.

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