Minority Representation

The independent Garden State Dispensary (GSD) has been bought by the Multi-State Operator (MSO) Ayr Wellness for $101 million.

GSD has three open dispensaries in Woodbridge, Union Township, and Eatontown, in Middlesex, Union, and Monmouth Counties, respectively. They have the largest retail footprint of any operator.

They have a 30,000 sq. ft. facility that houses their cultivation and production facilities. An additional 75,000 sq. ft. facility is under construction. GSD currently employs 110 people, all of whom are expected to be retained by Ayr.

Ayr Wellness is a vertically integrated MSO traded on the Canadian Stock Exchange. Based in New York City, they have been buying other independent dispensaries recently as well.

“With its recent adoption of adult-use, New Jersey will be a leading force in the Northeast cannabis market. We look forward to serving the Garden State’s medical cannabis patients and working with the regulators to ensure a safe and robust roll-out of the adult-use program,” said Ayr Chairman and CEO Jonathan Sandelman.

The deal has been in the works since December.

Ayr Wellness will purchase 100 percent of GSD, one of the 12 existing vertical license holders in New Jersey thus far, and one of the state’s original six alternative treatment centers (ATCs).

“We see an excellent opportunity for wholesale growth given our planned cultivation expansion and past success at driving wholesale penetration in supply-constrained markets,” Sandelman said.

The Purchase Agreement of $101 million includes $41 million in cash, $30 million in stock, and $30 million in promissory notes.

“We see an incredible opportunity to drive growth at retail with the introduction of our quality cannabis brands, expanded product offerings, and exceptional in-store experience,” Sandelman said.

According to the Purchase Agreement, earning payouts will be based on certain target revenue thresholds following closing. They will be capped at a maximum of $96.75 million and payable in a combination of cash, promissory notes, and exchangeable shares.

GDS and Ayr Wellness

While GSD has many merits, there is a patient consensus that Breakwater down the Turnpike in Cranbury at the other end of Middlesex County is better in terms of quality.

It will be interesting to see what happens to the company. Assemblyman Raj Mukherji (D-Hudson) has a financial interest in GSD and abstained from what was supposed to be the final legalization vote last December. He helped them get a license in the first place.

The MSO Ascend recently refurbished the Greenleaf Compassion Center dispensary in Montclair and improved its capacity to serve patients. While it was independent, it was not popular due to its limited capacity and mediocre medical cannabis. Curaleaf’s Bellmawr location was also originally opened as an independent before an MSO bought it.

The Ayr GSD deal is subject to customary closing conditions and regulatory approvals. The deal is expected to be finalized in the third quarter of 2021, which is in the summer.

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