A large multistate cannabis company Monday announced plans to acquire two independent Chicago dispensaries in Illinois for $55 million — with plans to buy marijuana growing operations and more retail stores in the state.
Ayr Wellness operates cannabis dispensaries in six other states. CEO Jonathan Sandelman said the company typically also owns licenses to grow cannabis to form a seed-to-sale operation, and plans to do so in Illinois by acquiring a cultivation license here along with the maximum allowed 10 retail stores.
“We feel we have to be vertically integrated in every state we enter,” he said. “We’d love to have the maximum amount of stores so our brand resonates. We don’t like to be a niche player.”
In July, Ayr announced an agreement to spend $30 million to acquire Herbal Remedies Dispensaries, which operates two dispensaries in downstate Quincy, in the westernmost part of the state. Ayr is also a 49% partner in Land of Lincoln Dispensary, which won rights to a pending new dispensary license, with majority owner Michael Scott Carter.
The higher price for Dispensary 33 reflects the value of its dispensaries in Chicago, where it opened a medical dispensary at 5001 N. Clark St., which expanded to add recreational weed last year, and opened a second location at 1152 W. Randolph St. in May.
John Kagia, chief knowledge officer at industry analyst New Frontier Data, said the value of the deal reflected a thriving operation in a market that could double in size in the next five years or so. Existing businesses are much more valuable, he said, than the 185 new dispensary licenses the state has promised, which have been delayed more than a year and are still being held up in court due to applicants challenging the process.
“Stepping into an operational license generally is a far more attractive proposition than having to build from the ground up,” he said.
Dispensary 33 owners include Bryan Zises, a former COO of the Illinois Housing Development Authority, with its co-founders, his wife Kristie Zises, and his brother Zach Zises.
Bryan Zises said the owners heard offers to be bought by probably every multistate operator in the business, but he felt Ayr was a good match in terms of emphasizing the quality of its people and products.
Zises expected his team to continue managing the dispensaries for six to 10 months, and for employees to have opportunities for advancement at Ayr.
“This is the first and only approach that made sense to us,” he said. “We’re going to have a great amount of influence and a new partner in a much stronger platform than my family could ever create.”
Bryan Zizes is also an investor in Green & Bransford, a minority- and veteran-owned applicant that won the chance at five new dispensaries, and said his team helped eight successful new applicants under names starting with “Green &.”
Purchase consideration is expected to consist of $55 million upfront, including $12 million in cash, $3 million in seller’s notes and $40 million in stock, Ayr said, with the potential for further compensation depending on sales revenue.