Ascend Wellness Holdings, Inc. (“AWH” or the “Company”) (CSE: AAWH.U) (OTCQX: AAWH), a multi-state, vertically-integrated cannabis operator focused on bettering lives through cannabis, announced that today it entered into a definitive agreement (the “Agreement”) to acquire the Maryland assets of Devi Holdings, Inc. (“Devi”), which owns and operates four licensed dispensaries in Aberdeen, Crofton, Ellicott City, and Laurel under the names Nature’s Medicines and True Wellness. The Agreement will expand AWH’s operations into a seventh state as the company continues to build its footprint in limited license states across the Midwest and East Coast.
“Maryland is an ideal state to expand our footprint – home to more than six million people, a mature medical cannabis program, and voter-approved support to create an adult-use cannabis market,” said Abner Kurtin, Executive Chairman and Founder of AWH. “This Agreement reflects our strategy of entering limited-license, late-stage medical markets with an anticipated adult-use cannabis market launch. This approach has made AWH a leader in New Jersey and Illinois, and we are following the same playbook in Ohio, Pennsylvania, and now, Maryland.”
Upon closing of the Agreement, AWH will acquire 100% of the membership interests of Devi’s Maryland dispensaries and related real property holding companies for $19 million, $12 million of which will be paid in cash and $7 million, or 5.19 million shares, of Class A Common Stock. The close of the transaction is pending the satisfaction or waiver of customary closing conditions and the receipt of approval for the transfer of the licenses from Maryland regulatory authorities.
“This transaction represents an opportunity to allocate capital to a business that is accretive based on run rate medical earnings, and we expect it to be significantly accretive with conservative adult-use sales assumptions. We take issuing equity very seriously and considered this transaction worthy given the attractive valuation, existing run rate sales of $17 million, and $3 million of real estate included in the transaction,” said Dan Neville, CFO and interim co-CEO of AWH. “We appreciate Seaport Global’s support as our financial advisor on this transaction and look forward to closing and welcoming patients in Maryland.”
There are currently 102 dispensaries in Maryland, approximately one for every 1,600 registered patients. The Maryland Medical Cannabis Commission reported 2021 medical cannabis sales of $600 million, with the 2022 MJBiz Factbook projecting 2022 sales reaching up to $725 million. BDSA previously estimated that, should adult-use sales be permitted to commence, Maryland’s cannabis market will reach $1 billion in annual sales by 2024. On November 8, 2022, Maryland voters approved Question 4, making recreational cannabis legal in the state.