A Big MSO Gets Wiped Out
You’re reading this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news. We no longer send these by email as we did in the past, but we post this and all of the newsletters on our website here.
Friends,
Yesterday, after the market closed, AYR Wellness issued a press release that we published. It indicated that the company is in the process of restructuring its debt. The Restructured Support Agreement allows for an Article 9 of the Uniform Commercial Code sale of assets or to shut them down. After the Article 9 sale auction ends, the company expects to be wound down.
Investors are likely not surprised, especially if they are readers of this newsletter. Just two weeks ago, we reported in an article about MSO risks, “There have been several MSOs that have already experienced financial challenges, and one Tier 2 name, AYR Wellness, faces them currently. That stock is down 67% in 2025.” The company failed to issue its Q1 filings with SEDAR, and its Q4 was a financial mess. Revenue in Q4 was flat sequentially and down 1% from a year earlier, and the company had an operating loss of $134 million.
The big operating loss at AYR was due primarily to an impairment charge of $116 million, but there was a loss even excluding the impairment charge. The company ended Q4 with total debt of $410 million, and it paid $20 million in interest in Q4 to service it. While the company reported positive equity at $379.5 million, the tangible equity was -$237.2 million. The company’s cash balance was just $35.5 million. While AYR did generate $9.6 million from operations during the year, there was a use of cash of $9.4 million during Q4. This is a bad combination: no revenue growth, cash burn, dwindling cash and lots of debt with negative tangible equity. There were issues with Ayr Wellness that go beyond too much debt, including lots of management turnover.
AYRWF has declined a ton in 2025 (-64.6% for AYRWF and -76.2% for AYR.A in Canada, where trading was suspended in early June) and even more since its peak in early 2021 (more than 99%):
For investors, like the MSOS ETF, which controls 13.3 million shares, there is little hope for AYR’s stock, but perhaps there will be some sales at good prices for the buyers. This will be a challenging time to find buyers that can get financing and that won’t break the rules of certain states (like Florida and Pennsylvania, for instance). Further, this could scare investors from other MSOs, like Curaleaf, which has a lot of debt and very negative tangible equity.
So, AYR Wellness, already effectively wiped out, is likely to be a zero. It is not the first MSO to go away, but it is the largest. Cannabis investors need to understand that the current environment is dangerous for American cannabis companies.
Sincerely,
Alan
New Cannabis Ventures publishes curated articles as well as exclusive news. Here is what we published this past week:
Exclusives
Big Cannabis Companies Are Set to Report Q2 Financials
Financial Reports
Hawthorne Gardening Q3 Revenue Weakens Again
Tilray Q4 Cannabis Revenue Falls 6%
Restructurings
Debtholders Take Control of AYR Wellness
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