Ayr Wellness, a vertically integrated cannabis multi-state operator, has entered into a binding letter of intent to acquire Cultivauna, LLC, the owner of the Levia branded seltzers and water-soluble tinctures.
The company was started in 2017 and Levia was launched in February 2021 in roughly 40 dispensaries across Massachusetts. The product comes in 12-ounce slim cans and is sold in three varieties dubbed Achieve (Raspberry Lime, Sativa), Celebrate (Lemon Lime, Hybrid), and Dream (Jam Berry, Indica).
With zero calories and zero sugar Levia contains five milligrams of THC, an amount that is in line with the company’s goal of creating a sessionable drink. This provides for rapid onset of the effects of THC, typically 15-20 minutes, allowing for a more consistent consumption experience than many edible products.
“You can have two or three beers to enjoy. Why not have two or three of these?” says Troy Brosnan who runs the company with Eric and Kristen Rogers, Kaitlyn Brosnan, and Matthew Melander. “If you [offer] too high of a dosage, you’re going to turn people off, because that effect is going to be too much for them. This is meant to be enjoyed by the many, not the few who are, what I would call, cannabis veterans.”
Levia is also offered as THC infused tinctures that you can add to your favorite drink or just take the drops as is.
The production of Levia, which consists of an extraction unit and a microbrewery, takes place within a 6,000-square-foot facility in Georgetown, Massachuttes, 30 miles north of Boston.
Ayr Wellness is a producer of cannabis products for the health and wellness, medicinal-oriented market. The company has an extensive presence in the US with 58 open dispensaries, about 1,770 employees, more than 100 products on the shelves, and over 550,000 square feet of cultivation space capable of producing some 120,000 pounds of cannabis biomass annually.
In recent months Ayr has rapidly expanded its reach by acquiring several companies. Last month, the company acquired Herbal Remedies, which operates two licensed dispensaries in Illinois market for USD 30 million. Also in July, Ayr purchased Tahoe Hydro, a Nevada-based cultivation company for another USD 17 million
Now, Ayr intends to purchase 100% of the equity interests of Cultivauna. The terms of the transaction include USD 20 million in upfront consideration, made up of up to USD 10 million in cash with the remainder in stock. An earn-out payment of up to an additional USD 40 million will be paid in shares based on the achievement of revenue targets in 2022 and 2023.
“Ayr wants something exciting to offer every cannabis consumer of today and the future cannabis customer of tomorrow. Infused beverages, done right, will be game changing to the mainstreaming of cannabis in the U.S., providing an approachable and sessionable form factor to new and existing customers. The acquisition of Levia brings Ayr into this rapidly growing segment with delicious, market-leading infused seltzer. We are excited to have Levia join Kynd premium flower and Origyn extracts in Ayr’s suite of premier national brands,” said Jonathan Sandelman, CEO of Ayr Wellness.
“With a formula that provides consistently great flavor and zero calories in an infused beverage experience, we believe Levia has enormous potential as an alcohol alternative. In just six months since its initial launch in Massachusetts, Levia has become the top selling THC beverage. As we finalize our updated national brand portfolio to address all segments and form factors, Levia will play a marquee role in each market where we operate,” Mr. Sandelman concluded.
Despite the fact that the US market for cannabis products is still fragmented into State-level entities, and somewhat stymied by a lack of Federal action toward legalization, legalized cannabis sales in the US were USD 12.9 billion in 2019, hit USD 17.5 billion last year, and are expected to exceed USD 41 billion by 2026.
In contrast, the market in Canada, which is already fully legalized recorded only sales of USD 2.6 billion last year, with a 2026 forecast of USD 6.4 billion due to the country’s comparatively small population of almost 38 million people in contrast to the 328 million people living in the United States.
The acquisition ofCultivauna and Levia is subject to customary closing conditions and regulatory approvals, as well as the execution of a binding definitive agreement. The acquisition is expected to close by the end of 2021.
