rewrite this title and make it good for SEOCannabis operator Ayr Wellness restructures to cut debt by 50%

Multistate cannabis operator Ayr Wellness is undergoing a restructuring that will cut its debt in half, streamline operations and enable the company to come out stronger under new ownership.

Senior note holders, led by Boston-based investment adviser Millstreet Capital Management, have $387 million in credit to put toward purchasing Ayr Wellness’ assets and give them ownership of the company.

Representatives for Millstreet Capital Management could not be reached for comment.

The restructuring, expected to wrap up by December, will reduce Ayr’s debt load by more than 50% and ensure Ayr Wellness remains a strong player in the cannabis industry, interim CEO Scott Davido said.

The debt holders are not just taking over the company – they’re also committing an extra $50 million to help Ayr Wellness grow, especially in key markets like Virginia, where it plans to build retail, cultivation and manufacturing facilities.

Cutting debt, gaining new owners

Davido sees a lot of potential.

“When I came to Ayr, I was struck by how much support we had from our debt holders,” he said. “They really get the industry and believe in what we’re building.”

With over 2,000 employees and $463.6 million in annual revenue, Ayr Wellness is a major player in the cannabis industry. Davido said he is confident that the streamlined approach will set it up for growth.

As part of the restructuring, Ayr Wellness is narrowing its focus to the markets and operations that make the most sense for its future.

At a Nov. 10 auction, the debt holders are likely to acquire Ayr Wellness’ retail, cultivation and manufacturing facilities in Florida, Ohio, New Jersey and Pennsylvania as well as retail outlets in Nevada and Massachusetts.

“Our senior note holders are planning to participate in these auctions and bid on these assets to acquire the vast majority of the company,” said Davido, noting that it’s possible another party may bid for some or all of the business.

The company already has divested:

Massachusetts: cultivation/manufacturing and medical-only Needham dispensary.
Pennsylvania: three PA Natural stores and a cultivation facility in Pottsville.
Nevada: cultivation and process facility.
New Jersey: Lakewood cultivation facility.
Connecticut: one retail location.

The sale of its four Illinois retail locations is pending state regulatory approval.

Insights into a distressed market

Avis Bulbulyan sees Ayr’s restructuring as part of a larger trend in the cannabis market.

Bulbulyan pointed out that the problem isn’t the assets themselves but how they’ve been used. The new owners must make changes that push the business into a consumer packaged goods model.

“They can’t keep operating the way they have been – there’s got to be a drastic shift,” he said.

Bulbulyan also noted a common misstep among MSOs: treating cannabis licenses as the business itself, rather than as a tool to enable a broader strategy.

He expects to see strong interest for potential buyers other than the senior note holders.

“It’s a distressed asset market right now, and anyone with cash is going to get a deal out of it,” Bulbulyan said. “There’s nothing wrong with any of these assets.”

A tough industry

The cannabis industry isn’t for the faint of heart. Between complicated regulations, high operating costs and the initial rush of overinvestment, it’s been a bumpy ride for many companies.

Ayr Wellness’ restructuring is part of a larger trend in the industry, where only the strongest and smartest players are expected to survive.

Davido compares it to other industries that went through similar shakeouts, like the cereal boom in the early 1900s when more than 80 cereal companies in Battle Creek, Michigan, were reduced to three.

“We’re in the winnowing-out phase,” he said. “A lot of companies have big debts coming due in 2026, and it’s not clear what the landscape will look like by then. We’ve been proactive to make sure we’re ready for whatever comes next.”

What’s next?

Ayr Wellness is pushing to finish its restructuring by the end of the year. The process involves state-by-state approvals for license transfers and asset sales, which can be slow, but the company is optimistic about the timeline.

Its senior note holders are expected to take over most of the business, ensuring a smoother transition and a stable future.

Despite the challenges, Ayr is looking ahead with confidence, Davido said. With a leaner operation, reduced debt and the backing of experienced investors, the company is ready to tackle the next chapter in the cannabis industry.

As Bulbulyan put it, “This isn’t new – it’s just happening on a larger, more public scale. The key now is for the new owners to make the right moves and unlock the potential of these assets.”

Margaret Jackson can be reached at margaret.jackson@mjbizdaily.com.