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Ascend Wellness Could Be On a Rapid Growth Trajectory

·3 min read

Photo by Tim Foster on Unsplash

In the 3 years since it started growing and selling cannabis, New York-based Ascend Wellness Holdings, Inc. (CSE: AAWH.U) (OTCQX: AAWH) has grown to operate 19 dispensaries in the 5 states where it’s licensed to grow its award-winning strains.

The company’s cultivation and retail successes — it’s opened 5 stores this year alone — have translated into rapidly increasing revenue and the ability to attract capital to increase its operations even further.

Ascend, which completed its initial public offering (IPO) in May, has operations in Massachusetts, New Jersey, Michigan, Ohio, and Illinois including its flagship retail locations. A pending investment in New York will give Ascend access to that market — one of the hottest new markets to approve cannabis for recreational use. The company looks to grow into other limited license recreational or near-recreational markets. Examples of such markets include Pennsylvania, Connecticut, Maryland, Virginia and Arizona.

In addition to the recently acquired Ohio cultivation operations, Ascend has grow operations in Illinois, Michigan, Massachusetts and New Jersey, for a total of 90,700 square feet of canopy. The company expects to have 285,000 square feet of cultivation facilities in operation by the end of next year.

Growing Like a Weed

The Company has strong cash positioning and recently closed on a $210 million term loan with Seaport Global Securities LLC as lead manager. The company plans to use the proceeds to repay debt, finance its pending investment in MedMen NY Inc. and support its future growth and acquisition initiatives.

“We are excited to include this new class of stakeholders into our capital structure via the senior debt financing and look forward to the opportunity to expand our relationship with many of these investors over time in future debt and equity financings,” Ascend Founder and CEO Abner Kurtin said at the time the loan was announced. “We are actively building one of the most robust networks of retail stores and cultivation facilities in the highest-quality markets.”

Founded in 2018, Ascend has been on a trajectory for rapid growth since its inception. Revenue skyrocketed 1,100% to $144 million in 2020 and is estimated to grow 139% to $344 million this year. Analysts estimate that the company’s revenue is expected to grow 83% to $630 million in 2022 as it brings more of its assets online.

Retail sales accounted for 60% of Ascend’s revenue during the 2nd quarter, with wholesale transactions making up the rest. Ascend completed a total of 573,000 retail transactions during the 2nd quarter with revenue per transaction estimated at $101.

As of April, Ascend’s Ozone Premium Cannabis brand sales ranked No. 2 among brands sold in Illinois, just behind Cresco Cannabis, according to BDSA, a Boulder, Colorado-based cannabis market research firm. Ascend’s experienced management team led the company’s entrance into the Illinois market in 2018, where it is now believed to be among the top 3 players.

Ascend also has recently teamed up with California-based Lowell Farms Inc. (CSE: LOWL) (OTCQX: LOWLF) and luxury fashion brand Edie Parker to bring their cannabis brands to its retail locations in Illinois and Massachusetts.

“With our strong balance sheet and successful track record, we are well-positioned to implement our growth strategies to take advantage of the significant market opportunity ahead and drive strong value for our shareholders,” Kurtin said.

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