The cannabis industry’s early gold rush mentality has given way to a more sober reality over the past few years, and now Ayr Wellness (CSE: AYR.A) (OTCQX: AYRWF) is making tough choices about where to place its bets.

During the company’s earnings call on Thursday, interim CEO Steven Cohen said the company is walking away from Illinois, having signed a letter of intent to sell its four retail stores in a state where it never achieved the scale or vertical integration needed to compete effectively.

“We’re taking a hard look at other markets to make sure we are prioritizing those core markets that will deliver for our business,” said George DeNardo, Ayr’s recently promoted president.

The pullback comes as the broader sector confronts what Cohen bluntly described as “a tough business” marked by price compression, regulatory setbacks and escalating costs. The company reported a $164.2 million loss, largely due to write-downs after Florida voters rejected recreational marijuana in November.

But rather than retreating from Florida, where approximately 70% of Ayr’s retail network operates, the company is doubling down. Its upcoming Ocala indoor cultivation facility represents what DeNardo called “one of our most important catalysts of the year.”

The Ocala facility aims to fix what has been a persistent weakness in Ayr’s Florida operations, a lack of premium indoor flower. “It’s been a lagging product form that we’ve had really over since Ayr’s conception,” DeNardo explained.

The company expects the facility to more than double its flower production capacity in Florida.

“I think it’s something that will help us with the price compression that we’re facing in the market, due to the higher competition and it will allow us to generate additional foot traffic within our stores,” DeNardo said.

Across its remaining core markets – Florida, Massachusetts, Nevada, New Jersey, Pennsylvania and Ohio – Ayr is consolidating operations and cutting costs. In Nevada, it’s closing a secondary cultivation site. In Massachusetts, it already subleased its original medical cultivation facility.

The company’s wholesale business grew 20% year-over-year, with its core brands of Kynd, Haze and Later Days up 126%. Now Ayr is “rolling out comprehensive brand toolkits” across its footprint to maintain that momentum.

Ohio is a brighter spot following its transition to adult-use sales, with retail revenue up 41% quarter-over-quarter. The company opened its fourth adult-use store in February and plans to add three more this year.

Cohen, acknowledged the industry’s downturns and invoked basketball coach Jim Valvano’s famous motto to describe Ayr’s approach: “Survive and advance.”

“We will survive and advance,” Cohen insisted, adding, “I believe that, ultimately this is an extraordinary industry and Ayr has a very important role to play in it.”

Whether that belief proves well-founded remains to be seen, but one thing is clear: Ayr is done trying to be everywhere at once.

The cannabis industry’s early gold rush mentality has given way to a more sober reality over the past few years, and now Ayr Wellness (CSE: AYR.A) (OTCQX: AYRWF) is making tough choices about where to place its bets.

During the company’s earnings call on Thursday, interim CEO Steven Cohen said the company is walking away from Illinois, having signed a letter of intent to sell its four retail stores in a state where it never achieved the scale or vertical integration needed to compete effectively.

“We’re taking a hard look at other markets to make sure we are prioritizing those core markets that will deliver for our business,” said George DeNardo, Ayr’s recently promoted president.

The pullback comes as the broader sector confronts what Cohen bluntly described as “a tough business” marked by price compression, regulatory setbacks and escalating costs. The company reported a $164.2 million loss, largely due to write-downs after Florida voters rejected recreational marijuana in November.

But rather than retreating from Florida, where approximately 70% of Ayr’s retail network operates, the company is doubling down. Its upcoming Ocala indoor cultivation facility represents what DeNardo called “one of our most important catalysts of the year.”

The Ocala facility aims to fix what has been a persistent weakness in Ayr’s Florida operations, a lack of premium indoor flower. “It’s been a lagging product form that we’ve had really over since Ayr’s conception,” DeNardo explained.

The company expects the facility to more than double its flower production capacity in Florida.

“I think it’s something that will help us with the price compression that we’re facing in the market, due to the higher competition and it will allow us to generate additional foot traffic within our stores,” DeNardo said.

Across its remaining core markets – Florida, Massachusetts, Nevada, New Jersey, Pennsylvania and Ohio – Ayr is consolidating operations and cutting costs. In Nevada, it’s closing a secondary cultivation site. In Massachusetts, it already subleased its original medical cultivation facility.

The company’s wholesale business grew 20% year-over-year, with its core brands of Kynd, Haze and Later Days up 126%. Now Ayr is “rolling out comprehensive brand toolkits” across its footprint to maintain that momentum.

Ohio is a brighter spot following its transition to adult-use sales, with retail revenue up 41% quarter-over-quarter. The company opened its fourth adult-use store in February and plans to add three more this year.

Cohen, acknowledged the industry’s downturns and invoked basketball coach Jim Valvano’s famous motto to describe Ayr’s approach: “Survive and advance.”

“We will survive and advance,” Cohen insisted, adding, “I believe that, ultimately this is an extraordinary industry and Ayr has a very important role to play in it.”

Whether that belief proves well-founded remains to be seen, but one thing is clear: Ayr is done trying to be everywhere at once.

AYR Wellness Inc. (CSE: AYR.A) (OTCQX: AYRWF) reported financial results Thursday that showed mounting losses and missed analyst expectations, with the company taking a $94 million goodwill impairment that executives blamed on challenging Florida market conditions.

The multistate operator saw its net loss balloon to $362.4 million for 2024, versus $279.5 million in 2023. The fourth quarter was particularly difficult, with net losses of $164.2 million versus $31 million in the prior-year period.

Fourth quarter revenue came in at $114 million, slightly below the average analyst estimate of $114.3 million and down 0.7% from the same period in 2023. Full-year revenue remained flat at $463.6 million, matching analyst expectations.

Fourth quarter adjusted EBITDA declined to $19.1 million, down 35.9% from $29.8 million a year earlier, with margins shrinking to 16.7% from 25.9%. The company’s fourth quarter operating loss widened to $133.9 million versus $9.5 million in the prior year.

“While our fourth quarter and full year results reflected ongoing macroeconomic pressures and company-specific challenges that impacted revenue and profitability, we remain confident that sustained growth and enhanced profitability are achievable within our footprint,” interim CEO Steven Cohen said in a statement.

AYR ended 2024 with $35.5 million in cash, down from $50.8 million at the end of 2023. For the full year, the company generated $9.6 million in operating cash flow and reduced capital expenditures to $17.7 million.

“Our vision for 2025 is focused on investment in our core brands and further streamlining operations to achieve cost efficiencies and facilitate quicker and better decision making at every level of our operational infrastructure,” according to recently promoted president, George DeNardo.

During 2024, AYR opened 11 new dispensaries, expanding its total to 97 stores across eight states. A key development in Florida involves plans for a new indoor cultivation facility, secured through financing with Innovative Industrial Properties.

In February, AYR extended nearly $400 million of debt that was maturing in 2024 by two years to 2026, while raising approximately $40 million through additional notes.

The company expects first quarter 2025 revenue to decrease by mid-single digits versus the previous quarter, with a modest increase in profit margins. Capital expenditures are projected to decrease to approximately $10 million for 2025.