6-K - AYRWF - Equibles

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August, 2022.

Commission File Number: 333-253466

Ayr Wellness Inc.

(Exact Name of Registrant as Specified in Charter)

199 Bay Street, Suite 5300, Toronto, Ontario, M5L 1B9, Canada

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ¨ Form 40-F x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

INCORPORATION BY REFERENCE

Exhibits 99.1 and 99.2 to this Form 6-K of Ayr Wellness Inc. (the "Company") are hereby incorporated by reference as exhibits to the Registration Statement on Form F-10 (File No. 333-253466) of the Company, as amended or supplemented.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		AYR WELLNESS INC.
		(Registrant)
Date:	August 17, 2022	By:	/s/ Brad Asher
		Name:	Brad Asher
		Title:	Chief Financial<br>Officer

EXHIBIT INDEX

99.1	Interim Financial Statements – June 30, 2022
99.2	Management’s Discussion and Analysis – June 30, 2022
99.3	Certification of Interim Filings – CFO
99.4	Certification of Interim Filings – CEO

Exhibit 99.1

Ayr Wellness Inc.

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIALSTATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,2022 AND 2021

(EXPRESSED IN UNITED STATESDOLLARS)

Ayr Wellness Inc.

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIALSTATEMENTS

JUNE 30, 2022 AND 2021

Unaudited Interim Condensed Consolidated Financial Statements (“InterimFinancial Statements”)

Unaudited Interim Condensed Consolidated Balance Sheets
(“Interim Balance Sheets”)	1
Unaudited Interim Condensed Consolidated Statements of Operations
(“Interim Statements of Operations”)	2
Unaudited Interim Condensed Consolidated Statements of Shareholders’ Equity
(“Interim Statements of Shareholders’ Equity”)	3-4
Unaudited Interim Condensed Consolidated Statements of Cash Flows
(“Interim Statements of Cash Flows”)	5
Notes to the Unaudited Interim Condensed Consolidated Financial Statements	6-27

Ayr Wellness Inc.

Unaudited Interim Condensed Consolidated Balance Sheets

(Expressed in United States Dollars, in thousands, except shareamounts)

	June 30, 2022			December 31, 2021
ASSETS
Current
Cash	$	116,743		$	154,342
Accounts receivable, net		6,974			7,413
Inventory		106,471			93,363
Prepaid expenses, deposits, and other current assets		8,744			10,949
Total Current Assets		238,932			266,067
Non-current
Property, plant, and equipment, net		301,861			275,222
Intangible assets, net		971,948			978,915
Right-of-use assets - operating		133,756			88,721
Right-of-use assets - finance, net		39,296			17,527
Goodwill		241,972			229,910
Deposits and other assets		7,947			3,550
TOTAL ASSETS	$	1,935,712		$	1,859,912
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Current
Trade payables	$	24,520		$	26,983
Accrued liabilities		21,451			32,724
Lease liabilities - operating - current portion		7,275			4,195
Lease liabilities - finance - current portion		7,968			3,185
Contingent consideration - current portion		4,779			39,868
Purchase consideration payable		2,183			812
Income tax payable		20,758			28,915
Debts payable - current portion		17,063			8,112
Accrued interest payable - current portion		2,970			7,542
Total Current Liabilities		108,967			152,336
Non-current
Deferred tax liabilities, net		69,385			70,081
Lease liabilities - operating - non-current portion		131,051			87,767
Lease liabilities - finance - non-current portion		23,365			9,406
Construction finance liabilities		27,779			-
Contingent consideration - non-current portion		116,628			145,654
Debts payable - non-current portion		193,448			125,746
Senior secured notes, net of debt issuance costs		245,045			245,408
Accrued interest payable - non-current portion		4,149			3,451
TOTAL LIABILITIES		919,817			839,849
Shareholders' equity
Multiple Voting Shares - no par value, unlimited authorized. <br> Issued and outstanding - 3,696,486 shares		-			-
Subordinate, Restricted, and Limited Voting Shares - no par value, unlimited authorized. <br> Issued and outstanding - 58,647,169 and 56,337,175 shares, respectively		-			-
Exchangeable Shares: no par value, unlimited authorized. <br> Issued and outstanding - 7,141,614 and 7,368,285 shares, respectively		-			-
Additional paid-in capital		1,324,241			1,289,827
Treasury stock - 645,300 and 568,300 shares, respectively		(8,987	)		(7,828	)
Accumulated other comprehensive income		3,266			3,266
Accumulated Deficit		(311,136	)		(265,202	)
Equity of Ayr Wellness Inc.		1,007,384			1,020,063
Noncontrolling interest		8,511			-
TOTAL SHAREHOLDERS' EQUITY		1,015,895			1,020,063
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,935,712		$	1,859,912

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

Ayr Wellness Inc.

UnauditedInterim Condensed Consolidated Statements of Operations

(Expressed in United States Dollars, in thousands, except per shareamounts)

	Three Months Ended						Six Months Ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Revenues, net of discounts	$	110,131		$	91,251		$	221,356		$	149,650
Cost of goods sold excluding fair value items		66,624			42,342			129,812			70,483
Incremental costs to acquire cannabis inventory in a business combination		3,212			26,596			5,731			32,388
Cost of goods sold		69,836			68,938			135,543			102,871
Gross profit		40,295			22,313			85,813			46,779
Operating expenses
Selling, general, and administrative		50,375			34,844			101,925			59,624
Depreciation and amortization		13,995			11,065			27,638			15,982
Acquisition expense		2,722			1,285			4,173			4,422
Gain on sale of assets		(2,000	)		-			(2,000	)		-
Total operating expenses		65,092			47,194			131,736			80,028
Loss from operations		(24,797	)		(24,881	)		(45,923	)		(33,249	)
Other income (expense)
Share of loss on equity investments		-			(6	)		-			(19	)
Fair value gain on financial liabilities		1,701			12,091			31,780			11,545
Interest expense, net		(7,474	)		(3,818	)		(14,342	)		(6,571	)
Interest income		11			65			40			124
Other, net		-			457			-			437
Total other income (expense)		(5,762	)		8,789			17,478			5,516
Loss before income taxes and noncontrolling interests		(30,559	)		(16,092	)		(28,445	)		(27,733	)
Income taxes
Current tax provision		(10,779	)		(8,767	)		(21,693	)		(15,819	)
Deferred tax benefit		1,089			4,121			696			6,192
Total income taxes		(9,690	)		(4,646	)		(20,997	)		(9,627	)
Net loss before noncontrolling interest		(40,249	)		(20,738	)		(49,442	)		(37,360	)
Net loss attributable to noncontrolling interest		(1,892	)		-			(3,508	)		-
Net loss attributable to Ayr Wellness Inc.	$	(38,357	)	$	(20,738	)	$	(45,934	)	$	(37,360	)
Basic and diluted loss per share	$	(0.56	)	$	(0.36	)	$	(0.67	)	$	(0.73	)
Weighted average number of shares outstanding (basic and diluted)		68,625			58,115			68,108			51,091

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

Ayr Wellness Inc.

Unaudited Interim Condensed Consolidated Statements of Shareholders’Equity

(Expressed in United States Dollars, in thousands)

	Multiple<br><br> Voting Shares		Subordinate,<br><br> Restricted, and Limited<br> Voting Shares			Exchangeable<br><br> Shares				Treasury<br> stock
	#		#			#				#
Balance, March 31, 2022		3,696		57,737			7,697				(645	)	)	)
Stock-based compensation		-		3			-				-
Tax withholding on stock-based compensation awards		-		(2	)		-		)		-					)
Share issuance - business combination		-		-			354				-
Conversion of Exchangeable Shares		-		909			(909	)			-
Net loss		-		-			-				-			)	)	)
Balance, June 30, 2022		3,696		58,647			7,142				(645	)	)	)
Balance, December 31, 2021		3,696		56,337			7,368				(568	)	)	)
Stock-based compensation		-		547			-				-
Tax withholding on stock-based compensation awards		-		(253	)		-		)		-					)
Share issuance - related party - consulting services		-		50			-				-
Share issuance - business combinations		-		-			683				-
Share issuance - earn-out consideration		-		1,029			-				-
Conversion of Exchangeable Shares		-		909			(909	)			-
Consolidation of variable interest entity		-		-			-				-
Exercise of options, net of options sold to cover<br> income taxes		-		33			-				-
Repurchase of Equity Shares		-		(5	)		-		)		(77	)	)			)
Net loss		-		-			-				-			)	)	)
Balance, June 30, 2022		3,696		58,647			7,142				(645	)	)	)

All values are in US Dollars.

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

Ayr Wellness Inc.

Unaudited Interim Condensed Consolidated Statements of Shareholders’Equity

(Expressed in United States Dollars, in thousands)

	Multiple<br><br> Voting Shares		Subordinate,<br><br> Restricted, and Limited<br> Voting Shares			Exchangeable<br><br> Shares				Treasury<br> stock
	#		#			#				#
Balance, March 31, 2021		3,696		47,461			6,348				(64	)	)	)
Stock-based compensation		-		1,906			-				-
Tax withholding on stock-based compensation awards		-		(987	)		-		)		-				)
Exercise of rights		-		42			-				-
Exercise of warrants		-		114			-				-
Conversion of Exchangeable Shares		-		334			(335	)			-
Share issuance - business combinations and asset<br> acquisitions		-		76			-				-
Replacement options issued - business combination		-		-			-				-
Exercise of options		-		17			-				-
Conversion of convertible debt		-		147			-				-
Net loss		-		-			-				-			)	)
Balance, June 30, 2021		3,696		49,110			6,013				(64	)	)	)
Balance, December 31, 2020		3,696		28,874			2,128				(64	)	)	)
Stock-based compensation		-		1,906			-				-
Tax withholding on stock-based compensation awards		-		(987	)		-		)		-				)
Exercise of rights		-		135			-				-
Exercise of warrants		-		901			-				-
Conversion of Exchangeable Shares		-		685			(685	)			-
Share issuance - business combinations and asset<br> acquisitions		-		12,747			4,570				-
Replacement options issued - business combination		-		-			-				-
Exercise of options		-		17			-				-
Equity offering		-		4,600			-				-
Conversion of convertible debt		-		232			-				-
Net loss		-		-			-				-			)	)
Balance, June 30, 2021		3,696		49,110			6,013				(64	)	)	)

All values are in US Dollars.

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

Ayr Wellness Inc.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

(Expressed in United States Dollars, in thousands)

	Six Months Ended
	June 30, 2022			June 30, 2021
Operating activities
Net loss before noncontrolling interest	$	(49,442	)	$	(37,360	)
Adjustments for:
Fair value (gain) on financial liabilities		(31,780	)		(11,545	)
Stock-based compensation		19,381			15,376
Stock-based compensation - related parties		707			-
Depreciation and amortization		8,243			2,887
Amortization on intangible assets		35,567			19,177
Share of loss on equity investments		-			19
Gain on disposal of equity investments		-			(500	)
Gain on disposal of property, plant, and equipment		(2,000	)		-
Incremental costs to acquire cannabis inventory in a business combination		5,731			32,388
Deferred tax benefit		(696	)		(6,192	)
Amortization on financing costs		1,146			817
Amortization on financing premium		(1,509	)		-
Changes in operating assets and liabilities, net of business combinations:
Accounts receivable		986			(3,048	)
Inventory		(8,577	)		(21,618	)
Prepaid expenses, deposits, and other current assets		1,513			(508	)
Trade payables		1,886			3,260
Accrued liabilities		(5,486	)		(1,880	)
Interest accrued		(3,714	)		560
Lease liabilities - operating		1,329			713
Income tax payable		(8,157	)		(14,961	)
Cash used in operating activities		(34,872	)		(22,415	)
Investing activities
Purchase of property, plant, and equipment		(50,972	)		(27,748	)
Loss on disposal of property, plant, and equipment		-			(57	)
Capitalized interest		(7,366	)		(3,851	)
Proceeds from the sale of assets, net of transaction costs		27,591			-
Cash paid for business combinations and asset acquisitions, net of cash acquired		(11,465	)		(17,777	)
Cash paid for business combinations and asset acquisitions, working capital		(2,812	)		(3,275	)
Payments for interests in equity accounted investments		-			(46	)
Cash received in disposal of equity investment		-			500
Advances to related corporation		-			(42	)
Purchase of intangible asset		(1,000	)		-
Cash received (paid) for bridge financing		1,258			(15,810	)
Deposits for business combinations, net of cash on hand		(2,825	)		(1,700	)
Cash used in investing activities		(47,591	)		(69,806	)
Financing activities
Proceeds from exercise of warrants		-			5,346
Proceeds from exercise of options		300			86
Proceeds from financing transaction, net of financing costs		27,599			-
Proceeds from issuance of notes payable, net of financing costs		51,713			118,052
Payments of financing costs		-			(136	)
Payment for settlement of contingent consideration		(10,000	)		-
Deposits paid for financing lease and note payable		(924	)		-
Tax withholding on stock-based compensation awards		(3,996	)		(28,421	)
Repayments of debts payable		(6,563	)		(4,300	)
Repayments of lease liabilities - finance (principal portion)		(4,835	)		(1,807	)
Repurchase of equity shares		(8,430	)		-
Cash provided by financing activities		44,864			88,820
Net decrease in cash		(37,599	)		(3,401	)
Cash, beginning of the period		154,342			127,237
Cash, end of the period	$	116,743		$	123,836
Supplemental disclosure of cash flow information:
Interest paid during the period		26,049			9,501
Income taxes paid during the period		30,680			29,780
Non-cash investing and financing activities:
Recognition of right-of-use assets for operating leases		23,002			52,047
Recognition of right-of-use assets for finance leases		23,342			4,356
Issuance of promissory note related to business combinations		16,000			-
Issuance of Equity Shares related to business combinations and asset acquisitions		6,352			526,976
Issuance of Equity Shares related to equity component of debt		-			7,430
Issuance of Equity Shares related to settlement of contingent consideration		11,748			-
Issuance of promissory note related to settlement of contingent consideration		14,934			-
Cancellation of Equity Shares		78			-

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

Ayr Wellness Inc.

Notes to the Unaudited Interim Condensed ConsolidatedFinancial Statements

(Expressed in United States Dollars)

1. NATURE OF OPERATIONS

Ayr Wellness Inc. (“Ayr” or the “Company”) is a vertically integrated cannabis multi-state operator in the United States of America (“U.S.”), with cannabis operations in Massachusetts, Nevada, Pennsylvania, Florida, Arizona, New Jersey, Ohio, and Illinois as of June 30, 2022. Through its operating companies, Ayr is a leading cultivator, manufacturer, and retailer of cannabis products and branded cannabis packaged goods. The Company prepares its segment reporting on the same basis that its chief operating decision maker manages the business and makes operating decisions. The Company has one operating segment, cannabis sales. The Company’s segment analysis is analyzed regularly and will be re-evaluated when circumstances change.

The Company is a reporting issuer in the United States and Canada. The Company’s subordinate voting shares, restricted voting shares, and limited voting shares (“Equity Shares”) are trading on the Canadian Stock Exchange (the “CSE”), under the symbol “AYR.A”. The Company’s Equity Shares are also trading on the Over-the-Counter Market (“OTC”) in the United States under the symbol “AYRWF”. The Company’s warrants (“Warrants”) and rights (“Rights”) were trading on the CSE under the symbols “AYR.WT” and “AYR.RT”; however, they stopped trading on September 30, 2021 and May 24, 2021, respectively. Ayr’s headquarter office is 2601 South Bayshore Drive, Suite 900, Miami, FL 33133.

2. BASIS OF PRESENTATION

These interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of Canadian securities regulators and the United States Securities Exchange Commission (“SEC”). Accordingly, these interim statements are condensed and do not include all disclosures required for annual financial statements.

The financial data presented herein should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2021, included in the Company’s Annual Report on the Form 40-F filed with the SEC on March 30, 2022. The accompanying condensed consolidated balance sheet as of December 31, 2021 has been derived from those consolidated statements. In the opinion of management, the financial data presented includes all adjustments, consisting primarily of normal recurring adjustments, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. Certain previously reported amounts have been reclassified between line items to conform to the current period presentation, however, there was no impact on previously reported net loss. These unaudited interim financial statements include estimates and assumptions of management that affect the amounts reported. Actual results could differ from these estimates. The results of operations of unaudited interim periods are not necessarily indicative of the results to be expected for the entire year, or any other period.

Ayr Wellness Inc.

Notes to the Unaudited Interim Condensed ConsolidatedFinancial Statements

(Expressed in United States Dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Basis of consolidation

The interim financial statements for the three and six months ended June 30, 2022 and 2021 include the accounts of the Company, its wholly-owned subsidiaries, and entities over which the Company has a controlling interest. Entities over which the Company has control are presented on a consolidated basis from the date control commences until the date control ceases. Equity investments where the Company does not exert a controlling interest are not consolidated. All intercompany balances and transactions involving controlled entities are eliminated on consolidation.

3.2 Variable Interest Entities (“VIE”)

Under certain provisions of Accounting Standards Codification (“ASC”) Topic 810 – Consolidations (“ASC 810”), the Company determines whether we are the primary beneficiary of a VIE. We assess whether we have the power to direct matters that most significantly impact the activities of the VIE and the obligation to absorb losses or the right to receive the benefits from the VIE that could potentially be significant to the VIE.

A VIE is a legal entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured that such equity investors lack the ability to make significant decisions relating to the entity’s operations through voting rights or do not substantively participate in the gains or losses of the entity. The primary beneficiary has both the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. We assess all variable interests in the entity and use our judgment when determining if we are the primary beneficiary. Other qualitative factors that are considered include decision-making responsibilities, the VIE capital structure, risk and rewards sharing, contractual agreements with the VIE, voting rights, and level of involvement of other parties. We assess the primary beneficiary determination for a VIE on an ongoing basis if there are any changes in the facts and circumstances related to a VIE. See Note 5.

Where we determine we are the primary beneficiary of a VIE, we consolidate the accounts of that VIE, under the guidance of ASC 805, Business Combinations, ("ASC 805"). The equity owned by other shareholders of the VIE is shown as noncontrolling interests in the accompanying Unaudited Interim Condensed Consolidated Financial Statements.

Ayr Wellness Inc.

Notes to the Unaudited Interim Condensed ConsolidatedFinancial Statements

(Expressed in United States Dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)

3.3 Earnings per share

The basic loss per share is computed by dividing the net loss by the weighted average number of shares outstanding, including Equity Shares, multiple voting shares of the Company (“Multiple Voting Shares”), and Exchangeable Shares, during the period. The diluted loss per share reflects the potential dilution of shares by adjusting the weighted average number of shares outstanding to assume conversion of potentially dilutive shares, such as Warrants, Restricted Stock Units (“RSUs”), and Vested Options. The treasury stock method is used for the assumed proceeds upon the exercise of the Exchangeable Shares, Warrants, and Vested Options that are used to purchase Equity Shares at the average market price during the period. If the Company incurs a net loss during a reporting period, the calculation of fully diluted loss per share will not include potentially dilutive equity instruments such as Warrants, RSUs, and Vested Options, because their effect would be anti-dilutive, therefore, basic loss per share and diluted loss per share will be the same. For the three and six months ended June 30, 2022, the potentially dilutive earnings per share included nil and 0.4 million warrants (2021: 6.3 million and 6.5 million) and 3.6 million and 3.2 million RSUs (2021: 1.6 million and 1.4 million), totaling 3.6 million and 3.6 million shares (2021: 7.9 million and 7.9 million) of potentially dilutive securities.

3.4 Significant accounting judgments and estimates

Significant estimates made by management include, but are not limited to: economic lives of leased assets; allowances for potential uncollectability of accounts receivable; provisions for inventory obsolescence; impairment assessment of goodwill and long-lived assets; depreciable lives of property, plant and equipment; useful lives of intangible assets; accruals for contingencies, including tax contingencies; valuation allowances for deferred income tax assets; estimates of fair value of identifiable assets and liabilities acquired in business combinations, including contingent consideration obligations; estimates of fair value of derivative instruments; and estimates of the fair value of stock-based payment awards.

The global pandemic outbreak of the novel strain of coronavirus (“COVID-19”) has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, store closures, self-imposed quarantine periods and social distancing, may cause material disruption to businesses globally resulting in an economic slowdown. COVID-19, as well as the increase in inflation and gas prices, has cast uncertainty on the assumptions used by management in making its judgments and estimates. Management has not observed any indicators of impairment to assets or a significant change in the fair value of assets due to COVID-19. The Company implemented new safety procedures in accordance with the guidance from the U.S. Centers for Disease Control and Prevention at all locations to better protect the health and safety of both employees and customers. The Company is re-assessing its response to and any potential impact of the COVID-19 pandemic on an ongoing basis.

Ayr Wellness Inc.

Notes to the Unaudited Interim Condensed ConsolidatedFinancial Statements

(Expressed in United States Dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)

3.5 Change in accounting standards

The Company is treated as an “emerging growth company” per the definition under the Jumpstart Our Business Startups Act (the “JOBS Act”). Under the JOBS Act, emerging growth companies may delay adopting new or revised accounting standards until the standards apply to private companies.

Recently Issued Accounting Standards

In June 2016, the FASB issued ASU 2016-13 Topic 326 Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which was subsequently revised by ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11, ASU 2020-02 and ASU 2020-03 (“ASU 2016-13”), which introduces a new model for assessing impairment on most financial assets. Entities will be required to use a forward-looking expected loss model, which will replace the current incurred loss model, which will result in earlier recognition of allowance for losses. ASU 2016-13 is effective for the Company’s fiscal year beginning after December 15, 2022, and interim periods therein. The adoption of ASU 2016-13, is not expected to have a material impact on the Company's interim financial statements.

In December 2019, the FASB issued ASU 2019-12 Topic 740 – Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. ASU 2019-12 is effective for the Company’s fiscal year beginning after December 15, 2021, and interim periods therein. The adoption of ASU 2019-12, on January 1, 2022, did not have a material impact on the Company's interim financial statements.

In January 2020, the FASB issued ASU 2020-01 Topic 321 – Investments - Equity Securities, Topic 323 – Investments – Equity Method and Joint Ventures, and Topic 815 – Derivatives and Hedging (collectively “ASU 2020-01”), which is intended to clarify the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. ASU 2020-01 is effective for the Company’s fiscal year beginning after December 15, 2021, and interim periods therein. The adoption of ASU 2020-01, on January 1, 2022, did not have a material impact on the Company's interim financial statements.

In August 2020, the FASB issued ASU No. 2020-06 Subtopic 470-20 – Debt—Debt with Conversion and Other Options and Subtopic 815-40 – Derivatives and Hedging—Contractsin Entity’s Own Equity: Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), to improve financial reporting associated with accounting for convertible instruments and contracts in an entity’s own equity. ASU 2020-06 is effective for the Company’s fiscal year beginning after December 15, 2023, including interim periods therein. The early adoption of ASU 2020-06, on January 1, 2022, did not have a material impact on the Company's interim financial statements.

Ayr Wellness Inc.

Notes to the Unaudited Interim Condensed ConsolidatedFinancial Statements

(Expressed in United States Dollars)

4. BUSINESS COMBINATIONS AND ASSET ACQUISITIONS

Transactions accounted for as business combinations have been accounted for in accordance with ASC 805, with the results included in the Company’s results from operations from the date of acquisition. The fair value considerations have been allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition.

Each of the acquisitions are subject to specific terms relating to the satisfaction of the purchase price by the Company and its wholly-owned subsidiaries, and incorporates payments in cash, shares, and debt as well as certain contingent considerations. The shares issued as consideration are either Equity Shares or non-voting exchangeable shares of the Company’s subsidiaries (“Exchangeable Shares”) that are exchangeable on a one-for-one basis into an equal number of Equity Shares of the Company. The Company treats the Exchangeable Shares as options with a value equal to a share of Equity Shares, which represents the holder’s claim on the equity of the Company. The Company has presented these Exchangeable Shares as a part of shareholders’ equity within these interim condensed financial statements due to the fact that (i) they are economically equivalent to the Company’s publicly traded Equity Shares and (ii) the holders of the Exchangeable Shares are subject to restrictions on transfer under United States securities laws but may dispose of the Exchangeable Shares through the CSE by exchanging them for Equity Shares of the Company. Changes in these assumptions would affect the presentation of the Exchangeable Shares from shareholders’ equity to non-controlling interests; however, there would be no impact on loss per share.

The goodwill recognized on acquisitions is attributable mainly to the expected future growth potential and expanded customer base arising as a result of the completion of the respective acquisition. Goodwill has been allocated to the reporting units corresponding to the states of the acquired businesses. None of the goodwill is expected to be deductible for income tax purposes. For further analysis on goodwill relating to business combinations, see Note 8.

Ayr Wellness Inc.

Notes to the Unaudited Interim Condensed ConsolidatedFinancial Statements

(Expressed in United States Dollars)

4. BUSINESS COMBINATIONS AND ASSET ACQUISITIONS (Continued)

2022 Second Quarter Acquisition

Business combinations

On May 25, 2022, the Company completed its acquisition of Herbal Remedies Dispensaries, LLC (“Herbal Remedies”) through a membership interest purchase agreement.

Final valuations of the assets acquired and liabilities assumed are not yet complete due to the inherent complexity associated with valuations and the short period of time between the acquisition date and the period end. Therefore, the purchase price allocation is preliminary and subject to adjustment on completion of the valuation process and analysis of resulting tax effects. Further changes may still be required as management works to finalize the valuation of assets acquired and liabilities assumed. Differences between these provisional estimates and the final acquisition accounting may occur and these differences could have a material impact.

The preliminary fair value of identifiable assets acquired and liabilities assumed as of the acquisition date are as follows:

(In thousands)	Herbal Remedies
ASSETS ACQUIRED
Cash	$	637
Inventory		1,480
Prepaid expenses and other assets		256
Intangible assets - licenses/permits		15,700
Property, plant, and equipment		122
Right-of-use assets - operating		700
Total assets acquired at fair value		18,895
LIABILITIES ASSUMED
Trade payables		215
Accrued liabilities		68
Lease liabilities - operating		700
Total liabilities assumed at fair value		983
Goodwill		1,180
Consideration transferred	$	19,092

Ayr Wellness Inc.

Notes to the Unaudited Interim Condensed ConsolidatedFinancial Statements

(Expressed in United States Dollars)

4. BUSINESS COMBINATIONS AND ASSET ACQUISITIONS (Continued)

Herbal Remedies Business Combination

Herbal Remedies is an operator of two licensed retail dispensaries in Quincy, Illinois. This acquisition will expand our operational footprint with the addition of Illinois.

Purchase consideration was comprised of the following:

(In thousands)			Fair Value
Cash	i		$	3,002
Debt Payable	ii			14,220
Shares Issued	iii	353		1,870
Total		353	$	19,092

Pursuant to the terms of the Definitive Agreement (“Herbal Remedies Agreement”), Ayr satisfied the purchase price of $19.1 million for Herbal Remedies through the following:

i.	$3.0 million of the Herbal Remedies purchase price in the form of cash consideration and settlement of<br>the final working capital which is deemed immaterial;
ii.	$14.2 million of the Herbal Remedies purchase price in the form of a promissory note payable; and
---	---
iii.	$1.9 million of the Herbal Remedies purchase price in the form of 353 thousand Exchangeable Shares, these<br>shares have contractual restrictions on their ability to be sold for six to twelve months (the “Herbal Remedies Lock-Up Provision”).<br>The fair value of the shares was determined by the share price at the date of acquisition and a 16.55% discount rate attributed to the<br>contractual restrictions.
---	---

Ayr Wellness Inc.

Notes to the Unaudited Interim Condensed ConsolidatedFinancial Statements

(Expressed in United States Dollars)

4.	BUSINESS COMBINATIONS AND ASSET ACQUISITIONS (Continued)

2022 First Quarter Acquisition

Business combinations

On February 15, 2022, the Company completed its acquisition of Cultivauna, LLC (“Cultivauna”) through a membership interest purchase agreement. Cultivauna has a production license in the state of Massachusetts and sells cannabis infused branded seltzers and water-soluble tinctures.

The preliminary fair value of identifiable assets acquired and liabilities assumed as of the acquisition date are as follows:

(In thousands)	Cultivauna
ASSETS ACQUIRED
Cash	$	1,251
Accounts receivable		471
Inventory		1,812
Prepaid expenses and other assets		38
Intangible assets - trade name/brand		3,400
Intangible assets - host community agreements		2,100
Property, plant, and equipment		2,202
Right-of-use assets - operating		315
Total assets acquired at fair value		11,589
LIABILITIES ASSUMED
Trade payables		23
Accrued liabilities		305
Lease liabilities - operating		315
Total liabilities assumed at fair value		643
Goodwill		10,675
Consideration transferred	$	21,621

Ayr Wellness Inc.

Notes to the Unaudited Interim Condensed ConsolidatedFinancial Statements

(Expressed in United States Dollars)

4.	BUSINESS COMBINATIONS AND ASSET ACQUISITIONS (Continued)

Cultivauna Business Combination

Cultivauna is the owner of Levia branded cannabis infused seltzers and water-soluble tinctures.

Purchase consideration was comprised of the following:

(In thousands)			Fair Value
Cash	i		$	11,027
Shares Issued	ii	329		4,482
Contingent Consideration	iii			6,112
Total		329	$	21,621

Pursuant to the terms of the Definitive Agreement (“Cultivauna Agreement”), Ayr satisfied the purchase price of $21.6 million for Cultivauna through the following:

i.	$11.0 million of the Cultivauna purchase price in the form of cash consideration and settlement of the<br>final working capital which is deemed immaterial;
ii.	$4.5 million of the Cultivauna purchase price in the form of 329 thousand Exchangeable Shares, these shares<br>have contractual restrictions on their ability to be sold for six to twelve months (the “Cultivauna Lock-Up Provision”). The<br>fair value of the shares was determined by the share price at the date of acquisition and a 14.85% discount rate attributed to the contractual<br>restrictions; and
---	---
iii.	A portion of the Cultivauna purchase price is derived from an earn-out provision through December 31,<br>2023, based on annualized net revenues generated during the measurement period, consisting of Exchangeable Shares, valued through a Monte-Carlo<br>simulation, that may entitle the sellers to earn additional consideration if certain milestones are achieved, see Note 13 for more information.
---	---

Ayr Wellness Inc.

Notes to the Unaudited Interim Condensed ConsolidatedFinancial Statements

(Expressed in United States Dollars)

4.	BUSINESS COMBINATIONS AND ASSET ACQUISITIONS (Continued)

Supplemental Pro-Forma Information

The consolidated unaudited pro-forma revenue and net income (loss) before taxes attributable to Liberty Health Sciences (“Liberty”) and Blue Camo, LLC (“Oasis”), two entities acquired during the first quarter of 2021, for the three and six months ended June 30, 2021, were $nil and $nil, respectively, and $18.2 million and ($2.6) million, respectively. The financial information related to Herbal Remedies was not material to the interim financial statements. The other supplemental pro-forma information required by ASC 805-10-50-2h for the periods ended June 30, 2022 and 2021 is not practicable.

5.	VARIABLE INTEREST ENTITIES (“VIE”)

As of June 30, 2022, the Company has the ability to direct the activities of two entities, Tahoe Hydroponics Company, LLC (“Tahoe Hydro”) and NV Green, Inc., (“NV Green”), collectively (“TH/NVG”), through a management services and equity purchase agreement, consummated in February 2022, thereby classifying the entities as VIEs, until certain conditions are met, at which time the Company will evaluate business combination accounting.

The following tables present the summarized financial information about the Company’s consolidated VIEs that is included in the Interim Balance Sheet as of June 30, 2022 and in the Interim Statements of Operations for the three and six months ended June 30, 2022.

(In thousands)	TH/NVG
Current assets	$	4,008
Non-current assets		6,198
Total assets		10,206
Current liabilities		330
Non-current liabilities		68
Total liabilities		398
Noncontrolling interest		8,511
Equity attributable to Ayr Wellness, Inc.		1,297
Total liabilities and equity	$	10,206

The assets of TH/NVG can only be used to settle its liabilities and there are no TH/NVG liabilities for which creditors or beneficial interest holders have recourse to the general credit of the Company.

	Three Months Ended			Six Months Ended
(In thousands)	June 30, 2022			June 30, 2022
Revenues	$	924		$	1,463
Net loss attributable to noncontrolling interest		(1,892	)		(3,508	)
(In thousands)	TH/NVG
---	---	---	---
Total purchase consideration	$	16,868
Working capital adjustment presented as consideration payable		4,849
Noncontrolling interest at February 1, 2022		12,019
Net loss during the period		(3,508	)
Noncontrolling interest at June 30, 2022	$	8,511

Ayr Wellness Inc.

Notes to the Unaudited Interim Condensed ConsolidatedFinancial Statements

(Expressed in United States Dollars)

6.	INVENTORY

The Company’s inventories include the following:

(In thousands)	June 30, 2022			December 31, 2021
Materials, supplies, and packaging	$	14,436		$	12,805
Work in process		65,917			56,858
Finished goods		28,573			25,392
Incremental costs to acquire cannabis inventory in a business combination, net		486			575
Inventory reserve		(2,941	)		(2,267	)
Total inventory	$	106,471		$	93,363

The amount of inventory included in cost of goods sold during the three and six months ended June 30, 2022 and 2021, was $57.3 million and $112.4 million, and $38.6 million and $63.9 million, respectively. The Company reviews inventory on hand for estimated obsolescence or unmarketable items, as compared to future demand requirements and the shelf life of the various products. Based on the review, the Company records inventory write-downs, when necessary, when costs exceed expected net realizable value.

For the three and six months ended June 30, 2022 and 2021, $3.2 million and $5.7 million, and $26.6 million and $32.4 million, respectively, of expenses relating to the incremental costs to acquire cannabis inventory in a business combination is recognized in cost of sales on the Interim Statements of Operations. This relates to the one-time adjustment of cannabis inventory from the acquiree historical cost to fair value as part of the purchase price allocation.

7.	PROPERTY, PLANT, AND EQUIPMENT, NET

As of June 30, 2022 and December 31, 2021, property, plant, and equipment, net consisted of the following:

(In thousands)	June 30, 2022		December 31, 2021
Furniture and equipment	$	41,453	$	26,311
Auto and trucks		1,759		1,021
Buildings		52,982		65,820
Leasehold improvements		121,273		78,283
Land		14,164		17,892
Construction in progress		84,192		95,853
Total		315,823		285,180
Less: Accumulated depreciation		13,962		9,958
Total property, plant and equipment, net	$	301,861	$	275,222

Depreciation expense for the three and six months ended June 30, 2022, totaled $3.5 million and $6.4 million, respectively, of which $2.6 million and $4.7 million, respectively, is included in cost of goods sold. Depreciation expense for the three and six months ended June 30, 2021, totaled $1.4 million and $2.7 million, respectively, of which $969 thousand and $2 million, respectively, is included in cost of goods sold.

Ayr Wellness Inc.

Notes to the Unaudited Interim Condensed ConsolidatedFinancial Statements

(Expressed in United States Dollars)

8.	GOODWILL AND INTANGIBLE ASSETS

Goodwill

The Company evaluates goodwill for impairment annually or more frequently when an event occurs, or circumstances change that indicate that the carrying value may not be recoverable. An impaired asset is written down to its estimated fair value based on the most recent information available.

ASC 350 Intangibles-Goodwill and Other-Testing Goodwill for Impairment*,* provides entities an option to perform a qualitative assessment to determine whether a further quantitative analysis of goodwill is required. In performing the qualitative assessment for the Company’s goodwill impairment test, the Company is required to make assumptions and utilized judgements when evaluating triggering events. If impairment indicators are present after performing the qualitative assessment, the Company would perform a quantitative impairment analysis to estimate the fair value of goodwill.

During the six months ended June 30, 2022, the Company performed the qualitative impairment test. As a result of the analysis, no further quantitative impairment test was deemed necessary at this time. There were no impairments of goodwill or intangible assets for the six months ended June 30, 2022.

As of June 30, 2022, and December 31, 2021, the Company’s goodwill is as follows:

(In thousands)	Total
As of December 31, 2021	$	229,910
Acquired through business combinations and VIEs		12,062
As of June 30, 2022	$	241,972

Intangible Assets

Amortization expense is recorded within cost of goods sold and operating expenses. The amount in cost of goods sold for the three and six months ended June 30, 2022 and 2021, was $9.8 million and $2.4 million, and $4.9 million and $0.8 million, respectively.

The following table represents the net book value of intangible assets:

(In thousands)	Useful life (# of years)	June 30, 2022		December 31, 2021
Licenses/permits	15	$	918,617	$	935,265
Right-to-use licenses	15		18,373		12,592
Host community agreements	15		30,765		29,912
Trade name / brand	5		4,193		1,146
Total		$	971,948	$	978,915

Ayr WellnessInc.

Notes to theUnaudited Interim Condensed Consolidated Financial Statements

(Expressedin United States Dollars)

8.	GOODWILL AND INTANGIBLE ASSETS (Continued)

The anticipated amortization expense over the next five years and beyond is as follows:

(In thousands)	Amortization<br> Expense
2022	$	36,219
2023		72,437
2024		72,149
2025		71,959
2026		71,959
2027<br> and beyond		647,225
Total	$	971,948
9.	RIGHT-OF-USE ASSETS & LEASE LIABILITIES
---	---

Information related to operating and finance leases is as follows:


	Operating Leases	Finance Leases	Operating Leases	Finance Leases
Weighted<br> average discount rate	11.68%	9.67%	14.39%	12.65%
Weighted<br> average remaining lease term	13.62<br> yrs	5.37<br> yrs	12.46<br> yrs	3.45<br> yrs

The maturity of the contractual undiscounted lease liabilities as of June 30, 2022, are as follows:

(In thousands)	Operating<br> Leases			Finance<br> Leases			Total
2022	$	13,470		$	5,419		$	18,889
2023		27,247			10,410			37,657
2024		26,894			8,938			35,832
2025		26,423			3,277			29,700
2026		25,759			2,003			27,762
2027<br> and beyond		251,196			10,290			261,486
Total undiscounted lease liabilities		370,989			40,337			411,326
Impact<br> of discounting		(232,663	)		(9,004	)		(241,667	)
Total present value of minimum lease payments	$	138,326		$	31,333		$	169,659

Lease expense during the three and six months ended June 30, 2022 and 2021, are as follows:

	Three Months<br> Ended				Six Months<br> Ended
(In thousands)	June 30,<br> 2022		June 30,<br> 2021		June 30,<br> 2022		June 30,<br> 2021
Lease liabilities - operating
Lease liabilities - operating expense, COGS	$	1,811	$	1,229	$	3,574	$	1,801
Lease liabilities - operating expense, G&A		3,584		2,015		6,700		3,079
Lease liabilities - finance
Amortization of right-of-use assets, COGS		1,116		144		1,731		215
Amortization of right-of-use assets, G&A		48		7		91		9
Interest on lease liabilities - finance, COGS		622		65		959		101
Interest on lease liabilities - finance,<br> G&A		15		6		29		7
Total lease expense	$	7,196	$	3,466	$	13,084	$	5,212

Ayr Wellness Inc.

Notes to theUnaudited Interim Condensed Consolidated Financial Statements

(Expressedin United States Dollars)

9.	RIGHT-OF-USE ASSETS & LEASE LIABILITIES (Continued)

In June 2022, the Company completed a sale and lease back transaction to sell two cultivation and processing facilities for a purchase price of $28.1 million, excluding transaction costs. The Company will lease back the facilities and continue to operate and manage them under a long-term agreement. As a result of the sale, the Company divested of $22.2 million of buildings and improvements, and $3.7 million of land. The Company recognized a gain on sale related to the transaction of $2.2 million which was recorded within gain on sale of assets on the Interim Statement of Operations. The lease was recorded as an operating lease and resulted in a lease liability of $25.3 million and an ROU asset of $25.3 million, which was recorded net of a $0.8 million work allowance.

During the six months ended June 30, 2022, the Company closed on a real estate financing transaction resulting in $27.6 million of cash proceeds for the sale and simultaneous leaseback of a cultivation facility. The transaction includes a construction financing allowance of up to $14.2 million, which will increase the base rent at the time the construction financing is drawn down. Control was never transferred to the buyer-lessor because the transaction did not qualify for sale-leaseback treatment. Therefore, the Company is deemed to own this real estate and will continue to depreciate the assets and reflect the properties on the Company’s Interim Balance Sheet. The Company recorded a financing obligation for the consideration received from the buyer-lessor, and future cash lease payments will be allocated between interest expense and reduction to the financing obligation, as applicable. As the transactions did not qualify for sale-leaseback treatment, under ASC 842, Leases, no gain or loss was recognized.

10.	RELATED PARTY TRANSACTIONS AND BALANCES

Related parties are defined as management and members of the Company and/or members of their immediate family and/or other companies and/or entities in which a board member or senior officer is a principal owner or senior executive. Other than disclosed elsewhere in the interim financial statements, related party transactions and balances are as follows:

Mercer Park, L.P., a company owned by an executive of Ayr, entered into a management agreement with the Company dated May 24, 2019. The management fee is paid monthly and varies based on actual costs incurred by the related entity when providing the Company administrative support, management services, office space, and utilities. In addition, the management fees pay other corporate or centralized expenses based on actual cost, including but not limited to legal and professional fees, software, and insurance. The agreement is a month-to-month arrangement.

As of June 30, 2022, and December 31, 2021, $731 thousand and $935 thousand was included in prepaid expenses, a majority of which is for a letter of credit for an operating lease. Lease fees included in the operating lease during the three and six months ended June 30, 2022, were $215 thousand (2021: $116 thousand) and $430 thousand (2021: $231 thousand). During the three and six months ended June 30, 2022, included in general and administrative expenses were management fees of $3 thousand (2021: $2,636 thousand) and $3 thousand (2021: $4,423 thousand).

During the three and six months ended June 30, 2022, the Company incurred fees from a company partially owned by a board member of Ayr. The total incurred fees were $14 thousand and $27 thousand (2021: $26 thousand and $51 thousand) of office expenses, $65 thousand and $239 thousand (2021: $225 thousand and $386 thousand) of development fees, $234 thousand and $461 thousand (2021: $225 thousand and $375 thousand) of rental fees, and $44 thousand and $92 thousand (2021: $63 thousand $129 thousand) of interest expense. Additionally, the board member was issued 50,000 equity shares, valued at $707 thousand on the grant date, related to a consulting agreement with the Company for services rendered for the period ended June 30, 2022.

Ayr Wellness Inc.

Notes to theUnaudited Interim Condensed Consolidated Financial Statements

(Expressedin United States Dollars)

10.	RELATED PARTY TRANSACTIONS AND BALANCES (Continued)

Refer to the below debts payable and senior secured notes and share capital notes for additional information regarding the debts payable to related parties and non-cash stock-based compensation plan, respectively, for the three and six months ended June 30, 2022 and 2021.

11.	DEBTS PAYABLE & SENIOR SECURED NOTES

Senior SecuredNotes

On November 12, 2021, the Company completed a private placement offering of approximately $133 million aggregate principal amount of secured promissory notes at a premium price of $1,070 per $1,000, resulting in approximately $147 million of proceeds due December 2024. The notes are considered additional notes under the indenture governing the Company’s existing notes which were entered into on December 10, 2020 (“December 2020 Notes”). The resulting yield-to-maturity is 9.8%.

(In thousands)	Senior secured notes
As of January 1, 2021	$	103,653
Debt issuance costs		(2,142	)
Debt issuance costs amortized		1,744
Senior secured notes issued		133,250
Senior secured notes premium		9,305
Senior secured notes premium amortized		(402	)
As of December 31, 2021	$	245,408
Debt issuance costs amortized		1,146
Senior secured notes premium amortized		(1,509	)
Total senior secured notes classified as non-current payable as of June 30, 2022	$	245,045
Total accrued interest payable related to senior secured notes as of June 30, 2022	$	-

Debt Payable

(In thousands)	Debts payable
As of January 1, 2021	$	62,233
Discounted as of January 31, 2021		1,280
Incurred through combinations and acquisitions		87,475
Converted to equity		(7,430	)
Less: repayment		(8,749	)
Less: discounted to fair value		(951	)
As of December 31, 2021		133,858
Discounted as of December 31, 2021		951
Incurred through earn-out provision		14,934
Debt Issued		95,900
Less: repayment		(6,563	)
Total debts payable, undiscounted as of June 30,<br> 2022		239,080
Less: discounted to fair value		(790	)
Total debts payable as of June 30, 2022		238,290
Total accrued interest payable<br> related to debts payable as of June 30, 2022	$	7,119

Ayr Wellness Inc.

Notes to theUnaudited Interim Condensed Consolidated Financial Statements

(Expressedin United States Dollars)

11.	DEBTS PAYABLE & SENIOR SECURED NOTES (Continued)

Debt Payable(continued)

The details of debts payable were as follows:

	June 30,<br> 2022
(In thousands)	Related<br> party debt		Non-related<br> party debt			Total debt
Principal payments	$	24,805	$	214,275		$	239,080
Less: current portion		1,478		15,585			17,063
Total non-current debt, undiscounted		23,327		198,690			222,017
Less: discount to fair value		-		(790	)		(790	)
Total non-current debt	$	23,327	$	197,900		$	221,227

The following table presents the future debt obligations as of June 30, 2022:

Future debt obligations (per year, in thousands)
2022	$	5,084
2023		24,980
2024		116,196
2025		33,282
2026		1,874
2027<br> and beyond		57,664
Total debt obligations	$	239,080

As part of the business combinations and asset acquisitions, the Company issued and assumed notes with related and non-related parties. The related party notes are considered part of the purchase price to the former shareholders of the acquired businesses. As a result of the combinations and acquisitions, several of these individual shareholders are now considered related parties of the Company across various roles including directors, officers, and shareholders.

On March 28, 2022, the Company amended a non-related party note of $2.5 million that was assumed during the acquisition of Washoe Wellness, LLC (“Washoe”), which was acquired during May 2019. The loan was amended to extend the maturity date an additional year, while the payment terms and interest rate remained the same. Under ASC 470, this was considered to be a debt modification. As of June 30, 2022, the Company paid the note in full.

On March 17, 2022, the Company entered into a loan agreement with a community bank for total proceeds of $26.2 million, net of financing costs of $0.3 million, with a 4.625% annual interest rate. The loan is secured with a first mortgage lien on certain real property in Massachusetts and matures five years from the date of the agreement, with an option to extend for an additional five years.

On March 1, 2022, pursuant to the PA Natural Medicine, LLC (“PA Natural”) Agreement, the Company issued non-related party promissory notes in the amount of $14.9 million. The notes are secured by all the assets and a pledge of the Company’s membership interests in PA Natural. The notes mature three years from the date of the agreement with an 8.0% annual interest rate.

Ayr WellnessInc.

Notes to theUnaudited Interim Condensed Consolidated Financial Statements

(Expressed inUnited States Dollars)

11.	DEBTS PAYABLE & SENIORSECURED NOTES (Continued)

Debt Payable(continued)

On May 16, 2022, the Company entered into a loan agreement with a community bank for total proceeds of $25.8 million, with an annual interest rate of Prime Rate plus 1.5%, floating, with a 5.0% floor (currently 6.25% as of June 30, 2022). The loan is secured with a first mortgage lien on certain real property and matures two years from the date of the agreement. The loan is subject to certain financial and other covenants, that we are in compliance with as of June 30, 2022.

Interest expense associated with related party debt payable for the three and six months ended June 30, 2022 and 2021, was $377 thousand and $769 thousand, $450 thousand, and $912 thousand, respectively.

12.	SHARE CAPITAL

The following activity occurred during the six months ended June 30, 2022:

·	5<br>thousand Equity Shares were repurchased and cancelled, and 77 thousand Equity Shares were repurchased and held.
·	In<br> relation to the exercise of 547 thousand RSUs, 294 thousand Equity Shares were issued due<br> to net settlement.
o	20<br> thousand shares were forfeited.
---	---
·	33<br> thousand Equity Shares were issued in connection with options exercised.
---	---
·	1<br> million Equity Shares were issued in connection with the earn-out provision related to the<br> acquisition of PA Natural.
---	---
·	908<br> thousand Exchangeable Shares were exchanged for 908 thousand Equity Shares related to the<br> purchase considerations to the CannTech PA, LLC acquisition
---	---
·	329<br> thousand Exchangeable Shares were issued in connection with the Cultivauna Acquisition.
---	---
·	353<br> thousand Exchangeable Shares were issued in connection with the Herbal Remedies Acquisition.
---	---
·	50<br> thousand Equity Shares were issued to a related party.
---	---

Warrants

The average remaining life of Warrants is 1.9 years with an aggregate intrinsic value of $nil. The number of Warrants outstanding as of June 30, 2022, and December 31, 2021, is:

(In thousands)			Amount
Number of warrants outstanding
Balance as of January 1, 2021	10,486		$	6,516
Exercise of warrants	(7,555	)		(4,694	)
Forfeitures of warrants, due to expiration	(57	)		(36	)
Balance as of December 31, 2021	2,874			1,786
No activity
Balance as of June 30, 2022	2,874		$	1,786

Ayr WellnessInc.

Notes to theUnaudited Interim Condensed Consolidated Financial Statements

(Expressed inUnited States Dollars)

13.	DERIVATIVE LIABILITIES

Purchase Considerationand Contingent Consideration

The earn-out provision related to the acquisition of Sira Naturals, Inc. (“Sira”) is measured at fair value by taking a probability-weighted average of possible outcomes, as estimated by management, and discounting the payment to a present value. As of June 30, 2022 and December 31, 2021, the fair value was $25.4 million and $25.3 million, respectively.

The earn-out provisions related to the acquisitions of Oasis, GSD NJ, LLC (“GSD”), PA Natural, and Cultivauna are measured at fair value based on unobservable inputs and is considered a Level 3 measurement. The provision uses a Monte-Carlo simulation to estimate the fair value through the end of the earn-out period based on the Company’s share price at the acquisition date and other inputs based on other observable market data.

As of June 30, 2022, the fair value of Oasis, GSD, PA Natural, and Cultivauna earn-out provisions were $nil, $90.4 million, $nil, and $5.6 million, respectively. As of December 31, 2021, the fair value of Oasis, GSD, and PA Natural earn-out provisions were $28.7 million, $91.7 million, and $39.9 million, respectively.

During the period ended June 30, 2022, the Company paid and settled its earn-out provision related to the PA Natural acquisition. Ayr paid $10.0 million of cash, issued $14.9 million of promissory notes, and issued $11.7 million of Equity Shares, and recognized a gain during the period of $3.2 million on the change in fair value of the contingent consideration obligation.

During the period ended June 30, 2022, the Company acquired Herbal Remedies and recorded a fair value adjustment on the purchase consideration settlement of $1.8 million related to the issuance of a promissory note.

The fair value adjustment relating to derivative liabilities has been reflected in the Interim Statements of Operations under “Fair value gain (loss) on financial liabilities” as detailed below:

	Three Months Ended					Six Months Ended
(In thousands)	June 30, 2022			June 30, 2021		June 30, 2022			June 30, 2021
Gain from FV adjustment on contingent consideration	$	3,481		$	11,989	$	30,374		$	11,443
Gain (loss) from FV adjustment on purchase consideration settlement		(1,780	)		102		(1,780	)		102
Gain from settlement of contingent consideration		-			-		3,186			-
Total	$	1,701		$	12,091	$	31,780		$	11,545
14.	STOCK-BASED COMPENSATION
---	---

The Company has adopted an Equity Incentive Plan (“the Plan”), as amended on May 2, 2021, which allows the Company to compensate qualifying plan participants through stock-based arrangements and provide them with opportunities for stock ownership in the Company, thereby aligning the interests of such persons with the Company’s shareholders. Under the Plan, the Company may grant stock options, RSUs, performance compensation awards, and unrestricted stock bonuses or purchases.

In addition, CSAC Acquisition Inc. established a Restricted Stock Plan (the “AcquisitionCo Plan”) to facilitate the granting of restricted Exchangeable Shares. Any shares issued under the AcquisitionCo Plan will reduce the number of Equity Shares that may be awarded under the Equity Incentive Plan on a one-for-one basis.

Ayr WellnessInc.

Notes to theUnaudited Interim Condensed Consolidated Financial Statements

(Expressed inUnited States Dollars)

14.	STOCK-BASED COMPENSATION (Continued)

The stock-based compensation expense is based on either the Company’s share price for service-based conditions or the Company’s share price fair value on the date of the grant. The RSUs vest over a one to four-year period, based on service, market, and/or performance conditions. Any cumulative adjustment prior to vesting is recognized in the current period with no adjustment to prior periods for expense previously recognized. During the periods ended June 30, 2022 and December 31, 2021, the Company recognized stock-based compensation relating to the granting of RSUs.

During the six months ended June 30, 2022, 547 thousand, of which 294 thousand were issued due to net settlement, Equity Shares vested. The result of the net settlement was 253 thousand Equity Shares were withheld with a total value of $3.9 million to pay income taxes on behalf of the grantees. The average remaining life of unvested RSUs is one year with an expected expense over the next twelve months of $29.4 million, with an aggregate intrinsic value of $44.4 million using the stock price as of June 30, 2022.

(In thousands)			Weighted<br> Average Grant <br><br>Date Fair Value
RSUs outstanding and nonvested, as of January 1, 2021	4,235		$	16.63
Granted	5,781			17.79
Vested	(1,916	)		(18.44	)
RSUs outstanding and nonvested, as of December 31, 2021	8,100			18.83
Granted	208			12.45
Vested	(547	)		26.58
Forfeited	(20	)		25.34
RSUs outstanding and nonvested, as of June 30, 2022	7,741		$	16.13

Options

As part of the Liberty acquisition, the Company issued replacement options to certain employees of Liberty who became employees of the Company and recorded additional paid-in capital of $4.5 million in relation to 248 thousand options, which were fully vested as of the date of acquisition. The range of exercise price is between $8.47 and $23.66. The estimated remaining life of the options is approximately under one year with an aggregate intrinsic value of $nil.

(In thousands)			Weighted<br> Average Fair <br><br>Value
Balance as of January 1, 2021	-		$	-
Replacement options issued	248			17.93
Options exercised	(37	)		17.93
Options sold to cover income taxes	(13	)		17.93
Balance as of December 31, 2021	198			17.93
Options exercised	(33	)		17.93
Balance as of June 30, 2022	165		$	17.93

Ayr WellnessInc.

Notes to theUnaudited Interim Condensed Consolidated Financial Statements

(Expressed inUnited States Dollars)

15.	COMMITMENTS AND CONTINGENCIES

Contingencies

The Company’s operations are subject to a variety of local and state governmental regulations. Failure to comply with one or more of those regulations could result in fines, restrictions on its operations, or losses of permits and/or licenses that could result in the Company ceasing operations. While management of the Company believes that the Company is in compliance, in all material respects, with applicable local and state governmental regulations as of June 30, 2022, cannabis regulations continue to evolve and are subject to differing interpretations. As a result, the Company may be subject to regulatory fines, penalties, or restrictions in the future.

Claims and Litigation

From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. As of June 30, 2022, there were no material pending or threatened lawsuits that could be reasonably expected to have a material effect on the results of the Company’s operations. There are also no proceedings in which any of the Company’s directors, officers or affiliates are an adverse party or have a material interest adverse to the Company’s interest.

16.	FINANCIAL RISK FACTORS
(a)	Fair value
---	---

• Level 1 inputs are quoted prices in active markets for identical assets or liabilities at the measurement date.

• Level 2 inputs are observable inputs other than quoted prices included within Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable directly or indirectly.

• Level 3 inputs are unobservable inputs for the asset or liability that reflect the reporting entity’s own assumptions and are not based on observable market data.

There were no transfers between levels in the hierarchy during the three months ended June 30, 2022 and 2021. For financial assets and liabilities not measured at fair value, their carrying value is considered to approximate fair value due to their market terms.

The carrying values of cash, deposits, accounts receivable, trade payables, accrued liabilities, accrued interest payable, and purchase consideration payable approximate their fair values because of the short-term nature of these financial instruments. Long-term debt is recorded at amortized cost.

The following table summarizes the fair value hierarchy for the Company’s financial assets and liabilities that are re-measured at their fair values periodically:

(In thousands)		June 30, 2022		December 31, 2021
Financial liabilities
Contingent consideration	Level 3	$	121,407	$	185,522

Ayr WellnessInc.

Notes to theUnaudited Interim Condensed Consolidated Financial Statements

(Expressed inUnited States Dollars)

16.	FINANCIAL RISK FACTORS (Continued)
(a)	Fair value (continued)
---	---

The following table summarizes the inputs used at the initial and subsequent measurement dates to value the contingent consideration in the table above:

Equity Volatility	55.65 - 65.87%
Revenue Volatility	12.45 - 23.96%
Risk-free Rate	1.51 - 2.84%
Revenue Risk Premium	5.76 - 9.61%
Credit Risk Rate	10.50 - 14.00%
Discount Rate	8.40 - 10.00%
(b)	Liquidity risk
---	---

Liquidity risk is the risk that the Company is unable to generate or obtain sufficient cash in a cost-effective manner to fund its obligations as they come due. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. The Company seeks to manage liquidity risk through maintaining sufficient funds on hand and continuously monitoring forecast and actual cash flows. Refer to Notes 9 and 11 for future lease and debt commitments. The Company has the following gross obligations as of June 30, 2022, which are expected to be payable:

(In thousands)	Less than 1 year		1-5 years		> 5 years		Total
Trade payables and accrued liabilities	$	45,971	$	-	$	-	$	45,971
Lease obligations		18,889		130,951		261,486		411,326
Purchase consideration		2,183		-		-		2,183
Income tax payable		20,758		-		-		20,758
Debt Payable		5,084		176,332		57,664		239,080
Contingent consideration		-		37,500		-		37,500
Senior secured notes		-		243,250		-		243,250
Accrued interest payable		2,970		4,149		-		7,119
Total	$	95,855	$	592,182	$	319,150	$	1,007,187
(c)	Interest rate risk
---	---

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its cash and long-term debts. Cash and deposits bear interest at market rates. The Company’s debts have fixed rates of interest. The Company does not use any derivative instruments to hedge against interest rate risk and believes that the change in interest rates will not have a significant impact on its financial results.

Ayr WellnessInc.

Notes to theUnaudited Interim Condensed Consolidated Financial Statements

(Expressed inUnited States Dollars)

17.	TAXATION

As the Company operates in the legal cannabis industry, the Company is subject to the limits of IRC Section 280E for United States federal income tax purposes as well as state income tax purposes. Under IRC Section 280E, the Company is only allowed to deduct expenses directly related to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E. Therefore, the effective tax rate can be highly variable and may not necessarily correlate with pre-tax income or loss.

The Company is treated as a United States corporation for the United States federal income tax purposes under IRC Section 7874 and is subject to United States federal income tax on its worldwide income. However, for Canadian tax purposes, the Company, regardless of any application of IRC Section 7874, is treated as a Canadian resident company (as defined in the Income Tax Act (Canada) (the “ITA”) for Canadian income tax purposes. As a result, the Company is subject to taxation both in Canada and the United States. The Company is also subject to state income taxation in Massachusetts, Pennsylvania, Florida, Arizona, Illinois, and New Jersey. Income Tax is accounted for in accordance with ASC 740, Income Taxes including ASU 2019-12. The following table summarizes the Company’s income tax expense and effective tax rates for the three and six months ended June 30, 2022 and 2021.

	Three Months Ended						Six Months Ended
(In thousands)	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Loss before taxes & noncontrolling interests	$	(30,559	)	$	(16,092	)	$	(28,445	)	$	(27,733	)
Provision for income taxes		9,690			4,646			20,997			9,627
Effective tax rate		-32	%		-29	%		-74	%		-35	%

The Company’s quarterly tax provision is calculated under the discrete method which treats the interim period as if it were the annual period and determines the income tax expense or benefit on that basis. The discrete method is applied when application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. The Company believes, at this time, the use of this discrete method is more appropriate than the annual effective tax rate method due to the high degree of uncertainty in estimating annual pre-tax income due to the early growth stage of the business.

18.	SUBSEQUENT EVENTS

The Company’s management has evaluated subsequent events through the date the interim financial statements were issued.

Exhibit 99.2

Ayr Wellness Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,2022 AND 2021

(EXPRESSED IN UNITED STATES DOLLARS)

Ayr Wellness Inc.

Management’s Discussion and Analysis

For the Three and Six Months Ended June 30,2022 and 2021

Introduction

The following Management’s Discussion and Analysis (“MD&A”) of the financial condition and results of the operations of Ayr Wellness Inc. (“Ayr”, “the Company”, “we”, “our” or “us”) constitutes management’s review of the factors that affected the Company’s financial and operating performance for the three and six months ended June 30, 2022 and 2021. This discussion should be read in conjunction with the Company’s Quarterly Report which contains the unaudited interim condensed consolidated financial statements for the three and six months ended June 30, 2022, and 2021 (the “interim financial statements”). Results are reported in United States dollars, unless otherwise noted. In the opinion of management, all adjustments (which consist only of normal recurring adjustments) considered necessary for a fair presentation have been included. The interim financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of Canadian securities regulators and the United States Securities Exchange Commission (“SEC”). Further information about the Company and its operations can be obtained on ir.ayrwellness.com, sec.gov, and www.sedar.com. The information contained on such websites are not a part of, nor are they incorporated by reference into, this Quarterly Report (or the equivalent thereof).

The effective date of this MD&A is August 17, 2022.

Overview of the Company

Ayr Wellness Inc. is a national cannabis consumer packed goods company and retailer. Founded in 2019 and headquartered in Miami, Florida, the Company is focused on delivering the highest quality cannabis products and customer experience throughout its footprint. As of June 30, 2022, the Company has operations in eight U.S. markets and employs roughly 2,375 people. The Company, through its subsidiaries and affiliates, holds, operates, and manages licenses and permits in the States of Arizona, Florida, Massachusetts, Nevada, New Jersey, Ohio, Pennsylvania, and Illinois.

The Company’s strategy is to vertically integrate through the consolidation of cultivating, producing, distributing, and dispensing cannabis brands and products at scale. The Company’s portfolio of consumer-packaged goods brands includes Kynd, Origyn Extracts, Levia, STiX Preroll Co., Secret Orchard, Lost in Translation and Entourage, among others. The Company distributes and markets its products to Ayr-owned retail stores and to third-party licensed retail cannabis stores throughout Ayr’s operating footprint.

The Company owns and operates a chain of cannabis retail stores under brand names including AYR, Liberty Health Sciences, and The Dispensary. Ayr owns stores under other names, primarily where stores acquired still retain their pre-acquisition branding, though the Company intends to unify its retail footprint under the AYR retail brand name over time. The income of Ayr’s retail stores derives primarily from the sale of cannabis products, with an immaterial portion of income resulting from the sale of other merchandise (such as cannabis accessories). As of June 30, 2022, Ayr operates 72 retail stores, located across Ayr’s portfolio.

Cautionary Note Regarding Forward-Looking Information

Certain statements in this MD&A are forward-looking statements within the meaning of applicable securities laws, including, but not limited to, those statements relating to the Company and their financial capacity and availability of capital and other statements that are not historical facts. These statements are based upon certain material factors, assumptions, and analyses that were applied in drawing a conclusion or making a forecast or projection, including experience of the Company, as applicable, and perception of historical trends, current conditions, and expected future developments, as well as other factors that are believed to be reasonable in the circumstances. Forward-looking statements are provided for the purpose of presenting information about management’s current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. These statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies, and outlook of the Company. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as “pro forma”, “expects”, “anticipates”, “plans”, “believes”, “estimates”, “intends”, “targets”, “projects”, “forecasts”, “seeks”, “likely” or negative versions thereof and other similar expressions, or future or conditional verbs such as “may”, “will”, “should”, “would” and “could”.

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Ayr Wellness Inc.

Management’s Discussion and Analysis

For the Three and Six Months Ended June 30,2022 and 2021

By their nature, forward-looking statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections, or conclusions will not prove to be accurate, that assumptions may not be correct, and that objectives, strategic goals and priorities will not be achieved. A variety of material factors, many of which are beyond the parties’ control, could affect operations, business, financial condition, performance, and results of the parties that may be expressed or implied by such forward-looking statements and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to, the following:

•	the extent of the impact of COVID-19, including government and/or regulatory responses to the outbreak;
•	laws and regulations and any amendments thereto applicable to our business and the impact thereof, including<br>uncertainty regarding the application of U.S. state and federal law to U.S. cannabis products and the scope of any regulations by the<br>U.S. Food and Drug Administration, the U.S. Drug Enforcement Administration, the U.S. Federal Trade Commission, the U.S. Patent and Trademark<br>Office, the U.S. Department of Agriculture and any state equivalent regulatory agencies over U.S. cannabis products;
---	---
•	climate change impacting economic factors such as prices and supply chain disruption, as well as governmental<br>response through laws or regulations regarding greenhouse gas emissions;
---	---
•	assumptions and expectations described in the Company’s critical accounting policies and estimates;
---	---
•	changes in U.S. generally accepted accounting principles or their interpretation<br>and the adoption and impact of certain accounting pronouncements;
---	---
•	the number of users of cannabis or the size of the regulated cannabis market in the United States;
---	---
•	the potential time frame for the implementation of legislation to legalize and regulate medical or adult-use<br>cannabis (and the consumer products derived from each of the foregoing) in the United States, and the potential form the legislation and<br>regulations will take;
---	---
•	the Company’s future financial and operating performance and anticipated profitability;
---	---
•	future performance, results and terms of strategic initiatives, strategic agreements, and supply agreements;
---	---
•	the market for the Company’s current and proposed products and services, as well as the Company’s<br>ability to capture market share;
---	---
•	the benefits and applications of the Company’s products and services and expected sales thereof;
---	---
•	development of affiliated brands, product diversification and future corporate development;
---	---
•	anticipated investment in and results of research and development;
---	---

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Ayr Wellness Inc.

Management’s Discussion and Analysis

For the Three and Six Months Ended June 30,2022 and 2021

•	inventory and production capacity, including discussions of plans or potential for expansion of capacity<br>at existing or new facilities;
•	future expenditures, strategic investments, and capital activities;
---	---
•	the competitive landscape in which the Company operates and the Company’s market expertise;
---	---
•	the Company’s ability to comply with its debt covenants;
---	---
•	the Company’s ability to secure further equity or debt financing, if required;
---	---
•	consistent or increasing pricing of various cannabis products;
---	---
•	the level of demand for cannabis products, including the Company’s and third-party products sold<br>by the Company;
---	---
•	the Company’s ability to mitigate risks relating to the cannabis industry, the larger economy such<br>as inflation or fluctuation in interest rates, breaches of and unauthorized access to the Company’s systems and related cybersecurity<br>risks, money laundering, costly litigation, and health pandemics;
---	---
•	the ability to gain appropriate regulatory approvals for announced acquisitions in the timeframe anticipated;
---	---
•	the application for additional licenses and the grant of licenses or renewals of existing licenses that<br>have been applied for;
---	---
•	the rollout of new dispensaries, including the number of planned dispensaries to be opened in the future<br>and the timing and location in respect of the same, and related forecasts;
---	---
•	the Company’s ability to hit anticipated development targets of cultivation and production projects;
---	---
•	the ability to successfully integrate and maintain employees from recent acquisitions;
---	---
•	the ability to develop the Company’s brand and meet growth objectives;
---	---
•	the risk related to limited market data and difficulty to forecast results;
---	---
•	the concentrated voting control of the Company;
---	---
•	market volatility and the risks associated with selling of a substantial amount of Equity<br> Shares;
---	---
•	product liability claims related to the products the Company cultivates, produces, and sells; and
---	---
•	other events or conditions that may occur in the future.
---	---

In making these statements, in addition to those described above and elsewhere herein, the parties have made assumptions with respect to expected cash provided by continuing operations, future capital expenditures, including the amount and nature thereof, trends and developments in the industry, business strategy and outlook, expansion and growth of business and operations, accounting policies, credit risks, anticipated acquisitions, opportunities available to or pursued by the parties, and other matters.

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Ayr Wellness Inc.

Management’s Discussion and Analysis

For the Three and Six Months Ended June 30,2022 and 2021

Management’s Definition and Reconciliationof Non-GAAP Measures

Management reports certain non-GAAP measures that are used to evaluate the performance of such businesses as well as to manage their capital structure. As non-GAAP measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Securities regulations require such measures to be clearly defined and reconciled with their most directly comparable GAAP measure.

The Company references non-GAAP measures, including cannabis industry metrics, in this document and elsewhere. These are provided as additional information to complement those GAAP measures by providing further understanding of the results of the operations of the Company from management’s perspective. Accordingly, these measures should not be considered in isolation, nor as a substitute for analysis of the Company’s financial information reported under GAAP. Non-GAAP measures used to analyze the performance of the Company include adjusted earnings before interest, tax, depreciation, and amortization (“Adjusted EBITDA”) and “Adjusted Gross Profit”.

The Company believes that these non-GAAP financial measures may be useful to investors because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. These financial measures are intended to highlight trends in the Company’s core businesses that may not otherwise be apparent when solely relying on the GAAP measures.

Adjusted EBITDA

“Adjusted EBITDA” represents (loss) income from operations, as reported under GAAP, before interest and tax, adjusted to exclude other adjustments associated with non-core costs, other non-cash items, including depreciation and amortization, and further adjusted to remove non-cash stock-based compensation, the accounting for the incremental costs to acquire cannabis inventory in a business combination, acquisition related costs, start-up costs and the gain on sale of assets.

Adjusted Gross Profit

“Adjusted Gross Profit” represents gross profit, as reported, adjusted to exclude other adjustments associated with non-core costs, the accounting for the incremental costs to acquire cannabis inventory in a business combination, interest, depreciation and amortization, and start-up costs.

Reconciliations are provided elsewhere in this MD&A.

Forward-Looking Financial Projections or Targets

Based on the results to date coupled with an uncertain macroeconomic backdrop, management is updating their assumptions underlying its previously issued guidance.

The Company expects Revenue, Adjusted EBITDA, and Operating Income to grow approximately 10% sequentially from Q2 2022 to Q3 2022, and expects a significant acceleration in the pace of sequential growth in Q4 2022. This guidance assumes further price compression in the wholesale and retail market of approximately 5-10% for select markets.

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Ayr Wellness Inc.

Management’s Discussion and Analysis

For the Three and Six Months Ended June 30,2022 and 2021

Ayr has also assumed that business and economic conditions will continue substantially in the ordinary course, including, without limitation, with respect to general economic and industry conditions, competition, regulations (including those in respect of the cannabis industry), weather, taxes, that there will be no new pandemics or substantially worsened pandemics or other material outbreaks of disease or safety issues or material recalls required, and that there will be no unplanned material changes in facilities, equipment, or customer and employee relations.

Review of the Financial Results for the Threeand Six Months Ended June 30, 2022, and 2021

AdjustedEBITDA Reconciliation for the Three and Six Months Ended June 30, 2022, and 2021

	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
(In thousands)
Loss from operations (GAAP)		)		)		)		)
Non-cash items accounting for inventory
Incremental costs to acquire cannabis inventory in a business combination
Interest (within cost of goods sold "COGS")
Depreciation and amortization (from statement of cash flows)
Acquisition costs
Stock-based compensation, non-cash
Start-up costs^1^
Other^2^
Gain on sale of assets		)				)

Adjusted EBITDA (non-GAAP)

All values are in US Dollars.

Notes:

^1^Costs to prepare a location for its intended use, including facilities not yet operating at scale. Start-up costs are expensed as incurred and are not indicative of ongoing operations.

^2^ Other non-core costs including non-operating adjustments and non-cash inventory write-downs

AdjustedGross Profit Reconciliation for the Three and Six Months Ended June 30, 2022, and 2021

	Three Months Ended		Six Months Ended
	June 30, 2022	June 30, 2021	June 30, 2022	June 30, 2021
(In thousands)
Gross profit (GAAP)
Incremental costs to acquire cannabis inventory in a business combination
Interest (within COGS)
Depreciation and amortization (within COGS)
Start-up costs (within COGS)
Other (within COGS)
Adjusted Gross Profit (non-GAAP)

All values are in US Dollars.

UnauditedInterim Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022, and 2021

	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
(In thousands)
Revenues, net of discounts
Cost of goods sold excluding fair value items		)		)		)		)
Incremental costs to acquire cannabis inventory in a business combination		)		)		)		)
Gross profit
Total operating expenses		)		)		)		)
Loss from operations		)		)		)		)
Total other income (expense)		)
Loss before income taxes and noncontrolling interests		)		)		)		)
Provision for income taxes		)		)		)		)
Net loss before noncontrolling interest		)		)		)		)
Net loss attributable to noncontrolling interest		)				)
Net loss attributable to Ayr Wellness Inc.		)		)		)		)

All values are in US Dollars.

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Ayr Wellness Inc.

Management’s Discussion and Analysis

For the Three and Six Months Ended June 30,2022 and 2021

Revenues, net of discounts

Revenues, net of discounts for the three months ended June 30, 2022, and 2021, was $110.1 million and $91.3 million, respectively, increasing $18.8 million or 21%. Revenues increased due to Ayr’s expansion that occurred throughout 2021 and 2022 including the addition of two new states, Illinois, and New Jersey, through the acquisition of Herbal Remedies and GSD. Additionally, the Company added two new dispensaries from the Herbal Remedies acquisition, eleven new dispensaries in Florida and began sales at its Arizona cultivation facility during the second quarter of 2022.

Revenues, net of discounts for the six months ended June 30, 2022, and 2021, was $221.4 million and $149.7 million, respectively, increasing $71.7 million or 48%. Revenues increased due to Ayr’s expansion that occurred throughout 2021 and 2022, including the addition of five new states: Florida, Arizona, Ohio, New Jersey, and Illinois.

Gross Profit

Gross profit for the three months ended June 30, 2022, and 2021, was $40.3 million and $22.3 million, respectively, an increase of $18 million or 81%. Gross profit percentage for the three months ended June 30, 2022, and 2021, was 37% and 24%, respectively. Gross profit for the six months ended June 30, 2022, and 2021, was $85.8 million and $46.8 million, an increase of $39 million or 83%. Gross profit percentage for the six months ended June 30, 2022, and 2021, was 39% and 31%, respectively.

The increase in gross profit was directly attributable to the expansion into new sates and synergies obtained from acquisitions.

Adjusted Gross Profit (non-GAAP) for the three months ended June 30, 2022, and 2021, was $57.2 million and $53.1 million, respectively, increasing $4.1 million or 8%. Adjusted gross profit percentage (non-GAAP) for the three months ended June 30, 2022, and 2021, was 52% and 58%, respectively.

Adjusted Gross Profit (non-GAAP) for the six months ended June 30, 2022, and 2021, was $115.2 million and $87.3 million, respectively, increasing $27.9 million or 32%. Adjusted gross profit percentage (non-GAAP) for the six months ended June 30, 2022, and 2021, was 52% and 58%, respectively.

The increase in Adjusted Gross Profit was directly attributable to the revenue increase as described above. The decrease in Adjusted Gross Profit percentage was due to a decrease in wholesale revenues as well as the impact of pricing compression in competitive markets.

Total Operating Expenses

Total operating expenses for the three months ended June 30, 2022, and 2021, were $65.1 million and $47.2 million, respectively, increasing $17.9 million or 38%. The majority of the increase in operating expense was due to an increase in selling, general and administrative expenses of $15.5 million.

Total operating expenses for the six months ended June 30, 2022, and 2021, were $131.7 million and $80.0 million, respectively, increasing $51.7 million or 65%. The increase in operating expense was due to an increase in selling, general and administrative expenses and depreciation and amortization of $42.3 million and $11.7 million, respectively.

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Ayr Wellness Inc.

Management’s Discussion and Analysis

For the Three and Six Months Ended June 30,2022 and 2021

The increase in general and administrative expenses was primarily driven by the expansion to new markets, including a 42% increase in store count, and Ayr’s continued investment in talent and infrastructure. The increase to depreciation and amortization expense was driven by the acquisition of cannabis licenses, which are classified as intangible assets and investment in capital expenditures, which are classified as property, plant, and equipment. Both are amortized over their estimated useful lives.

Total operating expenses as a percent of revenue during the three months ended June 30, 2022, and 2021, were 59% and 52%, respectively. Total operating expenses as a percent of revenues during the six months ended June 30, 2022, and 2021, were 60% and 53%, respectively. The change during the periods ended was due to an increase in selling, general, and administrative expenses as a percent of revenues of 8% and 6%, respectively.

Total Other Income (Expense)

Total other income (expense) for the three months ended June 30, 2022, and 2021, was ($5.8) million and $8.8 million, respectively. Total other income (expense) for the six months ended June 30, 2022, and 2021, was $17.5 million and $5.5 million, respectively. The decrease for the three-month period was primarily driven by the $10.4 million change in the fair value relating to contingent consideration and by the $3.7 million in interest expense primarily related to the senior secured notes. The increase for the six-month period was primarily driven by the $20.2 million change in the fair value relating to contingent consideration. The other income (expense) was offset by the decrease in interest expense of $7.8 million primarily related to the senior secured notes.

Income Tax

Income tax expense is recognized based on the expected tax payable on the taxable income for the period and the deferred tax, using tax rates enacted at year-end. The deferred tax benefit is mainly driven by changes in the amortization of intangibles.

As the Company operates in the cannabis industry, it is subject to the limitations of the United States Internal Revenue Code Section 280E under which the Company is only allowed to deduct expenses directly related to sales of product. Therefore, Ayr can have income tax even when it records a net loss.

Total income tax expense for the three months ended June 30, 2022, and 2021, was $9.7 million and $4.6 million, respectively. The current tax expense was $10.8 million and $8.8 million, respectively, for the three months ended June 30, 2022, and 2021. The increase in current tax expense was driven by an increase in gross profit over the respective periods. The deferred tax benefit was $1.1 million and $4.1 million, respectively, for the three months ended June 30, 2022, and 2021.

Total income tax expense for the six months ended June 30, 2022, and 2021, was $21.0 million and $9.6 million, respectively. The current tax expense was $21.7 million and $15.8 million, respectively, for the six months ended June 30, 2022, and 2021. The increase in current tax expense was driven by an increase in gross profit over the respective periods. The deferred tax benefit was $0.7 million and $6.2 million, respectively, for the six months ended June 30, 2022, and 2021.

Net Loss attributable to Ayr Wellness Inc.

Net loss for the three months ended June 30, 2022, and 2021, was $38.4 million and $20.7 million, respectively. Net loss for the six months ended June 30, 2022, and 2021, was $45.9 million and $37.4 million, respectively. The increases were primarily driven by the factors described above.

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Ayr Wellness Inc.

Management’s Discussion and Analysis

For the Three and Six Months Ended June 30,2022 and 2021

Liquidity and Capital Resources

Selected Liquidity and Capital Resource Information

	June 30, 2022	December 31, 2021
(In thousands)
Cash
Total current assets
Total assets
Total current liabilities
Total long-term liabilities
Total liabilities
Total shareholders' equity

All values are in US Dollars.

As of June 30, 2022, the Company had cash of $116.7 million, other current assets of $122.2 million, current liabilities of $109.0 million and working capital of $130.0 million compared to December 31, 2021, which had cash of $154.3 million, other current assets of $111.8 million, current liabilities of $152.3 million, and working capital of $113.8 million. The overall increase in net working capital is primarily due to the payment of contingent consideration for PA Natural of $39.0 million and an increase in inventory of $13.0 million. This was partially offset by a decrease in cash of $37.6 million.

Summary of Future Commitments

(In thousands)
Year	Operating Leases		Finance Leases		Debt		Construction Finance		Contingent Consideration		Total
2022	$	13,470	$	5,419	$	5,084	$	1,395	$	-	$	25,368
2023		27,247		10,410		24,980		2,839		4,779		70,255
2024		26,894		8,938		359,446		2,924		116,628		514,830
2025		26,423		3,277		33,282		3,012		-		65,994
2026		25,759		2,003		1,874		3,102		-		32,738
Thereafter:		251,196		10,290		29,885		27,779		-		319,150
Total Commitments	$	370,989	$	40,337	$	454,551	$	41,051	$	121,407	$	1,028,335

Selected Cash Flow Information

	Six Months Ended
	June 30, 2022		June 30, 2021
(In thousands)
Net cash used in operating activities		)		)
Net cash used in investing activities		)		)
Net cash (used in) provided by financing activities
Net (decrease) increase in cash		)		)
Cash, beginning of period
Cash, end of period

All values are in US Dollars.

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Ayr Wellness Inc.

Management’s Discussion and Analysis

For the Three and Six Months Ended June 30,2022 and 2021

Operating Activities

Net cash used in operating activities during the six months ended June 30, 2022, and 2021, was ($34.9) million and ($22.4) million, respectively, an increase of $12.5 million. The increase was driven by an increase in net loss of $12.1 million (primarily driven by the change in the fair value of financial liabilities) and an increase in interest paid on senior secured notes $12.7 million. This is offset by the change in inventory of $13.0 million.

Investing Activities

Net cash used in investing activities during the six months ended June 30, 2022, and 2021 was ($47.6) million and ($69.8) million, respectively, a decrease of $22.2 million. The decrease was primarily due to the proceeds from the sale of assets of $27.6 million. This was offset by an increase in capitalized interest of $7.4 million.

Financing Activities

Net cash provided by financing activities during the six months ended June 30, 2022, and 2021, was $44.9 million and $88.8 million, respectively, a decrease of $44.0 million. The decrease in net cash related to financing activities was primarily due to a decrease in proceeds from financing of $38.7 million, payments for contingent consideration, debts payable and lease liabilities of $15.3 million, and the repurchase of equity shares of $8.4 million. This was offset by the decrease in tax withholding on stock-based compensation of $24.4 million.

Capital Management

The Company’s objectives when managing capital are to ensure sufficient liquidity to support its financial obligations and to execute its operating and strategic plans while managing healthy liquidity reserves and access to capital. The Company is generating cash from sales and deploying its capital resources to develop assets capable of producing additional revenues and earnings over both the immediate and near term. Capital resources are expected to be used for capital expenditures and improvements to existing facilities, marketing, and product development.

The Company raises capital through issuance of debt, or equity, as necessary, to meet its needs and take advantage of perceived opportunities however there can be no assurance that the Company will be able to continue raising capital in this manner. The Company plans to use existing funds, as well as funds from the future sale of products, to fund operations and expansion activities.

Given the current economic uncertainty, the Company has taken additional measures to optimize the balance sheet and capital deployment process.

Share Capital

As of June 30, 2022, and December 31, 2021, the Company had share capital of $1,324.2 million and $1,289.8 million, respectively, consisting of additional paid-in capital.

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Ayr Wellness Inc.

Management’s Discussion and Analysis

For the Three and Six Months Ended June 30,2022 and 2021

Outstanding Shares

Issued and Outstanding
(in thousands)
Multiple Voting Shares	3,696		3,696
Subordinate Voting Shares	17,436		15,150
Restricted Voting Shares	13,739		11,454
Limited Voting Shares	27,472		29,733
Exchangeable Shares	7,142		7,368
Treasury Stock	(645	)	(568	)
Total number of shares	68,840		66,833

As of June 30, 2022, the Company had 2.9 million Equity Shares issuable upon the exercise of Warrants, 7.7 million restricted Exchangeable Share units, of which 1.3 million are market and performance based, and 0.17 million Equity Shares issuable upon the exercise of options. As of December 31, 2021, the Company had 2.9 million Equity Shares issuable upon the exercise of Warrants, 8.1 million restricted Exchangeable Share units, of which 1.3 million are market and performance based, and 0.20 million Equity Shares issuable upon the exercise of rights reserved for issuance.

Off-Balance Sheet Arrangements

As of the date of this filing, the Company does not have any off-balance sheet arrangements, with the exception of the definitive agreements and term sheets referenced in Note 15 in the audited consolidated financial statements for the year ended December 31, 2021 (“Audited Financial Statements”), that have, or are reasonably likely to have, a current or future effect on the results of operations or financial condition of the Company including, without limitation, such considerations as liquidity and capital resources that have not previously been discussed.

Related Party Transactions

See Note 10 in the interim financial statements for the Company’s disclosures on related party transactions.

Significant Accounting Judgments and Estimates

See Note 3.4 in the interim financial statements for the Company’s accounting policies regarding Significant Accounting Judgments and Estimates.

Recent Accounting Pronouncements

See Note 3.5 in the interim financial statements for the Company’s action on recent accounting pronouncements.

Proposed Transactions

See Note 15 in the audited consolidated financial statements and the accompanying notes for the year ended December 31, 2021, included in the Company’s Annual Report on the Form 40-F for definitive agreements and term sheets the Company entered into.

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Ayr Wellness Inc.

Management’s Discussion and Analysis

For the Three and Six Months Ended June 30,2022 and 2021

Risk Factors

Please refer to the Company’s final base shelf prospectus dated February 24, 2021, the Company’s management information circular dated May 26, 2022, and the Company’s Annual Information Form dated March 30, 2022, for information on the risk factors to which the Company is subject. In addition, see “Cautionary Note Regarding Forward-Looking Information” above.

Financial Instruments, Financial Risk Managementand Other Instruments

The Company does not utilize financial instruments such as derivatives to manage financial risks. See Note 16 in the interim financial statements for the Company’s financial instruments, financial risks factors, and other instruments.

The Company is exposed to liquidity and interest rate risk. The Company’s management oversees the management of these risks. The Company’s management is supported by the members of the board that advises on financial risks and the appropriate financial risk governance framework for the Company. The Company’s financial risk activities are governed by appropriate policies and procedures and financial risks are identified, measured, and managed in accordance with Company policies and risk appetite.

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Exhibit 99.3

FORM 52-109FV2

CERTIFICATION OF INTERIM FILINGS

VENTURE ISSUER BASIC CERTIFICATE

I, Brad Asher, Chief Financial Officer, Ayr Wellness Inc., certify the following:

Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Ayr Wellness Inc. (the "issuer") for the interim period ended June 30, 2022.
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Date: August 17, 2022

/s/ Brad Asher
Brad Asher
Chief Financial Officer

NOTE TO READER

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of

i)	controls and other procedures designed to provide reasonable assurance that information required to be<br>disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded,<br>processed, summarized and reported within the time periods specified in securities legislation; and
ii)	a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation<br>of financial statements for external purposes in accordance with the issuer's GAAP.
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The issuer's certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

Exhibit 99.4

FORM 52-109FV2

CERTIFICATION OF INTERIM FILINGS

VENTURE ISSUER BASIC CERTIFICATE

I, Jonathan Sandelman, Chief Executive Officer, Ayr Wellness Inc., certify the following:

Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Ayr Wellness Inc. (the "issuer") for the interim period ended June 30, 2022.
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Date: August 17, 2022

/s/ Jonathan Sandelman
Jonathan Sandelman
Chief Executive Officer

NOTE TO READER

i)	controls and other procedures designed to provide reasonable assurance that information required to be<br>disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded,<br>processed, summarized and reported within the time periods specified in securities legislation; and
ii)	a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation<br>of financial statements for external purposes in accordance with the issuer's GAAP.
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