EXCLUSIVE: Why TerrAscend's Success Doesn't Rely On Federal Cannabis Reform

At a time when marijuana businesses are hoping for cannabis reform on the federal level, one company is no longer at the mercy of policymakers on the Hill.

"We're independent of the need for federal reform or tax relief or anything like that," Jason Wild, chairman of TerrAscend Corp. TSNDF, said on Thursday at the Benzinga Cannabis Capital Conference in Chicago.

Wild and his colleagues managed to raise $21 million in equity and senior unsecured convertible debentures through two funding rounds and list the company on the Toronto Stock Exchange on July 4.

The move made TerrAscend the first American cannabis multistate operator to trade on the TSX, allowing access to more institutional capital and deeper-pocketed investors. Investment bank Morgan Stanley removed all restrictions from the stock following the listing, among others.

"After the listing before the Schedule III news came out, our volume was up about 140% or so," Wild told Jesse Redmond, the panel moderator and head of cannabis at Water Tower Research. "We have been very pleased with what we've seen in a couple of months or so."

The company underwent an internal reorganization to reach that milestone, starting last year.

See Also: Why 280e Change Spells Good News For Cannabis Cash Flow: Jason Wild Weighs In

Wild said they saw in the early summer of 2022 that prospects of the cannabis market were not bright and that TerrAscend was not sustainable at the time.

He and his team recognized high-interest loans and tax exposure as the main factors affecting the cash flow.

"We felt like we could not afford to keep paying those quarterly interest payments if we want it to be sustainable and cashflow positive," Wild explained.

To mitigate potential losses, the first step of the restructuring process was taking out a significant amount of expenses from the business.

In November, TerrAscend paid out roughly $30 million of its Michigan debt, followed by Canopy Growth Corp. CGC, the company's second-largest shareholder, agreeing to advertise their $90 million loan to TerrAssced. The two transactions improved the company's balance sheet and reduced annual interest expense by roughly $10 million.

Rec Opportunities In Maryland

The moves it opted for a year ago allowed TerrAscend to expand its national footprint.

In Maryland, the company closed the acquisition of Herbiculture Inc., a medical dispensary, in the days following the start of adult-use sales in Maryland on July 1. It was the company's fourth dispensary in the Old Line State. With the move, TerrAscend reached the four-dispensary cap.

"We believe that our four stores may be sort of the highest selling for stores in the state," Wild said, adding that Maryland did a "great job in terms of rolling out the program quickly," learning from the "fiasco that's happened in New York."

East Coast Expansion

In New Jersey, Governor Phil Murphy recently enacted a measure that allows TerrAscend to acquire up to 35% of another seven dispensaries in the state. Currently, the company has about 17% market share.

"New Jersey is right at the top of the list in terms of priority for us," Wild said.

He expects the recreational market launch to happen within the next 12 to 24 months in Pennsylvania, where the company plans to build a cultivation facility that produces roughly $200 million in wholesale revenue.

"Our facility in Pennsylvania is actually similar in size to all of our other facilities combined," Wild said.

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Photo: Carlos Alvarez