EXCLUSIVE: How One Cannabis Company Says It's Blazing The Trail In 'A Major Storm'

Even though capital markets in the cannabis industry are mostly dried up, there’s a way to still stay afloat, said Jason Wild, executive chairman of multistate state operator TerrAscend TRSSF, and president and CIO of JW Asset Management.

Wild recently shared a thesis about how the environment in the cannabis space is so bad, it’s good.

If a company has its business in a sustainable place and is cash flow positive even after accounting for taxes, then it is in “a pretty good spot compared to this industry that is truly in a major storm,” Wild said, breaking down his thesis Tuesday at Benzinga Cannabis Capital Conference in Miami Beach, Florida.

With a lot of debt in the industry, assets are shown with zero equity, said Wild, adding this presents the opportunity to discuss the deal with the lenders, who can potentially inspire them to take one of these assets.

”And, this is just the beginning,” Wild told Tim Seymour, portfolio manager of the Amplify Seymour Cannabis ETF CNBS, founder and CIO of Seymour Asset Management and trader on CNBC’s “Fast Money.”

Tale Of Two Halves: To deal with 2022 challenges, TerrAscend made sure its business is sustainable, Wild said.

Despite the management expecting the SAFE Banking Act to happen, they didn’t count on it, having being “fooled a few times” before, he told the Benzinga conference. 

“I think we cut our operating expenses by about $12 million annually,” said Wild.

TerrAscend's management realized that high-interest rates (related to debt) and punitive tax rates can’t coexist together if the company wants to be cash flow positive, so they worked on lowering the debt, he said. 

“Thankfully, we have an amazing partner at Canopy Growth CGC. And they looked at ourselves as a company that they own equity in, even though we also owned them about $90 million in debt.”

In December, Canopy agreed to equitize its debt at around CA$5.10 ($3.78) per share, and that put TerrAscend a better position, Wild said. 

In the second half of 2022, TerrAscend was cash flow positive from operations, even after accounting for taxes, he said. 

“To me, that’s a great place to be,” the cannabis exec said. “We feel like we are going to be one of the companies that make it out the other side. And there are a lot of companies that won't.”

Wild On Blazing The Trail: TerrAscend recently announced it has applied to list the company's shares on the Toronto Stock Exchange (TSX).

“This is not a magic bullet for us or for any company,” Wild said. “You have to have the fundamentals.”

TerrAscend needs to continue to execute to make a good investment. Yet being on an exchange with more participants will allow it to get noticed for its performance, he said.

Listing on TSX opens opportunities like Canadian institutional investors, stock exchange indexes, and a larger base of European institutional investors as well, Wild said. 

“I think that if we can blaze the trail here and show the rest of the industry that this is a viable path, we're looking forward to having others follow in our footsteps,” Wild concluded. 

Photo: image and logo on LinkedIn.