HomeMarket NewsSmall CapsWhy TerrAscend's Success Isn't Dependent on Federal Cannabis Reform

Why TerrAscend’s Success Isn’t Dependent on Federal Cannabis Reform

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Introduction

While many marijuana businesses are eagerly awaiting federal cannabis reform, one company stands apart in its independence from policy changes on Capitol Hill. TerrAscend Corp. (TRSSF), a leading American cannabis multistate operator, has successfully raised funds and achieved a significant milestone that allows it to thrive without relying on federal reform.

The Path to Independence

TerrAscendโ€™s chairman, Jason Wild, revealed at the recent Benzinga Cannabis Capital Conference in Chicago that the company had raised $21 million through equity and senior unsecured convertible debentures. This funding, along with the companyโ€™s listing on the Toronto Stock Exchange, has given TerrAscend access to institutional capital and deeper-pocketed investors, reducing its reliance on federal reform or tax relief.

Benefits of the Toronto Stock Exchange Listing

The listing on the Toronto Stock Exchange has had a positive impact on TerrAscendโ€™s trading volume, which increased by 140% after the listing. This increased liquidity and investor confidence after an investment bank like Morgan Stanley removed restrictions on the stock. TerrAscendโ€™s success in becoming the first American cannabis multistate operator to trade on the TSX has opened doors to new opportunities.

Internal Restructuring

To achieve this milestone, TerrAscend underwent an internal reorganization process, starting in 2022. The company recognized high-interest loans and tax exposure as key factors affecting its cash flow. To address these issues, TerrAscend significantly reduced expenses and paid off a substantial portion of its debt, resulting in an improved balance sheet and reduced annual interest expenses.

Expanding National Footprint

TerrAscendโ€™s strategic moves over the past year have allowed it to expand its presence across multiple states, particularly on the East Coast. In Maryland, the company closed the acquisition of Herbiculture Inc., a medical dispensary, shortly after the start of adult-use sales in the state. With this acquisition, TerrAscend reached the four-dispensary cap, positioning itself for success in one of the fastest-growing markets.

Favorable Market Conditions in Maryland

TerrAscendโ€™s chairman noted that Marylandโ€™s efficient rollout of its cannabis program has been instrumental in the success of their dispensaries. The company believes that its four stores may be among the highest-selling dispensaries in the state. This success has been attributed to the stateโ€™s careful planning and the lessons learned from other markets, such as New York, where the implementation process faced significant challenges.

New Jersey and Pennsylvania Expansion

Another significant opportunity for TerrAscend lies in New Jersey, where Governor Phil Murphy recently enacted a measure allowing the company to acquire up to 35% of seven additional dispensaries. With a current market share of around 17%, TerrAscend sees New Jersey as a top priority for expansion. The company also has plans to enter the recreational market in Pennsylvania within the next two years and is building a cultivation facility that is projected to generate approximately $200 million in wholesale revenue.

Conclusion

TerrAscendโ€™s success and ability to thrive without relying on federal cannabis reform make it a standout player in the industry. Through strategic fundraising, listing on the Toronto Stock Exchange, and smart operational decisions, the company has positioned itself for continued growth and success in multiple states. Investors and market watchers should take note of TerrAscendโ€™s strong performance and its potential for future expansion in lucrative markets such as New Jersey and Pennsylvania.

Want to learn more?

If youโ€™re interested in learning more about TerrAscend and the cannabis industry, consider attending our Cannabis Capital Conference. For existing subscribers, you can get direct access through our research platform. New users can instantly access our conference coverage by signing up here!

Photo: Carlos Alvarez

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