TerrAscend is a top vertically-integrated cannabis company operating in the US and Canada. The firm is best known for its strong senior-leadership team headed by Executive Chairman Jason Wild along with President & COO Ziad Ghanem. This, coupled with their deep footprint in fast-growing states makes TerrAscend one of the most compelling cannabis companies. For a detailed overview of the business, please read my article from July.
They reported strong third-quarter results, led by New Jersey. The slide below shows the growth is coming from retail, while wholesale has been more challenging, especially in Pennsylvania where existing operators are getting more vertically integrated. Vertical integration is a way to improve margins and take greater control of the supply chain.
TerrAscend focuses on large states with adult-use cannabis or medical markets that are soon transitioning to recreational sales. In the third quarter, Michigan was challenging due to declining prices and stiff competition. TerrAscend took a $331mm non-cash impairment to goodwill and intangibles on this business. New Jersey was the shining star. TerrAscend has the three-store maximum, Kind Tree is the best-selling flower and they are number one in concentrates with a 50% market share.
While TerrAscend ended the quarter with a tight cash position, they added $45.5 million in debt financing on October 12th. Jason also hinted that we may see more financing activity in the coming weeks. As CAPEX slows and more stores open, the cash burn should diminish, however, this is a highly levered business and I will continue to monitor changes in their balance sheet.
I spoke with Jason and Ziad about the improving political picture, third-quarter earnings, and their recent debt deal. We closed by covering risks and opportunities in 2023. To listen to the full conversation, please click on the tweet below. Spaces only play on mobile devices. For more details on the quarter, here is a link to TerrAscend's Q3 earnings presentation.
Disclosure: as of 11/17/22 I am long TerrAscend stock.
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