TerrAscend Corp【TER】株式ニュース

TRSSF was mentioned in this FORBES article from 2023 04 18...

Cannabis Stocks For 2023: What You Need To Know
Thomas Carroll
Contributor
Investor Hub
Contributor Group
Follow
Apr 18, 2023,06:04pm EDT

Cannabis Industry Profits With Marijuana Leaves With Hundreds High Quality
Cannabis is big business.GETTY
Ever wonder why the term “420” is associated with cannabis use? There are many rumors about how it came into being. However, the most credible story seems to be the Waldos in the early 1970s.

The Waldos were a group of five high school friends attending San Rafael High School in Marin County, California. At approximately 4:20 p.m. the group would gather around a school statue of Louis Pasteur–a chemist of all people–and light up their marijuana joints. They would sit on a wall adjacent to the statue and enjoy their time together, hence the “Waldos.” 420 became their code as the guys went about their school day. A rallying cry if you will.

However, 420 gained real traction when one of the Waldos got work as a roadie for the legendary band The Grateful Dead. How serendipitous that one of these young men would work for this particular band, whose lead guitarist, Jerry Garcia, was an infamous pot smoker.

Fifteen years later in Oakland, California a group of Deadheads (fans of the band) put flyers on car windshields, in door jams and other public places that invited people to light up on April 20, 1990 at 4:20 in the afternoon. One of these flyers ended up with Steve Bloom, a former reporter for the cannabis focused magazine High Times. The magazine printed the flyer the following spring solidifying 420 in cannabis culture forever.

This culture continues but things have changed a lot since those days. The emerging legal cannabis market is one of the bigger economic forces in a generation. It offers potential operators and investors a huge opportunity.

In 1996, California was the first state to legalize a medical cannabis program. Alaska, Oregon and Washington state soon followed. In 2012, Colorado and Washington were the first to make cannabis fully legal at the state level. In 2018, Canada fully legalized cannabis sales.

Investing Digest: Know what's moving the financial markets and what smart money is buying with Forbes Investing Digest.

Email address
Sign Up
You may opt out any time. By signing up for this newsletter, you agree to the Terms and Conditions and Privacy Policy
There are now 40 states with some type of legal cannabis program, Of those, 21, along with Washington D.C., are fully legal for adult-use while 18 remain medical-use only. Only ten states and the Federal government continue to stick their collective heads in the sand and maintain cannabis as an illegal substance.

I became very interested in medical cannabis over a decade ago. Not as a consumer, but as an investor. My entire career has been in healthcare finance, including almost two decades as an equity analyst with a large investment bank. I was amazed at the anecdotal health and wellness evidence that was creeping out of the woodwork with regards to cannabis. Beyond that, adult-use programs seemed to have real traction with a number of states following Colorado and Washington’s lead.

I begged my bosses to let me jump into this massive new market. After all, cannabis is likely the biggest new market of the past century. But the answer was a resounding no. I was forbidden to research this estimated $50-$100 billion market before legalization as my firm was a federally regulated financial institution. Said differently, all this current spending was going to shift from an illegal cash business to a legal, regulated market.

As more states legalized, comparisons to the end of Prohibition were made. But that does a disservice to cannabis. The plant offers so much more than mere recreation. For example, health and wellness. This is what drew me to the market in the first place. In June 2018, Epidiolex, the first approved drug derived from the cannabis plant, was approved by the FDA.

There is also another cannabis plant: hemp. It has many industrial uses as well as the primary source of cannabidiol or CBD. It is a compound thought to convey benefits without the “high” associated with marijuana. The market potential is enormous. Important to note, hemp was legalized at the federal level via the Farm Bill of 2018.

Today we have several publicly traded U.S. cannabis companies with professional C-suites, strong balance sheets, $100s of millions in revenue and growing brand recognition. In 2021, some companies achieved $1 billion in total sales.

This has become a sector that anyone can invest in, but caution is warranted. Here are three things to know before you commit capital.

Know The History
In my view, there have been five distinct eras of cannabis investment and growth. All with their own ups and downs. This is how I see legal cannabis evolving over the past 25-plus years.

Grassroots Business Development, 1996-2010. It all started in 1996 when California created the first medical cannabis program in the country. Early investors and entrepreneurs took big risks both financially and legally to get started.

From “Toe-Hold” To “Foot-Hold.” 2010-2018. As legal cannabis programs expanded across the U.S., professional investors and sophisticated entrepreneurs took note of the massive opportunity emerging. Some investment bankers quit their high paying jobs to form startups or to “wrap-up” growing private businesses. Cannabis-focused private equity companies were formed. Altria and Constellation Brands invested billions in the early Canadian cannabis market.

A New, Investable Market Takes Shape, 2018-2020. With the legalization of cannabis nationally in Canada, U.S. cannabis companies went public through reverse take-overs of already publicly traded Canadian companies. This gave them a new currency to fund future growth even if it was only on the small Canadian Stock Exchange or CSE. Individual investors and some hedge funds went from mere dabbling to outright trading in cannabis stocks.

The Full Monty, 2020-2022. In November 2020, Joseph Biden and Kamala Harris took the White House. And just days into the New Year 2021, the Georgia Senate runoff election pushed the Senate blue giving democrats 51 potential votes. These elections gave the U.S. a best-case policy outcome for cannabis and powered the sector to all-time highs. But it didn’t happen. Despite cannabis being legal in most U.S. states, the issue turned political.

Cannabis Capitulation (throwing in the towel), 2022. It was widely expected that the first federal legislation on cannabis would happen during the 2022 Lame Duck Congress. Both sides of the aisle were ready to allow legal cannabis businesses access to the federal banking system through the SAFE Banking Act (Secure and Fair Enforcement Banking Act). However, at the last minute, lawmakers could not find political common ground and the legislation failed again. The publicly traded stocks tanked.

Is a new era beginning in 2023? I think so but it has yet to define itself. Uncertainties have re-emerged.

The cannabis market is suffering similar stresses as other retail businesses with inflation, rising interest rates and other macro pressures hurting all retail. Moreover, efforts to loosen federal illegality have clouded over again. The same cannabis champions in Congress remain but they need to reorganize.

The stocks have cooled (frozen?) and sit at some of their lowest levels. That said, cannabis is not going away and there are many good companies to choose from. Interest will return. I’m sure of it.

This leads me to my second point: cannabis stocks are extremely volatile.

cannabis_carroll
North American Marijuana IndexFACTSET, COMPANY REPORTS, THOMAS CARROLL RESEARCH AND ESTIMATES.
The chart above illustrates five years of the North American Marijuana Index. This is an index made up of many cannabis stocks that operate across North America.

Why Is There So Much Volatility? Three Important Reasons To Understand.
• Massive policy conflict: There remains vastly different viewpoints about cannabis and how to establish guidelines. The biggest conflict is federal illegality while 80% of states have legal cannabis. How about the FDA (a federal agency) approving a medication directly-based cannabis? Or U.S. exchanges allowing Canadian cannabis companies to list their shares but not U.S. companies.

• Limited stock market: The strong U.S. cannabis companies cannot be listed on U.S. exchanges. Again, this is because of federal illegality. They must list their shares on smaller CSE and trade “over-the-counter” in the U.S. This substantially removes the breadth and depth of broad investor participation.

• Little to no institutional investment: A couple years ago, Bank of America estimated that only 4% of U.S. cannabis stocks were owned by institutional investors–the so called “smart money.” These folks take big positions and hold them. They trade around dollars, not dimes. Lack of institutional interest stems directly from the limited U.S. listings and federal illegality. Given recent setbacks, this small percentage is likely even smaller today. Essentially all cannabis stocks are “traded” (not invested) by small, unsophisticated investors.

Is Cannabis A Good Investment Now?
Well, all this negative stuff above still exists. In fact, the regulatory environment is cloudier today than it was just a couple years ago.

That said, new catalysts are appearing again. Here are a few of them:

• A new “Cole Memo” in the works?: Some believe that Merrick Garland will put in place an official memo indicating the federal government will limit enforcement of federal cannabis laws on the books. Former U.S. Attorney General James Cole put this in place in 2013.

• The SAFE Banking Act is back in play: Some believe this important bill may become law this year loosening many of the financial restrictions currently placed on cannabis. Janet Yellen even commented on this at a Senate Finance Committee meeting just last month on March 16.

• Kentucky legalizes medical cannabis program: In March, the Kentucky Governor signed the bill into law. This is important as Congress’ biggest cannabis opponent is Mitch McConnell–Senator from Kentucky. He will have to soften his position for state constituents.

• The Toronto Stock Exchange (TSX) is considering listing of U.S. cannabis stocks. The company TerrAscend (TRSSF) is apparently making headway and may be the first to be listed on the TSX. In my view, this would open the floodgates to a more liquid market and could convince the Nasdaq to do the same.

As these and others gain traction, cannabis stocks should again appear on investor radar screens.

Despite continued challenges and potential positive catalysts one thing remains the same–cannabis is not going away. The legal market continues to grow, and many good companies are established and fully operational.

Take Green Thumb (GTBIF) for instance. In 2018 the company generated $62 million in sales. This year it is expected to exceed $1 billion. The balance sheet will have essentially no debt by the end of the year ($37 million in net debt–cash minus debt). What’s more impressive? This company generated $159 million in cash flow from operations in 2022. Remember, accounting can tell many stories but cash doesn’t lie.

Even more impressive, Green Thumb and all other U.S. cannabis companies perform like this with one “financial hand” tied behind their back.

You see, under Section 280E of the internal revenue code, the IRS prohibits cannabis companies from taking normal business deductions like any other business. This makes cannabis company tax rates enormous. When this gets fixed–and it will–these companies will become even more profitable overnight.

Again, all the good and bad news remains out there for all to see. And it feels like investors have been worn out by the volatility of the prior years.

Times during investor capitulation when fear and uncertainty are maxed out prove to be great investment opportunities. Despite the fact that cannabis investing is completely out of favor, legal cannabis is here to stay.

What’s The Best Way To Get Involved As An Investor?
How about an exchange-traded fund? ETFs are like mutual funds in that they own a lot of stocks and are diversified, but you can easily trade them like stocks.

I like the AdvisorShares Pure US Cannabis ETF (MSOS). This is managed by cannabis investor Dan Ahrens and it focuses on the U.S. cannabis stocks (like Green Thumb) that are doing well.

Currently, MSOS is priced under $6, close to its all-time lows since trading began in fall of 2020. It is down more than 50% from late November 2022 when Congress failed to deliver in the Lame Duck. But it traded as high as $55 a share in early 2021.

And, this ETF has done something amazing. Despite its large price decline, investors keep putting money in it. When an ETF is declining, investors usually run for the hills. Not with MSOS. Inflows continue to exceed outflows.

While $55 a share may be a long way away, I’d expect prices to rise again as catalysts like those above begin to emerge and Congress starts talking about legalization again.

If you’d like to dabble in some specific stocks, here are a few options I think are interesting.

We’ve already talked about Green Thumb. Consider it a blue-chip cannabis stock.

The next is MariMed (MRMD). CNBC’s Tim Seymour called this company the best cannabis stock you’ve never heard of, and I agree. In 2023, the company is expected to generate more than $150 million in sales and $36 million in Ebitda. That’s an Ebitda margin of 23%. As a comparison, the entire S&P 500 is expected to generate a 20% margin this year.

The last is a small cannabis fintech company called POSaBIT Systems (POSAF). This company has developed a compliant electronic payment system for cannabis stores. It also sells its own point-of-sale devices like “cash registers” and handheld checkout devices. This allows customers to use a debit card to buy their cannabis products. Remember, cannabis is still mostly a cash business, which creates its own set of challenges.

The market really likes the company’s products. In 2020, POSaBIT had sales of less than $8 million for the whole year. This year, they are forecasting over $60 million.

I hope this article has piqued your interest. If you are ready, right now looks like a great time to learn about cannabis investing and perhaps even making some trades.

The coming years will bring many more opportunities and challenges for this “new” and controversial market. Investing now with a longer time horizon offers some of the lowest valuations seen since cannabis companies went public despite continued sales, earnings and cash flow growth.

Once larger exchanges like the Nasdaq, NYSE and even the Toronto Stock Exchange allow cannabis stock listings, there will be a flood of new investor demand. As demand rises, so will prices.

Thomas Carroll

https://www.forbes.com/sites/investor-hub/article/cannabis-stocks-what-you-need-to-know/?sh=163192a8355a

TerrAscend Announces Closing of US$45.5 Million Non-Brokered Debt Financing
BY Canada NewsWire
— 8:00 AM ET 10/12/2022
Non-dilutive financing to strengthen balance sheet and fund growth initiatives
TORONTO, Oct. 12, 2022 /CNW/ - TerrAscend Corp. (TRSSF) ("TerrAscend" or the "Company") (CSE: TER) , a North American cannabis operator, today announced that its New Jersey and Maryland subsidiaries, TerrAscend NJ, LLC, HMS Hagerstown, LLC, HMS Processing, LLC, and HMS Health, LLC, have closed on a non-brokered senior secured term loan (the "Loan") for gross proceeds of approximately US$45.5 million from funds managed by Pelorus Equity Group ("Pelorus"), a leading provider of commercial real estate loans for the cannabis sector. The Loan currently bears interest of 12.77% per annum and is based on a variable rate tied to the one month secured overnight financing rate (SOFR), with interest-only payments for the first 36 months. The maturity is 5 years from closing. There are no warrants being issued as part of the transaction. The Loan proceeds from this transaction will be used to fund the Company's growth initiatives.
"We are pleased to announce this non-dilutive financing at attractive terms given the current market environment," said Jason Wild, Executive Chairman of TerrAscend (TRSSF). "The Pelorus team has been a pleasure to work with, delivering exactly what they promised. We look forward to a long successful partnership as we continue to grow."
"With this agreement, we are excited to help fuel TerrAscend's (TRSSF) growth and long-term business goals," said Dan Leimel, CEO of Pelorus Equity Group and manager of the Pelorus Fund. "Our investment and lending philosophy is focused on being honest, upfront and doing what we say we're going to do for both our borrowers and our investors. As the demand for capital continues to increase in tandem with the growth of the cannabis industry, we plan to deliver even more innovative, flexible lending solutions and stabilized loans like this one to meet the needs of a wide range of clients, including MSOs, SSOs and ancillary businesses."
"We really enjoyed working with the Terrascend (TRSSF) team on our first deal together – they were great throughout the entire process," said Pelorus Equity Group Managing Partner Travis Goad. "As the largest privately held commercial real estate lender in cannabis, we are seeing an increase in deals coming through our pipeline, and are strategically closing on them – even during this time of market volatility. With the longest history in the space of deploying capital successfully and seeing it returned, we spend a lot of time underwriting the company we're working with, the real estate and the projections prior to making any loans. As more states come online and transition from medical to adult use, we remain excited about new opportunities in expanding markets like Maryland and New Jersey, and we are also closely following emerging markets like Alabama and Mississippi and will continue to look for strong sponsors, great projects and attractive markets."
The Canadian Securities Exchange ("CSE") has neither approved nor disapproved the contents of this news release. Neither the CSE nor its Market Regulator (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.
About TerrAscend (TRSSF)
TerrAscend (TRSSF) is a leading North American cannabis operator with vertically integrated operations in Pennsylvania, New Jersey, Michigan and California, licensed cultivation and processing operations in Maryland and licensed production in Canada. TerrAscend (TRSSF) operates The Apothecarium and Gage dispensary retail locations as well as scaled cultivation, processing, and manufacturing facilities in its core markets. TerrAscend's (TRSSF) cultivation and manufacturing practices yield consistent, high-quality cannabis, providing industry-leading product selection to both the medical and legal adult-use markets. The Company owns several synergistic businesses and brands, including Gage Cannabis, The Apothecarium, Ilera Healthcare, Kind Tree, Prism, State Flower, Valhalla Confections, and Arise Bioscience Inc. For more information, visit www.terrascend.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This news release contains "forward-looking information" within the meaning of applicable securities laws. Forward-looking information contained in this press release may be identified by the use of words such as, "may", "would", "could", "will", "likely", "expect", "anticipate", "believe, "intend", "plan", "forecast", "project", "estimate", "outlook" and other similar expressions. Forward-looking information is not a guarantee of future performance and is based upon a number of estimates and assumptions of management in light of management's experience and perception of trends, current conditions and expected developments, as well as other factors relevant in the circumstances, including assumptions in respect of current and future market conditions, the current and future regulatory environment, and the availability of licenses, approvals and permits.
Forward-looking statements in this news release include, but are not limited to: statements with respect to TerrAscend's (TRSSF) use of proceeds and its anticipated growth within key limited license states. Actual results and developments may differ materially from those contemplated by these statements. Such forward-looking statements are based on certain assumptions regarding expected growth, results of operations, performance, industry trends and growth opportunities. While TerrAscend (TRSSF) considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. Readers are cautioned not to place undue reliance on forward-looking statements.
Forward-looking information is subject to a variety of risks and uncertainties that could cause actual events or results to differ materially from those projected in the forward-looking information. Such risks and uncertainties include, but are not limited to, current and future market conditions; risks related to federal, state, provincial, territorial, local and foreign government laws, rules and regulations, including federal and state laws in the United States relating to cannabis operations in the United States; and the risk factors set out in TerrAscend's (TRSSF) management information circular dated October 4, 2021, and TerrAscend's (TRSSF) most recently filed MD&A, both filed with the Canadian securities regulators and available under TerrAscend's (TRSSF) profile on SEDAR at www.sedar.com.
The statements in this press release are made as of the date of this release. TerrAscend (TRSSF) disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.
Caution Regarding Cannabis Operations in the United States
Investors should note that there are significant legal restrictions and regulations that govern the cannabis industry in the United States. Cannabis remains a Schedule I drug under the US Controlled Substances Act, making it illegal under federal law in the United States to, among other things, cultivate, distribute or possess cannabis in the United States. Financial transactions involving proceeds generated by, or intended to promote, cannabis-related business activities in the United States may form the basis for prosecution under applicable US federal money laundering legislation.
While the approach to enforcement of such laws by the federal government in the United States has trended toward non-enforcement against individuals and businesses that comply with medical or adult-use cannabis programs in states where such programs are legal, strict compliance with state laws with respect to cannabis will neither absolve TerrAscend (TRSSF) of liability under U.S. federal law, nor will it provide a defense to any federal proceeding which may be brought against TerrAscend (TRSSF). The enforcement of federal laws in the United States is a significant risk to the business of TerrAscend (TRSSF) and any proceedings brought against TerrAscend (TRSSF) thereunder may adversely affect TerrAscend's (TRSSF) operations and financial performance.
SOURCE TerrAscend (TRSSF)