TerrAscend Reports Second Quarter Net Sales of $58.7 Million, Adjusted EBITDA1 of $24.3 Million and Adjusted EBITDA1 Margin of 41%

 
 

  Signs agreements to be the sole cultivator and manufacturer of COOKIES branded products in New Jersey and bring COOKIES corners to TerrAscend's three dispensaries in New Jersey   

 

  Unveils location of third New Jersey dispensary in highly trafficked Lodi , which is scheduled to open during the fourth quarter of 2021  

 

  Reports cash balance of $154 million providing strong support for future growth initiatives  

 

  Withdraws 2021 guidance due to temporary yield declines in Pennsylvania related to on-going construction and expansion and a decision to allocate more of the Company's branded products to its own stores in New Jersey   

 

  NEW YORK and TORONTO , Aug. 19, 2021 /CNW/ - TerrAscend Corp. ("TerrAscend" or the "Company") (CSE: TER) (OTCQX: TRSSF), a leading North American cannabis operator, today reported its financial results for the second quarter period ending June 30, 2021 . All amounts are expressed in U.S. dollars unless indicated otherwise and are prepared under International Financial Reporting Standards ("IFRS").

 

 

  TerrAscend Logo w Tickers (CNW Group/TerrAscend) 

 
 

TerrAscend has also announced the signing of an agreement with COOKIES, one of the country's most recognized and highest-grossing lifestyle brands, to bring its products to New Jersey .

 

  Second Quarter 2021 Financial Highlights
( Unless otherwise stated, all results are in U.S. dollars)    2  

 
  •   Net Sales increased 72% year over year to $58.7 million and 10% sequentially.
  •  
  •   Adjusted Gross Profit   Margin   3 of 61% compared to 56% in Q2 2020 and 65% in Q1 2021.
  •  
  •   Adjusted EBITDA of $24.3 million compared to $8.4 million in Q2 2020 and $22.6 million in Q1 2021.
  •  
  •   Adjusted EBITDA   Margin   1 of 41% compared to 25% in Q2 2020 and 42% in Q1 2021.
  •  
  •   Cash Flow from Operations was positive for the third consecutive quarter.
  •  
  •   Cash balance of $154 million at quarter end to support future growth initiatives.
  •  

"We are excited to announce our agreement with COOKIES to be the sole cultivator and manufacturer in New Jersey for one of the country's most recognized cannabis brands and the planned opening of 'COOKIES Corners', a store-in-store concept, within each of our three retail locations, subject to certain conditions and regulatory approval. New Jersey is an important market for us and this agreement with COOKIES will enable us to further solidify our leading position as the state is expected to implement adult-use by the end of this year," stated Jason Wild , Executive Chairman of TerrAscend.

 

Commenting on the Company's financial results and outlook for 2021, Mr. Wild said, "During the second quarter, we continued to deliver year-over-year and sequential revenue growth while maintaining industry-leading Adjusted EBITDA margins above 40%. Due to expansion related yield reduction in Pennsylvania , which I believe to be temporary, and a decision to prioritize allocation of our branded products to our own New Jersey dispensaries, I felt it was appropriate to withdraw guidance for 2021.  Looking ahead, 2022 will be a breakout year as we benefit from investment in cultivation capacity expansions and best-in-class retail experiences. I expect Pennsylvania to show substantial growth benefitting from the current expansion, while in New Jersey we will have our Maplewood , Phillipsburg , and Lodi stores opened along with our 140,000 square foot cultivation and processing facility, which is fully operational and prepared to supply an adult use New Jersey market."

 

  Second Quarter 2021 Operational Highlights  

 

  Subsequent Events  

 
  • Signed agreement to supply COOKIES licensed product and bring COOKIES Corners to all three Apothecarium dispensaries in New Jersey .
  •  
  • Decided to undertake a strategic review process to explore, review, and evaluate potential alternatives for its Arise CBD business, focused on maximizing shareholder value.
  •  
  • Signed definitive agreement to purchase an additional 12.5% of the issued and outstanding equity of TerrAscend NJ from BWH NJ, LLC and Blue Marble Ventures, LLC for total consideration of $50 million , bringing total ownership to 87.5%. The Company has the option to purchase an additional 6.25% at a pre-determined valuation during the period commencing April 1, 2023 , through June 15, 2023 .
  •  
  • Promoted Ryan McWilliams to EVP of the Northeast Region, succeeding Greg Rochlin , who left the Company to pursue other interests, subsequent to the final Ilera earnout payment.
  •  
  •   Jason Marks , the Company's Chief Legal Officer and Head of Corporate Development, decided to leave the Company to return to the life sciences sector.
  •  

  Financial Summary of Q2 2021 and Comparative Periods  

 
 
                                                                                    
 

   (In millions of U.S. Dollars)   

 
 

  Q2 2020  

 
 

  Q1 2021  

 
 

   Q2 2021   

 
 
 

  YTD 20  

 
 

   YTD 21   

 
 

  Net Sales  

 
 

  34.2  

 
 

  53.4  

 
 

   58.7   

 
 
 

  60.1  

 
 

   112.1   

 
 

   QoQ increase   

 
 

   32%   

 
 

   8%   

 
 

    10%    

 
 
 
 
 

   YoY increase   

 
 

   159%   

 
 

   106%   

 
 

    72%    

 
 
 

   149%   

 
 

    86%    

 
 

  Gross profit before gain on fair value of biological assets  

 
 

  19.2  

 
 

  34.9  

 
 

   34.7   

 
 
 

  30.8  

 
 

   69.6   

 
 

  Adjusted Gross profit 1,2  

 
 

  19.2  

 
 

  34.9  

 
 

   35.7   

 
 
 

  37.2  

 
 

   70.6   

 
 

   % of Net Sales   

 
 

   56%   

 
 

   65%   

 
 

   61%   

 
 
 

   62%   

 
 

    63%    

 
 

  General & Administrative Expense  

 
 

  11.3  

 
 

  15.8  

 
 

   14.8   

 
 
 

  22.2  

 
 

   30.6   

 
 

   % of Net Sales   

 
 

   33%   

 
 

   30%   

 
 

    25%    

 
 
 

   37%   

 
 

    27%    

 
 

  Adjusted EBITDA 1  

 
 

  8.4  

 
 

  22.6  

 
 

   24.3   

 
 
 

  12.1  

 
 

   46.9   

 
 

   Adjusted EBITDA % of Net Sales   

 
 

   25%   

 
 

   42%   

 
 

    41%    

 
 
 

   20%   

 
 

    42%    

 
 

  Cash Flow from Operations  

 
 

  7.2  

 
 

  13.3  

 
 

   3.4   

 
 
 

  6.4  

 
 

   16.7   

 
 
 

 

 
 
 
 

  1.  Adjusted EBITDA and the respective margin and Adjusted Gross Profit and the respective margin are non-IFRS measures. Please see discussion and reconciliation of non-IFRS measures below.  

 
 
 

Net Sales increased 72% to $58.7 million in the second quarter of 2021, as compared to $34.2 million in the second quarter of 2020. This year over year growth was driven by acquisitions, cultivation capacity expansions in Pennsylvania , New Jersey , and California as well as an increase in the number of dispensaries. Net Sales increased 10% quarter-over-quarter primarily driven by the contribution from acquisitions, the ramp up in New Jersey , growth in Canada , and recovery in California retail, partially offset by lower sales driven by yield declines in Pennsylvania related to ongoing construction and expansion efforts.

 

Adjusted gross margin, before gain on fair value of biological assets, was 61% in the second quarter of 2021 compared to 56% in the second quarter of 2020 and 65% in the first quarter of 2021. The 500-basis point improvement year-over-year in adjusted gross margin was due to greater mix of higher margin sales from Pennsylvania and the initial ramp of retail and wholesale operations in New Jersey . The 400 basis points decline sequentially is due to yield declines in Pennsylvania and higher mix of retail relative to branded manufacturing driven by the acquisition of KCR.

 

SG&A expense, excluding stock-based compensation, was $14.8 million compared to $11.3 million in the second quarter 2020. The year over year increase was primarily due to increased salaries and professional fees as well as a one-time legal settlement of $0.7 million . SG&A as a percent of net sales was 25% in the second quarter of 2021 compared to 33% in the second quarter of 2020 and 30% in the first quarter of 2021. The Company continues to invest in building infrastructure to support growth while continuing to realize improved operating leverage.

 

Adjusted EBITDA was $24.3 million in the second quarter of 2021 compared to $8.4 million in the second quarter of 2020 and $22.6 million in first quarter 2021. The increase in Adjusted EBITDA was primarily due to operational scale up in its core Northeast Region. The Company continued to expand in the US organically through an increase in production and branded manufacturing capacity in Pennsylvania and New Jersey and store expansions in Pennsylvania , New Jersey , and California . The KCR and HMS acquisitions during Q2 also partially contributed to the growth. Adjusted EBITDA margin in the second quarter of 2021 was 41% compared to 25% in the second quarter of 2020 and 42% in the first quarter of 2021.

 

Net loss for the second quarter of 2021 was $23 million , largely impacted by a non-cash loss on fair value of warrants of $20 million , a non-cash impairment of intangibles of its Arise Bioscience CBD division of $8.6 million , and an unrealized foreign exchange loss of $3 million primarily related to USD cash balances held in Canada .

 

  Balance Sheet and Cash Flow  

 

Cash and cash equivalents were $154 million as of June 30, 2021 , compared to $234 million as of March 31, 2021 , which is sufficient to fund planned growth initiatives.

 

During the quarter, the Company paid $20 million related to the acquisition of KCR in Pennsylvania , $22 million related to the acquisition of HMS in Maryland , and $30 million related to the final earnout payment for Ilera Healthcare in Pennsylvania . Cash from operations was $3.4 million for the quarter while free cash flow, after $2.5 million of capex spending, was slightly positive for the quarter. This is the third consecutive quarter in which the Company generated positive free cash flow.

 

As of August 18, 2021, there were 314 million shares outstanding on a fully diluted basis. Fully diluted shares outstanding include approximately 184 million common shares, 14 million common share equivalent preferred shares, 39 million exchangeable non-voting shares, and 76 million warrants and options. Basic shares outstanding on an as converted basis are approximately 238 million. The warrants and options had a weighted average strike price of C$5.09 on June 30, 2021.

 

  2021 Outlook  

 

The Company is withdrawing 2021 financial guidance primarily due to:

 
  1. Temporary reduction in yields of quality flower caused by ongoing construction and expansion in Pennsylvania.
  2.  
  3. Decision to increase allocation of the Company's branded products to its own Apothecarium dispensaries in New Jersey.  While more profitable in the long run, retail sales take longer to sell through when compared to wholesale sales.  When evaluating the potential of the Company's dispensaries in an adult use environment, management believes prioritizing the company's retail channel in a supply constrained market is the best path for building shareholder value.
  4.  

For the second half of 2021, although the Company has withdrawn its guidance, management expects to continue to deliver strong year-over-year growth in revenue and adjusted EBITDA.

 

  Additional Info  

 

The Company remains on track to become a U.S. filer under U.S. Generally Accepted Accounting Principles (US GAAP) with the United States Securities and Exchange Commission (SEC) by the end of 2021 and is preparing to meet the requirements necessary for its securities to be traded on a national U.S. exchange should such an event become permissible by U.S. law.

 

  Conference Call  

 

TerrAscend will host a conference call today, August 19, 2021 , to discuss these results. Jason Wild , Executive Chairman, and Keith Stauffer , Chief Financial Officer will host the call starting at 8:30 a.m. Eastern time . A question-and-answer session will follow management's presentation.

 
 
               
 

   CONFERENCE CALL DETAILS   

 
 
 
 

  DATE:  

 
 

  Thursday, August 19 th , 2021  

 
 

  TIME:  

 
 

  8:30 a.m. Eastern Time  

 
 

  WEBCAST:  

 
 

     Click to Access     

 
 

  DIAL-IN NUMBER:  

 
 

  1-888-664-6392  

 
 

  CONFERENCE ID:  

 
 

  64034488  

 
 

  REPLAY:  

 

 

 
 

  (416) 764-8677 or (888) 390-0541
Available until 12:00 midnight Eastern Time Thursday, September 2 nd , 2021
 

 

  Replay Code: 034488  

 
 
 

Financial results and analyses are available on the Company's website (   www.terrascend.com   ) and SEDAR (   www.sedar.com   ).

 

   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  

 

TerrAscend is a leading North American cannabis operator with vertically integrated operations in Pennsylvania , New Jersey , and California , licensed cultivation and processing operations in Maryland and licensed production in Canada . TerrAscend operates an award-winning chain of The Apothecarium dispensary retail locations as well as scaled cultivation, processing, and manufacturing facilities on both the East and West coasts. TerrAscend's best-in-class cultivation and manufacturing practices yield consistent, high-quality cannabis, providing industry-leading product selection to both the medical and legal adult-use market. The Company owns several synergistic businesses and brands, including The Apothecarium, Ilera Healthcare, Kind Tree, Prism, State Flower, Valhalla Confections, and Arise Bioscience Inc. For more information, visit   www.terrascend.com   .

 

  Non-IFRS Measures, Reconciliation and Discussion  

 

Certain financial measures in this news release are non-IFRS measures, including, Adjusted Gross Profit and Adjusted EBITDA. These terms are not defined by IFRS and, therefore, may not be comparable to similar measures provided by other companies. These metrics have no direct comparable IFRS financial measure. Such information is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. For more information, please see "Non-IFRS Financial Measures" in the Company's Interim MD&A available on     www.sedar.com   .

 

Adjusted Gross Profit and the associated margin are non-IFRS measures which management uses to evaluate the performance of the Company's business as it reflects its ongoing profitability. The Company believes that certain investors and analysts use this measure to evaluate a company's ability to service debt and to meet other payment obligations or as a common measurement to value companies in certain industries. The Company measures Adjusted Gross Profit as Gross Profit / (loss) less the cost of a one-time inventory impairments. The associated margin is Adjusted Gross Profit as a percentage of Net Sales.

 

Adjusted EBITDA and the associated margin are non-IFRS measures which management uses to evaluate the performance of the Company's business as it reflects its ongoing profitability. The Company believes that certain investors and analysts use this measure to evaluate a company's ability to service debt and to meet other payment obligations or as a common measurement to value companies in certain industries. The Company measures Adjusted EBITDA as EBITDA less unrealized gain on changes in fair value of biological assets and other income plus fair value changes in biological assets included in inventory sold, impairments, restructuring costs, purchase accounting adjustments, transaction costs, share based compensation, revaluation of warrants and derivatives liabilities, unrealized loss on investments or foreign exchange, settlement costs related to contractual disputes, and other one-time non-recurring items. The associated margin is Adjusted EBITDA as a percentage of Net Sales.

 

  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 of liability under U.S. federal law, nor will it provide a defense to any federal proceeding which may be brought against TerrAscend. The enforcement of federal laws in the United States is a significant risk to the business of TerrAscend and any proceedings brought against TerrAscend thereunder may adversely affect TerrAscend's operations and financial performance.

 

  Forward Looking Information  

 

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, and include statements with respect to future revenue and profits. 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.

 

Although the Company believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because the Company can give no assurance that they will prove to be correct. Actual results and developments may differ materially from those contemplated by these 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 the Company's most recently filed MD&A, filed with the Canadian securities regulators and available under the Company's profile on SEDAR at www.sedar.com .

 

The statements in this press release are made as of the date of this release. The Company 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.

 

  Financial Outlook  

 

This press release contains a "financial outlook" within the meaning of applicable Canadian securities laws. The financial outlook has been prepared by management of TerrAscend to provide an outlook for full year 2021 and may not be appropriate for any other purpose. The financial outlook has been prepared based on a number of assumptions including the assumptions discussed under the heading "Forward Looking Information" above and the following assumptions: revenue earned in existing retail stores is representative both of revenue that will continue to be earned by such retail stores, as well as of revenue earned in new retail stores; the Company's ability to capitalize on the New Jersey market being generally undersupplied and underdeveloped at the retail and consumer level; the Company's retail locations continuing to be favorably located to take advantage of commuter and other traffic across its footprint; the Company's estimates about the growth in demand for medical cannabis outstripping the aggregate supply in the marketplace in each of its key markets being accurate; the Company's ability to continue to have a diversified customer base and avoid dependence or concentration in any one customer or small group of customers; the Company's Canadian business successfully scaling up its operations to meet customer demand; and, the success of the Company in integrating acquired businesses into its organizational structure and operations, including achieving anticipated economies of scale and revenue projections in connection with such acquisitions. The actual results of the Company's operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. TerrAscend and its management believe that the financial outlook has been prepared on a reasonable basis. However, because this information is highly subjective and subject to numerous risks, including the risks discussed under the heading "Forward Looking Information" above, it should not be relied on as necessarily indicative of future results. Except as required by applicable Canadian securities laws, TerrAscend undertakes no obligation to update the financial outlook. TerrAscend undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of TerrAscend, its securities, or financial or operating results (as applicable).

 

  Unaudited Condensed Interim Consolidated Statements of Financial Position
  (Amounts expressed in thousands of United States dollars, except for per share amounts)  

 
 
                                                                                                                                                                                                                                                                                                                                                                                                                        
 
 
 
 

   At   

 
 
 

   At   

 
 
 

   At   

 
 
 

   Notes   

 
 
 

   June 30, 2021   

 
 
 

   December 31, 2020*   

 
 
 

   January 1, 2020*   

 
 

   Assets   

 
 
 
 
 
 
 
 
 

   Current Assets   

 
 
 
 
 
 
 
 
 

  Cash and cash equivalents  

 
 
 

   $   

 
 

   154,181   

 
 

  $  

 
 

  59,226  

 
 

  $  

 
 

  9,162  

 
 

  Receivables, net of sales returns and allowances  

 
 

  4  

 
 
 

   12,673   

 
 
 

  10,876  

 
 
 

  5,869  

 
 

  Share subscriptions receivable  

 
 
 
 

   878   

 
 
 

  

 
 
 

  24,463  

 
 

  Note receivable  

 
 
 
 

    

 
 
 

  

 
 
 

  4,609  

 
 

  Investments  

 
 
 
 

    

 
 
 

  

 
 
 

  358  

 
 

  Biological assets  

 
 

  6  

 
 
 

   16,109   

 
 
 

  17,816  

 
 
 

  4,222  

 
 

  Inventory  

 
 

  7  

 
 
 

   64,386   

 
 
 

  34,696  

 
 
 

  15,723  

 
 

  Prepaid expenses and other assets  

 
 
 
 

   5,980   

 
 
 

  5,165  

 
 
 

  4,757  

 
 
 
 
 

   254,207   

 
 
 

  127,779  

 
 
 

  69,163  

 
 

   Non-Current Assets   

 
 
 
 
 
 
 
 
 

  Investment in associate  

 
 

  5  

 
 
 

    

 
 
 

  1,379  

 
 
 

  1,000  

 
 

  Property, plant and equipment  

 
 

  8  

 
 
 

   144,853   

 
 
 

  129,735  

 
 
 

  86,734  

 
 

  Intangible assets and goodwill  

 
 

  9  

 
 
 

   300,683   

 
 
 

  199,985  

 
 
 

  185,670  

 
 

  Indemnification asset  

 
 

  16  

 
 
 

   4,676   

 
 
 

  11,500  

 
 
 

  11,500  

 
 

  Prepaid expenses and other assets  

 
 
 
 

   13,921   

 
 
 

  3,923  

 
 
 

  695  

 
 
 
 
 

   464,133   

 
 
 

  346,522  

 
 
 

  285,599  

 
 

   Total Assets   

 
 
 

   $   

 
 

   718,340   

 
 

  $  

 
 

  474,301  

 
 

  $  

 
 

  354,762  

 
 
 
 
 
 
 
 
 
 

   Liabilities and Shareholders' Equity   

 
 
 
 
 
 
 
 
 

   Current Liabilities   

 
 
 
 
 
 
 
 
 

  Accounts payable and accrued liabilities  

 
 
 

   $   

 
 

   24,915   

 
 

  $  

 
 

  27,176  

 
 

  $  

 
 

  19,256  

 
 

  Deferred revenue  

 
 
 
 

   638   

 
 
 

  638  

 
 
 

  908  

 
 

  Loans payable  

 
 

  10  

 
 
 

   9,727   

 
 
 

  5,734  

 
 
 

  48,559  

 
 

  Contingent consideration payable  

 
 

  5  

 
 
 

   10,858   

 
 
 

  30,966  

 
 
 

  24,008  

 
 

  Lease liability  

 
 

  12  

 
 
 

   2,326   

 
 
 

  1,710  

 
 
 

  891  

 
 

  Corporate income tax payable  

 
 

  16  

 
 
 

   25,671   

 
 
 

  27,739  

 
 
 

  16,381  

 
 
 
 
 

   74,135   

 
 
 

  93,963  

 
 
 

  110,003  

 
 

   Non-Current Liabilities   

 
 
 
 
 
 
 
 
 

  Loans payable  

 
 

  10  

 
 
 

   184,730   

 
 
 

  178,804  

 
 
 

  4,849  

 
 

  Contingent consideration payable  

 
 

  5  

 
 
 

   1,083   

 
 
 

  6,590  

 
 
 

  135,393  

 
 

  Lease liability  

 
 

  12  

 
 
 

   29,107   

 
 
 

  22,609  

 
 
 

  15,070  

 
 

  Warrant liability  

 
 

  22  

 
 
 

   138,750   

 
 
 

  132,257  

 
 
 

  

 
 

  Convertible debentures  

 
 

  11  

 
 
 

    

 
 
 

  4,083  

 
 
 

  10,682  

 
 

  Deferred income tax liability  

 
 

  16  

 
 
 

   57,083   

 
 
 

  27,263  

 
 
 

  20,774  

 
 
 
 
 

   410,753   

 
 
 

  371,606  

 
 
 

  186,768  

 
 

   Total Liabilities   

 
 
 

   $   

 
 

   484,888   

 
 

  $  

 
 

  465,569  

 
 

  $  

 
 

  296,771  

 
 
 
 
 
 
 
 
 
 

   Shareholders' Equity   

 
 
 
 
 
 
 
 
 

  Share capital  

 
 

  13  

 
 
 

   491,599   

 
 
 

  242,336  

 
 
 

  196,978  

 
 

  Contributed surplus  

 
 

  13  

 
 
 

   75,885   

 
 
 

  69,205  

 
 
 

  41,874  

 
 

  Cumulative translation adjustment  

 
 
 
 

   1,162   

 
 
 

  (3,819)  

 
 
 

  (826)  

 
 

  Deficit  

 
 
 
 

   (346,324)   

 
 
 

  (306,423)  

 
 
 

  (186,496)  

 
 

  Non-controlling interest  

 
 

  14  

 
 
 

   11,130   

 
 
 

  7,433  

 
 
 

  6,461  

 
 

   Total Shareholders' Equity   

 
 
 
 

   233,452   

 
 
 

  8,732  

 
 
 

  57,991  

 
 
 
 
 
 
 
 
 
 

   Total Liabilities and Shareholders' Equity   

 
 
 

   $   

 
 

   718,340   

 
 

  $  

 
 

  474,301  

 
 

  $  

 
 

  354,762  

 
 

   Total Number of Common and Proportionate Voting Shares Outstanding   

 
 

  13  

 
 
 

   184,402,803   

 
 
 

  155,834,272  

 
 
 

  141,980,314  

 
 
 

  *Change in presentation currency (Note 23) Subsequent events (N ote 25 )
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.  

 

  Unaudited Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
  (Amounts expressed in thousands of United States dollars, except for per share amounts)  

 
 
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
 
 
 

   For the three months ended   

 
 

   For the six months ended   

 
 
 

   Notes   

 
 
 

   June 30, 2021   

 
 
 

   June 30, 2020*   

 
 
 

   June 30, 2021   

 
 
 

   June 30, 2020*   

 
 

   Sales, gross   

 
 
 

   $   

 
 

   61,977   

 
 

   $   

 
 

  36,367  

 
 

   $   

 
 

   118,473   

 
 

  $  

 
 

  64,510  

 
 

  Excise and cultivation taxes  

 
 
 
 

   (3,254)   

 
 
 

  (2,153)  

 
 
 

   (6,396)   

 
 
 

  (4,421)  

 
 

   Sales, net   

 
 

  18  

 
 
 

   58,723   

 
 
 

  34,214  

 
 
 

   112,077   

 
 
 

  60,089  

 
 
 
 
 
 
 
 
 
 
 
 

   Cost of sales   

 
 

  7  

 
 
 

   24,001   

 
 
 

  14,999  

 
 
 

   42,425   

 
 
 

  29,314  

 
 

   Gross profit before gain on fair value of biological assets   

 
 
 
 

   34,722   

 
 
 

  19,215  

 
 
 

   69,652   

 
 
 

  30,775  

 
 
 
 
 
 
 
 
 
 
 
 

  Unrealized gain on changes in fair value of biological assets  

 
 

  6  

 
 
 

   27,685   

 
 
 

  16,722  

 
 
 

   51,208   

 
 
 

  27,793  

 
 

  Realized fair value amounts included in inventory sold  

 
 

  7  

 
 
 

   (16,068)   

 
 
 

  (13,748)  

 
 
 

   (37,059)   

 
 
 

  (18,391)  

 
 
 
 
 
 
 
 
 
 
 
 

   Gross profit   

 
 
 
 

   46,339   

 
 
 

  22,189  

 
 
 

   83,801   

 
 
 

  40,177  

 
 
 
 
 
 
 
 
 
 
 
 

   Operating expenses:   

 
 
 
 
 
 
 
 
 
 
 

  General and administrative  

 
 

  17  

 
 
 

   14,818   

 
 
 

  11,345  

 
 
 

   30,580   

 
 
 

  22,201  

 
 

  Share-based payments  

 
 

  13  

 
 
 

   6,230   

 
 
 

  2,484  

 
 
 

   10,414   

 
 
 

  4,581  

 
 

  Amortization and depreciation  

 
 

  8, 9  

 
 
 

   2,386   

 
 
 

  2,299  

 
 
 

   4,659   

 
 
 

  3,517  

 
 

  Research and development  

 
 
 
 

    

 
 
 

  121  

 
 
 

    

 
 
 

  275  

 
 

   Total operating expenses   

 
 
 
 

   23,434   

 
 
 

  16,249  

 
 
 

   45,653   

 
 
 

  30,574  

 
 
 
 
 
 
 
 
 
 
 
 

   Income from operations   

 
 
 
 

   22,905   

 
 
 

  5,940  

 
 
 

   38,148   

 
 
 

  9,603  

 
 
 
 
 
 
 
 
 
 
 
 

  Revaluation of contingent consideration  

 
 

  5, 22  

 
 
 

   (7)   

 
 
 

  4,475  

 
 
 

   2,990   

 
 
 

  8,620  

 
 

  Finance and other expenses  

 
 

  10,11,12,16  

 
 
 

   9,987   

 
 
 

  2,266  

 
 
 

   17,233   

 
 
 

  4,723  

 
 

  Transaction and restructuring costs  

 
 
 
 

   432   

 
 
 

  1,266  

 
 
 

   432   

 
 
 

  1,694  

 
 

  Unrealized (gain) loss on investments  

 
 

  5  

 
 
 

   (5,964)   

 
 
 

  (102)  

 
 
 

   (6,192)   

 
 
 

  244  

 
 

  Impairment of goodwill  

 
 

  9  

 
 
 

   5,007   

 
 
 

  

 
 
 

   5,007   

 
 
 

  

 
 

  Impairment of intangible assets  

 
 

  9  

 
 
 

   3,633   

 
 
 

  390  

 
 
 

   3,633   

 
 
 

  734  

 
 

  Loss on fair value of warrants  

 
 

  22  

 
 
 

   19,891   

 
 
 

  

 
 
 

   25,301   

 
 
 

  

 
 

  Unrealized foreign exchange loss  

 
 
 
 

   3,055   

 
 
 

  37  

 
 
 

   5,838   

 
 
 

  77  

 
 
 
 
 
 
 
 
 
 
 
 

   Loss before income taxes   

 
 
 
 

   (13,129)   

 
 
 

  (2,392)  

 
 
 

   (16,094)   

 
 
 

  (6,489)  

 
 

  Current income tax expense  

 
 

  16  

 
 
 

   6,876   

 
 
 

  7,113  

 
 
 

   16,088   

 
 
 

  11,474  

 
 

  Deferred income tax expense  

 
 

  16  

 
 
 

   3,120   

 
 
 

  320  

 
 
 

   3,691   

 
 
 

  2,173  

 
 

   Net loss   

 
 
 

   $   

 
 

   (23,125)   

 
 

   $   

 
 

  (9,825)  

 
 

   $   

 
 

   (35,873)   

 
 

  $  

 
 

  (20,136)  

 
 

   Items that will be subsequently reclassified to profit or loss:   

 
 
 
 
 
 
 
 
 
 
 

  Currency translation adjustment  

 
 
 

   (3,020)   

 
 
 

  156  

 
 
 

   (4,981)   

 
 
 

  2,009  

 
 

   Comprehensive loss   

 
 
 

   $   

 
 

   (20,105)   

 
 

   $   

 
 

  (9,981)  

 
 

   $   

 
 

   (30,892)   

 
 

  $  

 
 

  (22,145)  

 
 
 
 
 
 
 
 
 
 
 
 

   Net loss (income) attributable to:   

 
 
 
 
 
 
 
 
 
 
 

  Shareholders of the Company  

 
 
 
 

   (25,939)   

 
 
 

  (9,177)  

 
 
 

   (39,954)   

 
 
 

  (18,999)  

 
 

  Non-controlling interests  

 
 
 
 

   2,814   

 
 
 

  (648)  

 
 
 

   4,081   

 
 
 

  (1,137)  

 
 
 
 
 
 
 
 
 
 
 
 

   Comprehensive loss (income) attributable to:   

 
 
 
 
 
 
 
 
 
 
 

  Shareholders of the Company  

 
 
 
 

   (22,919)   

 
 
 

  (9,333)  

 
 
 

   (34,973)   

 
 
 

  (21,008)  

 
 

  Non-controlling interests  

 
 
 
 

   2,814   

 
 
 

  (648)  

 
 
 

   4,081   

 
 
 

  (1,137)  

 
 
 
 
 
 
 
 
 
 
 
 

   Net loss per share, basic and diluted   

 
 
 
 
 
 
 
 
 
 
 

  Net loss per share – basic and diluted  

 
 
 

   $   

 
 

   (0.14)   

 
 

   $   

 
 

  (0.06)  

 
 

   $   

 
 

   (0.23)   

 
 

  $  

 
 

  (0.13)  

 
 

  Weighted average number of outstanding common and proportionate voting shares  

 
 
 

   182,369,839   

 
 
 

  149,031,066  

 
 
 

   176,901,119   

 
 
 

  147,750,133  

 
 
 

  The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.  

 

  Unaudited Condensed Interim Consolidated Statements of Cash Flow
  (Amounts expressed in thousands of United States dollars, except for per share amounts)  

 
 
                                                                                                                                                                                                                                                                                                                      
 
 
 
 

   For the six months ended   

 
 
 

   Notes   

 
 
 

   June 30, 2021   

 
 
 

   June 30, 2020*   

 
 

   Operating activities   

 
 
 
 
 
 
 

  Net loss  

 
 
 

   $   

 
 

   (35,873)   

 
 

  $  

 
 

  (20,136)  

 
 

  Add (deduct) items not involving cash  

 
 
 
 
 
 
 

  Unrealized gain on changes in fair value of biological assets  

 
 

  6  

 
 
 

   (51,208)   

 
 
 

  (27,793)  

 
 

  Realized fair value amounts included in inventory sold  

 
 

  7  

 
 
 

   37,059   

 
 
 

  18,391  

 
 

  Non-cash write downs of inventory  

 
 

  7  

 
 
 

   699   

 
 
 

  3,258  

 
 

  Accretion, accrued interest and loan forgiveness  

 
 

  10  

 
 
 

   14,341   

 
 
 

  4,670  

 
 

  Depreciation of property, plant and equipment  

 
 

  8  

 
 
 

   4,723   

 
 
 

  2,676  

 
 

  Amortization of intangible assets  

 
 

  9  

 
 
 

   3,394   

 
 
 

  3,034  

 
 

  Share-based payments  

 
 

  13  

 
 
 

   10,414   

 
 
 

  4,845  

 
 

  Current income tax expense  

 
 

  16  

 
 
 

   16,088   

 
 
 

  11,474  

 
 

  Deferred income tax expense  

 
 

  16  

 
 
 

   3,691   

 
 
 

  2,173  

 
 

  Loss on fair value of warrants  

 
 

  22  

 
 
 

   25,301   

 
 
 

  

 
 

  Unrealized loss (gain) on investments  

 
 
 
 

   (6,192)   

 
 
 

  244  

 
 

  Revaluation of contingent consideration  

 
 

  5  

 
 
 

   2,990   

 
 
 

  8,620  

 
 

  Impairment of intangible assets  

 
 

  9  

 
 
 

   3,633   

 
 
 

  734  

 
 

  Impairment of goodwill  

 
 

  9  

 
 
 

   5,007   

 
 
 

  

 
 

  Release of indemnification asset  

 
 

  16  

 
 
 

   3,796   

 
 
 

  

 
 

  Forgiveness of loan principal and interest  

 
 
 
 

   (766)   

 
 
 

  

 
 

  Unrealized foreign exchange loss  

 
 
 
 

   5,838   

 
 
 

  

 
 

  Changes in working capital items  

 
 

  20  

 
 
 

   (9,843)   

 
 
 

  (5,800)  

 
 

  Income taxes paid  

 
 

  16  

 
 
 

   (16,381)   

 
 
 

  

 
 

   Cash inflow from operating activities   

 
 
 
 

   16,711   

 
 
 

  6,390  

 
 
 
 
 
 
 
 

   Financing activities   

 
 
 
 
 
 
 

  Proceeds from warrants exercised  

 
 

  13  

 
 
 

   10,536   

 
 
 

  

 
 

  Proceeds from options exercised  

 
 

  13  

 
 
 

   2,385   

 
 
 

  86  

 
 

  Proceeds from loan  

 
 

  10  

 
 
 

   766   

 
 
 

  65,769  

 
 

  Return of capital to non-controlling interests  

 
 

  14  

 
 
 

   (384)   

 
 
 

  175  

 
 

  Loan principal and interest paid  

 
 

  10  

 
 
 

   (13,292)   

 
 
 

  (56,111)  

 
 

  Proceeds from private placement, net of share issuance costs  

 
 

  13  

 
 
 

   173,477   

 
 
 

  70,696  

 
 

  Lease payments  

 
 

  12  

 
 
 

   (1,884)   

 
 
 

  (1,367)  

 
 

   Cash inflow from financing activities   

 
 
 
 

   171,604   

 
 
 

  79,248  

 
 
 
 
 
 
 
 

   Investing activities   

 
 
 
 
 
 
 

  Investment in property, plant and equipment  

 
 

  8  

 
 
 

   (10,856)   

 
 
 

  (17,943)  

 
 

  Investment in intangible assets  

 
 

  9  

 
 
 

   (40)   

 
 
 

  (784)  

 
 

  Principal and interest payments received on lease receivable  

 
 
 
 

   359   

 
 
 

  28  

 
 

  Distribution of earnings to associates  

 
 
 
 

   469   

 
 
 

  

 
 

  Deposits for property, plant and equipment  

 
 
 
 

   (10,583)   

 
 
 

  

 
 

  Payments of contingent consideration  

 
 

  5  

 
 
 

   (29,668)   

 
 
 

  (20,666)  

 
 

  Cash portion of consideration paid on acquisition of KCR  

 
 

  5  

 
 
 

   (20,337)   

 
 
 

  

 
 

  Cash portion of consideration paid on acquisition of HMS  

 
 

  5  

 
 
 

   (22,399)   

 
 
 

  

 
 

  Cash received on acquisition of State Flower  

 
 
 
 

    

 
 
 

  739  

 
 

   Cash outflow from investing activities   

 
 
 
 

   (93,055)   

 
 
 

  (38,626)  

 
 
 
 
 
 
 
 

   Increase (decrease) in cash and cash equivalents during the period   

 
 
 
 

   95,260   

 
 
 

  47,012  

 
 

  Net effects of foreign exchange  

 
 
 
 

   (305)   

 
 
 

  (1,300)  

 
 

   Cash and cash equivalents, beginning of period   

 
 
 
 

   59,226   

 
 
 

  9,162  

 
 

   Cash and cash equivalents, end of period   

 
 
 

   $   

 
 

   154,181   

 
 

  $  

 
 

  54,874  

 
 
 

  The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements  

 
 
 

SOURCE TerrAscend

 

 

 

 Cision View original content to download multimedia: https://www.newswire.ca/en/releases/archive/August2021/19/c3521.html  

 
 

News Provided by Canada Newswire via QuoteMedia

The Conversation (0)
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Thailand Reverses Course on Cannabis, Moves to Recriminalize Amid Political Fallout

Thailand’s groundbreaking experiment with cannabis decriminalization is rapidly unraveling, with the government formally moving to reclassify the plant as a narcotic and ban recreational sales.

The decision has sent shockwaves through an industry once projected to be worth over US$1 billion.

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New Cannabis Consumption Trends, Regulatory Shifts Seen Driving Market in 2025

Understanding trends in the cannabis industry is paramount for investors eyeing a market with steady growth potential, but the landscape is complex as products and regulations continue to evolve.

Consumption habits are changing as edibles, vaping and THC beverages gain traction, especially among younger users, and cannabis companies are adapting their offerings to meet shifting demand.

Meanwhile, regulatory uncertainty, particularly surrounding the future of the US Farm Bill and state-level restrictions on hemp-derived cannabinoids, continues to challenge the market.

Despite these headwinds, production data and long-term growth forecasts suggest the cannabis industry remains on a promising — albeit turbulent — path. Read on for more on key trends to watch in 2025.

Consumption methods evolving post-legalization

Shifts in consumer behavior are reshaping markets across the board, and the cannabis industry is no exception.

While smoking remains the dominant method of cannabis consumption, a recent report from the Centers for Disease Control and Prevention highlights the growing popularity of edibles, vaping and dabbing.

The report notes that vaping and dabbing are particularly pronounced among younger adults.

A separate study published by the American Medical Association and funded in part by the Canadian Institutes of Health Research also points to how product preferences have changed among Canadian users since legalization in 2018.


The study indicates that while the use of flower, cannabis concentrates, oil, tinctures and topicals has decreased during that time, the use of vape cartridges, edibles and beverages has increased.

Edibles and beverages were legalized in Canada in late 2019, and Truss Beverage was one of the first players to introduce cannabis-infused drinks. Truss was a joint venture formed by Molson Coors Canada (TSX:TPX.A,TSX:TPX.B) and HEXO, a cannabis company that has since been acquired by Tilray Brands (TSX:TLRY,NASDAQ:TLRY).

In early 2020, Tilray launched a lineup of confectionery, wellness products and beverages through its subsidiary, High Park; Canopy Growth (TSX:WEED,NASDAQ:CGC) made a similar move. These companies gradually brought their products to the US as more states legalized cannabis for medical and/or recreational use.

Today, established cannabis brands typically offer edibles and beverages alongside their other products. Organigram Global (TSX:OGI,NASDAQ:OGI) is one of the newest US entrants, with its April acquisition of Collective Project providing immediate access to the US hemp-derived THC beverage market.

Growing awareness of health and wellness, potentially amplified by the pandemic-led adoption of health trackers, appears to be making an impact on the alcoholic beverage market.

A 2023 Gallup poll reveals a two decade decline in alcohol consumption, particularly among younger adults, suggesting a shift towards more health-conscious lifestyles within this demographic.

Craft beer production declined by 4 percent year-on-year in 2024, according to data collected by the Brewers Association. This marked the largest drop in the industry's history, excluding the pandemic. For small, independent craft breweries, 2024 marked the third consecutive year of declining production. A drop in the number of operating small breweries last year provides further evidence of this trend, with 501 closures in 2024 versus 434 openings.

Challenges in the alcohol market extend beyond the brewing industry, with the New York Times recently reporting the closure of a handful of nightclubs facing decreased alcohol sales alongside rising insurance and rent costs.

Meanwhile, cannabis lounges have been popping up across the US for the last several years. As of early 2025, several states had legalized or were in the process of implementing regulations for cannabis consumption lounges.

Hemp market growth despite regulatory uncertainty

The burgeoning hemp industry is another segment of the expanding cannabis market.

The legalization of industrial hemp — defined as cannabis with a THC concentration of 0.3 percent or less — through the 2018 Farm Bill led to initial investment and optimistic projections for CBD wellness products and various industrial applications. The sector’s rapid evolution also brought the rise of hemp-derived intoxicating cannabinoids, creating a market that presented both opportunities and complexities for participants.

However, after an initial boom, a lack of infrastructure and clearly defined regulations for CBD, as well as state-level variations and market oversupply, ultimately contributed to a quick retraction.

2024 was a pivotal year for the US hemp industry, as the hemp-related provisions of the 2018 Farm Bill — originally set to expire in September 2023, but extended to December 31, 2024 — created an urgent need to address critical issues like THC limits and the regulation of novel hemp-derived cannabinoids. A major point of contention was the proposed shift from defining hemp based on Delta-9 THC concentration (0.3 percent or less) to “total THC,” which includes THCA.

This change had the potential to significantly impact farmers and processors, as many hemp varieties that are compliant under the Delta-9 THC rule could exceed the 0.3 percent limit when THCA is included.

Various bills and amendments were proposed in 2024 as part of the Farm Bill discussions, each with different approaches to regulating hemp. Separate regulatory frameworks for industrial hemp and hemp grown for cannabinoids were suggested, and many states took their own action, leading to a patchwork of regulations and even outright bans.

Despite challenges, data from the US Department of Agriculture suggests signs of recovery.

The department's annual National Hemp Report from 2024 points to an 18 percent increase in industrial hemp production value between 2022 and 2023, with output growth seen in specific sectors like floral (18 percent), fiber (133 percent) and seed hemp (414 percent). The 2025 report from the Department of Agriculture indicates further expansion, with notable increases observed in both acreage (up 64 percent from 2023) and value (46 percent).

The 2024 Farm Bill ultimately did not pass, and right now the hemp industry is operating under a temporary extension of the 2018 Farm Bill under the American Relief Act of 2025, signed into law on December 21, 2024.

The 2018 Farm Bill is now set to expire on September 30, 2025.

While analysts for Markets and Markets project that the North American hemp industry will grow at a CAGR of 22.4 percent and ultimately reach a valuation of US$30.24 billion by 2029, the future of the industry will be heavily influenced by the outcome of the ongoing Farm Bill discussions.

US cannabis legalization remains stalled

Although there is clear demand for cannabis products, the now-defunct rescheduling process in the US is likely to continue casting a shadow of uncertainty over the industry's long-term trajectory.

Legal and procedural delays, including allegations of improper conduct and bias within the US Drug Enforcement Administration (DEA), led to hearing cancellations, and the new administration of US President Donald Trump has brought leadership changes to key agencies like the DEA and the Department of Justice.

Terry Cole, who Trump nominated to be DEA administrator on February 11, has a history of opposing cannabis legalization in the country. Similarly, Pam Bondi, Trump’s pick to lead the justice department, staunchly opposed a movement to legalize medical cannabis during her tenure as Florida’s attorney general.

While there have been bipartisan efforts in Congress to end federal cannabis prohibition and establish regulations for eventual legalization, the DEA’s actions and statements indicate a potential stall or reversal of progress.

In addition to that, new research is adding complexity to the debate.

A study published in the American Journal of Psychiatry this past March highlights an association between the use of high-potency cannabis strains and increased risks of psychosis, a factor that may not have been fully considered by the Department of Health and Human Services. As stronger cannabis strains become more widely available, a reassessment of their potential health risks may be required.

Investor takeaway

While the cannabis industry holds promise for growth and innovation, investors must remain acutely aware of the regulatory uncertainties and market volatility that will undoubtedly shape its trajectory in the years to come.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.

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