Despite the onslaught of COVID-related market contractions, several multi-state operators (MSOs) are still growing at a remarkable pace. Over the past year, one operator in particular has emerged not only as a market leader but also as Canopy Growth’s top contender in the event of federal legalization in the future.
Last week, during TerrAscend’s annual Investor Day fireside chat, Canopy Growth CEO David Klein noted that TerrAscend’s performance dwarfed many competitors in the industry.
“We’re interested in putting together the set of assets between innovation and consumer insights, routes to market and production capacity that are second to none, and when you look at TerrAscend, it’s a really well-run company in an industry that’s not really filled with well-run companies,” remarked Klein.
Mr. Klein’s assessment of TerrAscend’s strong position in the industry can be substantiated by the company’s momentum in the past month alone. Earlier in August, TerrAscend announced its second straight quarter of growth and positive earnings and became the first greenhouse in New Jersey to receive a cultivation license from the Department of Health.
Analysts at Craig-Hallum recently noted that the company’s second quarter “blowout” and Canopy Growth’s bet on TerrAscend will likely pay off once cannabis is federally legal. These latest accomplishments reflect the operator’s ongoing philosophy that “the model that has worked best are companies that are going deep and not wide,” a strategy that was reiterated by TerrAscend Chairman Jason Wild during the Investor Day discussion.
Canopy Growth was one of TerrAscend’s initial investors in 2017 and has been critical to TerrAscend’s growth as it successfully pivoted from the Canadian market to lucrative states including Pennsylvania, California and, most recently, New Jersey. Earlier in March, TerrAscend received another vote of confidence from Canopy Growth when it was given a C$ 80.5 million loan to fund its Canadian operations, U.S. hemp division and international businesses.
During the discussion, Jason Wild also shared TerrAscend’s ambitions to expand to one or two more states on the East Coast in the next year. TerrAscend’s long-term success largely depends on its performance in the New Jersey market over the next few quarters. If the company is able to edge out established competitors and capitalize on potential political tailwinds in the state’s upcoming referendum on legalizing adult-use cannabis, this could truly be a watershed year for the operator, as analysts have previously projected.
During the Investor Day discussion, Mr. Wild cited the rising national demand for cannabis and progressive state programs as some of the reasons why he’s “been as bullish as [he’s] ever been on the sector as a whole and for TerrAscend.” As the company continues to go deep and build out additional infrastructure to support its ambitious growth objectives, investors like Canopy Growth will keep their eyes peeled for TerrAscend’s ability to deliver in this turbulent political climate. TerrAscend’s meteoric rise has been undoubtedly impressive, but the next task at hand is for the company to maintain its upward momentum.