Gage Growth Earnings
TRSSF is a LONG
TerrAscend Corp and Gage Growth Corp. announced in early September that they have entered into a definitive arrangement agreement under which TerrAscend will acquire all of the issued and outstanding subordinate voting shares of Gage. Under the terms of the Arrangement Agreement, representing a total consideration of approximately $545 million based on the closing price of TerrAscend on August 31, 2021. Shareholders approved the Transaction on November 11. At the time, the Exchange Ratio implies a consideration of $2.11 per Gage Share, representing an 18% premium based on the closing prices of both companies' shares on the Canadian Securities Exchange on August 31, 2021. Upon completion of the Transaction, the combined business will have operations in 5 states and Canada, including seven cultivation and processing facilities and 23 operating dispensaries serving medical and adult-use cannabis markets in the U.S. and Canada.
Yesterday, Gage reported Q3 earnings. They reported a revenue increase of 119.6% YoY and 3.2% sequentially. Gage Growth operates all of its facilities in Michigan. It has ten dispensary locations and 11 cultivation facilities, 8 of which are contracted out. Gage's revenues missed by $7.1 million, and sequential growth trailed the revenues of the entire state of Michigan, which grew 10% sequentially but only 54% YoY. Margins were strong compared to Q2 to 36.5% from 34.2%. Gage operates in the premium flower market with its average dried flower selling price of $4,900/lb vs. the Michigan average of $3,400/lb, a 44% premium. The Company posted an adjusted EBITDA loss of $1.8 million compared to last quarter's $2 million loss. Michigan remains a growing market; however, profitability is not as promising as other midwestern markets such as Illinois. The Company also closed a senior secured loan of $55 Million at a 7% plus prime rate with a maturity of November 30, 2022. The Company plans to use these funds to expand by acquisitions in the state. It plans to acquire various dispensaries in the state to grow its retail presence.
M.A. Tracker
Sales in Massachusetts saw an uptick recently. Sales were up 11% during the week leading up to thanksgiving. YoY sales are also accelerating into the holidays. The annual run rate for 2021 sits at $1.44 Billion.
GNRS Closed CT
Greenrose Acquisition Corp. announced that it had closed its previously announced business combination with Connecticut-based Theraplant, LLC. The Transaction was approved at a special meeting of Greenrose's stockholders. The Company has been renamed The Greenrose Holding Company Inc. and will be listed on the OTC under the symbols "GNRS" and "GNRSW."
CA Robberies
Marijuana businesses in Oakland, CA, are calling on state and local officials to provide tax amnesty after a string of robberies of cannabis companies earlier this month. Over 25 licensed marijuana businesses were burglarized during the week of November 15. A non-profit group called Supernova Women urged officials to provide financial relief to these businesses. The group also wants to see a repeal of the state's cannabis cultivation tax and a large reduction in the excise tax placed on marijuana products. "Cannabis equity businesses, in particular, need more money and resources. Small businesses and small farmers need help," she said. "Piling on and increasing taxes—and now with the threat of robberies and violence—is proving to be unbearable for cannabis operators. When we're faced with targeted attacks, the effects are magnified. Our communities do not have the runway for robberies and tragedies of this time."
