TerrAscend Corp. (TSND) Earnings Call Transcript

[indiscernible] headed in that dynamic. And I believe this is the first Investor Day, since August of 2020. And if you think about the evolution of the industry, we all know that we move in late years in terms of progress. And I think in the case of TerrAscend it's a company that if you compared August of 2020 to where we are today, it's an extraordinary story to tell. Full disclosure as we like to have to do. I'm an investor as well. So it's exciting to be here and speak to the management team today. I want to introduce the Executive Chairman, Jason Wild, please come to the stage and look forward to today.

Thank you, Tim. Nice to see everybody. Before we get into the most exciting part of the day, the safe harbor statement, I just wanted to take a moment to acknowledge all of the loss of life in Israel by the barbaric terrorist attacks by Hamas. And I just wanted to say that I and the company stand behind all of the innocent victims in Israel and the Palestinian territories. With that, we'll read through the safe harbor word by word. Now, we'll take about 20 minutes. I'm just kidding. You've all got that. So anyway, thank you all for being here and for everybody that's logged in over our webcast. We're really happy to see all the investors and analysts and family members, team members, partners. I want to thank specifically Nancy Whiteman from Wana, who was that kind enough to make the long trip out here for this and thank Tim Seymour as well for making the short trip from New York, and we're just so happy to see everybody. Also wanted to thank the TSX for hosting today and for being great partners and being a pleasure to work with over the last 3 months. So anyway, I'm sure you all saw the pre-announcement that we put out this morning. We're very proud of the results and the progress that we've made over the last 16 months or so. When people asked us about our guidance a couple of months ago, when we first put out our first preliminary guidance. We mentioned that it is even more so than whatever the absolute numbers that were in the press release, we feel that it is -- the more important aspect is the fact that we feel like our business is now in a state, where it is predictable enough and we have enough visibility to be able to actually provide financial guidance. As some of you may remember, we were the first ones a couple of years ago to pull our guidance right at the beginning of the slowdown in the summer of 2021. And we are just so thrilled to be back in that position to be able to provide guidance starting about 2 months ago. As many of you know, it took a while to get here. We've made a lot of progress over the last 14 months. We have significantly reduced our debt and interest payments. We've obviously -- we were obviously uplisted to the TSX. A few months ago, we entered Maryland went from 0 retail in Maryland in January of this year to now we think that we could be the top retail operator in the newly launched rec market in Maryland and just all of the other aspects of the cost reductions that -- and sort of all of these things have come together to really put us in a position now where, as we disclosed, in the press release this morning, we plan on being fully cash flow positive for the second half of the year. And those are really important goals that we set starting over a year ago. We needed to do all of those actions that I just mentioned to be able -- to be able to get there. And we've actually gotten there slightly ahead of our internal plan. So I think that speaks to the way the team has really come together under Ziad Ghanem, our new CEO of a few months. And I can be more thrilled with the job that Ziad has done and with the job that the whole team has done here. It's easy a few years ago, when everything was high flying and everybody seemed to be doing well. I mean that was rewarding for us, and we had -- we were certainly rewarded in the market from a stock price perspective, but this time feels different and better than back then because as everybody knows, it's not an easy environment. And the things that this team has been able to pull off over the last 14 months, I am really just -- really proud of everybody. I just wanted to thank all of our employees that are here and all of our employees, have in the field as well. So with that, I will -- I'm going to call up Ziad Ghanem, also known as the million-dollar face, or that's what he likes to call himself. And I'll hand it off to you. Thanks, Ziad.

Thank you, Jason. Good morning, everyone. Good morning for everyone, who joined us here in person and over the webcast. I'm Ziad and I will soon celebrate my second year anniversary at TerrAscend. It's been a great 2 years. I'm excited about a lot of things. Jason talked about the what, what we were able to do over the last year or 2, but then he also described a little bit of the how from a business perspective. But there has been 2 -- there have been 2 main enablers for us to get here. Number one, as the leadership and the support that we have from Jason Wild themselves, the sponsorship we have from JWAM and then the sponsorship from the family and the investor of the JWAM. So Jason, we often accuse you of, you don't listen and follow the rules, the dress code today is one of those rebellion's decisions. So we often -- I often accuse Jason and use his month statement of he never knows when to stop. We often joke about every time we bring a win to Jason, he has a follow-up question is how many wins we'll get out of this one. So your relentless leadership, your focus on being #1 and you're hunger to grow the company the way you've done the others is contagious to us. And on behalf of all 1,200 employees, we thank you, the JWAM team and the investment family for our sponsorship. The second enablers that I am as proud of us, is the team that we have assembled at TerrAscend. A team that focus every single day on 4 things: and we breathe it, we talk about it, we joke about it, we hold each other accountable on. And that is one, the team member, how do we engage a team member in a way that is differentiated and in a way that mimics the Fortune 10 and 15 companies. We believe that our team members are the face of our brand. The second thing is our customers and patients and how do we have the state of our brands and our team members deliver and make every decision thinking of the customer and the patients, when we make those decisions. The third one is excellence in the operations that feeds into both the P&L and the balance sheet. And all this is governed by a culture of compliance that we are so proud of and I personally spending 20 years in the pharma company, would put that compliance culture for our customers and patients head-to-head against any others. Let's talk a little bit about the morning. So soon, we will ask Tim to facilitate a conversation with Jason and Lynn, our CLO and we'll get to hear a little bit about how the wild goals and wild idea starts and how they get executed behind the scene. Then we'll transition -- I'll come back with BJ, who leads our marketing and brand strategy; Chantelle, who leads our Northeast; and Mary, who lead our Michigan operation and we'll talk a little bit about our brand strategy. We'll talk about the operation of the state, and we'll take a deeper dive and this then once we're done with this, we'll ask Tim again to invite Nancy, BJ and I to also go through a quick panel interview and talk about partnership and brands. Then towards the end of the morning, we'll ask Keith, our CFO, to come in and quantify everything we've talked about with numbers that don't fly and that's what drives us every day, and that's what keeps us excited. Before we all get on the stage and answer every and each question that everybody has. So with that, Tim, I'll turn it over to you.

Thanks, Ziad. Yes, it's an exciting time. So I actually -- let's get our marshmallows and come to the stage. Jason and Lynn, please come on up. Let's talk about the industry. Let's talk about being listed on the Toronto Stock Exchange and let's talk about some of the exciting things going on overall in the industry. First of all, this is a monumental event for TerrAscend, but also, I think, for the entire industry. As I mentioned earlier, your last Investor Day was 2020. The world has changed. There's -- they say the operators that make it through the most difficult times are the ones that are really the most nimble and able to evolve coming out of -- do we call this crisis? Or is this just the natural evolution of the cannabis industry, frankly. But today, we're -- this is a full room of familiar faces, new faces, investors, executives, analyst, bankers and the world has changed. So on some level, it's changed. And if I'd parachuted in for the first time versus when I came in industry probably 8 or 9 years ago, I would find the setup to be extraordinary. I'm someone that has a background in emerging markets, and I've used this analogy over and over. But when I moved to Moscow in the fall of '98, it was basically the Asian financial crisis, Russia blew up, emerging markets were blowing up, and I'd never been through this before. And I felt like, wow, like the set up here is pretty good. You've got big resource companies. You've got the consumption dynamics and a lot of the same things, by the way, I always refer to cannabis as an emerging market, but I started investing in that market because I wasn't someone that had PTSD from having been through 2 or 3 boom bus in Russia. So I almost feel like that's where the industry is today. I think a new dollar allocated here and investors that are just coming to look. And obviously, listing on the Toronto part of this is a foundation to bring some of the biggest institutions in the world to be able to own your stock, and I want to hear all about that. So I don't know, how do you feel about today versus then a quick look back because you've seen almost everything in this industry, Jason?

Yes, absolutely. You guys hear me? Yeah, it's working? Okay. Great. Yes, very different feeling than a few years ago. As I mentioned, 2020 was a lot of fun all the way into what was at the beginning of '21 or the beginning of.

February 9th, I think we all remember the peak day of valuations.

Right, right. Exactly. And -- but this feels different and sort of more real, not that the other one wasn't real, but it feels better, when you're able to execute in a really difficult environment. And to be clear, it's not an easy environment, the cannabis industry, like everybody knows. And that's why it feels sort of more sustainable and we are -- the other thing is we just feel like it's just the beginning. We've now -- over the last year, we made all those changes that we made. And now it's freed us up to do some of the sort of the things that would be nice to have instead of must-have. And we think that, that is going to really help us continue to excel and hopefully separate ourselves away from the pack. We've got all the right people in place, we've got the right avenue to the market in terms of being on the TSX, where now as we continue to execute we won't be that tree that fell in the woods and barely anybody heard it, meaning so many of these institutional investors who couldn't have invested in us in the past now they can. But we really feel good about the place that we're in. And it's sort of like a few months ago, we started talking about when we started to really realize that things were turning for the better for us. So we started to really get excited. And I remember Keith getting excited. It's hard to get a CFO very excited. And I remember a text from him to me and Ziad being like a something like, yes, something like this s*** is really going to work. Like we're really -- it's all really happening.

Keith was that the terminology you use?

No.

But now we really do feel like we are there in a sustainable way. And we're just -- we're thrilled to be in this position.

Well, and again, you use the metaphor of a tree falling in the woods, no one, if it fall, if no one sees it did fall. There's no falling down, and I don't expect TerrAscend is going to do that, but -- but you're now listed on the Toronto Stock Exchange. Everyone will hear and see. And in that sense, your -- TerrAscend has been a trailblazer for the industry. The TSX listing is a game changer for a lot of the reasons you just talked about. And I think for the industry, frankly. This is one of the world's top 3 exchanges in my view. It will be interesting to hear, I think, for the audience how a lot of this came to be, but it's not 3 months living on the Toronto Stock Exchange. So I want to hear what the impact has been for the business. You want to talk about truly liquidity dynamics in terms of institutional sponsorship, who's paying attention, who's not.

Yes, absolutely. In terms of -- that's yours?

By the way, sorry.

Oh I took it off of the...

This happens in CNBC a lot. Am I getting trouble.

That's funny. So yes, I'll jump first forward too in terms of how the experience we've had with the TSX. As I've said in the past, it's been great it has been -- in terms of -- we felt like you would bring more volume into the stock more -- a larger audience that can participate as we continue to execute, we had -- the #1 question that would come up right away would be just to solve U.S. institutional custody, which we weren't sure of and now 90 days post. And now the answer is it looks like it has solved U.S. custody because we don't know of any prime brokers that will not custody the shares, and we specifically know of several institutions like Morgan Stanley, Bank of New York, who owns Pershing, Cowen, several others that have specifically removed us from their block list pursuant to their MRB or the marijuana-related business policy. So that's been solved. That doesn't automatically get you those institutional investors, obviously. But it keeps you from losing that institutional investor, if you -- if they like your story and it got held up by the fact that the plumbing would not allow it. So we've been -- it has exceeded our expectations, mainly because of the improved custody or the allowance of custody. But also from a volume perspective, our volume. It's up, I think, 3 or 4x now versus prior to our listing. I would say that a lot of that was driven by the HHS News.

Market has had a big move.

But even before that, we had about 6 weeks or so or 5 weeks before that news came out and our volume was up about 140% or 150% from prior to our listing. And when you compare that to other U.S. operators, the overall, their volume was down about 18% and the S&P volume was down about 18% over that same period. So that to us is proof that the TSX in and of itself led to increased volume. There's also been -- we got some stats on the bid-ask spread, and it has significantly narrowed. So that just shows you more liquidity and -- and the ability -- that's what's going to appeal to the larger institutional investors that they can get into the stock without taking it up 150%, although I wouldn't mind that either.

And obviously, other companies in the sector are following suite -- so -- and obviously, the dynamics of the plumbing within the industry and some of those challenges aren't totally solved here. But on some level, they are to someone that runs a U.S. 40x fund with a lot of requirements getting past the compliance folks to say, no, no, no, TSX immediately because if you challenge TSX, you have to challenge every other company on the TSX, and it's an exercise that I think is pretty much impossible for a compliance team to go through and it doesn't make sense. So Lynn, this has not been an easy process. It's probably taken months. And I'm curious, maybe talk about some of the legal challenges, what you think has allowed TerrAscend. And I think there's some unique dynamics to the foundation, the Genesis, the early stages of this company here in Canada. I mean, that's had a lot to do with it, and it's an important part of both the history and the future. But talk about that. It's great to have you here.

Sure.Thanks for having me. Glad to have you here, too, Tim. So on July, so Jason set out with the goal and he said, "Okay, we're going to list on the TSX on July 4." So literally, the team internally did everything that it took to hit that goal. So there were a lot of challenges with the way I call them. They're more obstacles each and every one. We tackled with innovation, which is the way we challenge ourselves every day. But TerrAscend is a trailblazer. It's not the first time that we've done something that's incredibly innovative. We transitioned to the U.S. in 2018 and '19 and -- and that was the first Canada operator to come into the U.S., and that was very significant. So we're just driven by innovation. It's one of our core values. And there were a lot of things we needed to get to in order to list on the TSX. Of course, we need to design a structure that was compliant. We had to spend a lot of time working with the TSX to ensure that it works. But then after we passed all of that, there were contracts that needed to be amended. The organizations needed to be fund, needed shareholder approval. So it's definitely a long process. But we got there. I mean I think that's one of the things that makes TerrAscend special. We don't really spend so much time asking how things have been done, but rather how they need to be done in order to achieve our goals. And we're just really excited to pave the way for others in the industry, and we're super proud to be here.

It's -- again, it's a moment that on some level, has seemed so easy the way TerrAscend has done it, and yet it's an incredibly transformative event. And I think it's something that feeds us into the next part of this conversation, which is really to talk about the market and talk about the world that has changed so much. And the last 2 months of -- thank you -- have been extraordinary even by a cannabis definition of macro and legislative headlines and 8 weeks ago, 10 weeks ago, HHS comes forward with a scheduling recommendation. That immediately drove market valuations higher. We can again talk about how sustainable that is -- and -- but there's no question this was a headline that didn't require a follow-through from a group of lawmakers on Washington that sometimes show up to work and sometimes don't. And then that was coupled with the news around safe banking or safer banking. Look, there's no denying this was the first progress in the Senate ever for this industry. And it's not only were there ceremonial type of and really important just elements of why this made some sense getting past Mitch McConnell. And I mean, there's a lot of reasons that the industry was feeling pretty proud of itself, but we've never taken those kinds of steps. So I guess my question is, we saw cannabis companies move anywhere from 30% to 230%, at least some of the larger ones on the exchanges. A lot of them have given some of them back. The folks in the room know kind of what the charts look like. and where you kind of have gone back to either levels on valuation that are a little bit south of where they were going into the summer of '22, when we started to get sprinkling of all this good news that was going to happen that never happened at the end of the year, and everything shuts down. Just talk about that, was it an overreaction? Because -- or are some of these headlines even though we don't know the timeline on delivery, are they ones that you really think have changed the world in cannabis?

Absolutely. I think the Schedule III news, I mean it's news. The news is that the HHS recommended Schedule III. We don't know after the -- yes, is going to follow that. We think there's a good chance of that. But that news in our view, is massive, much bigger than safe or safer banking. It's sort of -- it's like sort of like Goldilocks to a certain extent. It seems like it would keep all the state level programs in place and the states could treat their cannabis programs as they wish, but it would -- the main positive is that it looks like it would get rid of this very punitive tax treatment of 280E, where you can't deduct your operating expenses. So that would be -- I mean, you look at our business and figure for this year, we'll be making another an extra, I don't know, $7 million, $8 million per quarter. That makes companies and all of the companies -- all the cannabis companies around would be affected in a similar way. It just makes it so much easier for them to service their debt. It makes it so much easier for them to build out -- continue to build out their businesses. Hopefully, they don't build out too much new capacity anytime soon. But it is an absolute game changer. I think the day that, that news came out. What's the boyfriend meme? Where the boyfriend is looking ahead. And his girlfriend is not happy with him.

Oh, that one.

That one, yes. And I thought that the perfect sort of use of that would be the boyfriend was looking at Schedule III.

I do remember getting that one.

Yes, yes, yes. And was out looking, I guess, the old girlfriend was the safe banking ad. And that's the way I feel.

It talks about convoluted metaphors.

It would have been much better with a visual.

Well, that's -- we've all seen that slide.

Yes, we all seen it. But anyway, the point is safe. And maybe this is personally and maybe a lot of other people in this room have the same feeling. I've had so much frustration with what has happened in Washington or what's happened in Congress that to a certain extent it makes me feel good to point out and to know that we don't need them for -- to make this progress in that and that the Schedule III will be such a game changer that it's going to end up putting a lot of companies in a lot better position, including us. I think that we did -- I think we did a pretty good job over the last year of -- and on July 4, we declared our independence based upon all the things that we did in the prior year and culminating with the listing on the TSX to say that we are independent of the need for federal reform. But the fact is nobody was more excited about hearing that news, when it came out, and it is going to be a huge positive for us. and for every cannabis operator at the...

Once it gets back to that self-sufficiency dynamic, and there's probably still a lot of debate in the industry. I mean what is adjusted EBITDA. There's debate in any industry, what is adjusted EBITDA, but that self-sufficiency, free cash flow from operations as they are today, and I know Ziad's talking about, I know Keith is going to talk about it. Those are some of the defining moments of today alone. This is about what's going on right now in the business, not wishing on tomorrow. And I guess as we look towards some of the regulatory framework, Lynn, and you think about how your involvement in this industry. First of all, then you come from some of the most regulated established industries, insurance, alcohol, software, where you have not only some of the biggest companies in the world, but companies that have had to live under very [ osteo ] compliance background. So I mean, talk about your observation 1.5 years into cannabis about, first of all, what has been like for you, but how do you see this? Because, again, you know what it's like to walk the walk of an industry that really is in some of the most sophisticated regulatory framework as anyone.

Yes. Thank you. So first, before I just want to comment on the regulatory reform. So we spend a lot of time internally thinking about what's coming and what it means to us. I want to reiterate we have made some massive changes. So we stand to be a successful business people without it, but we'll significantly benefit. So -- but from my perspective, the way I look at it, I think, federal government has failed us. There's -- like everything is on the table internally. Everything is on the table among the large cannabis companies, who we speak to regularly about what else needs to be done. The fact is the people have spoken, 38 states, including the Districts of Columbia have legalized cannabis and yet the federal government still says it's illegal at the federal level. So that's an abusive discretion. There's a state sovereignty. So there's a lot that we still...

That was like a lawsuit. Hemp, hemp.

Yes. so you never know. But there are a lot of things that we're working on. Everything is on the table. But just to answer your question about what it's like to work here in cannabis versus more established industries that I've worked at. So it's -- I've had this question before. And as a lawyer, I take -- I get value out of solving 1 problem at a time. I've worked behind large management teams and you just block and tackle and you know that every solution to a problem arrives at helping the bottom line. But in cannabis, specifically, there is no other industry, where solving legal problems so significantly impacts the bottom line. And so that makes working in this industry so valuable, so impactful and I'm just really thrilled to be here. It's been a really exciting 1.5 years, and I'm just happy for the next 1.5 years and then to come.

Well, again, bringing that kind of background, I think, is critical for an industry that's growing up really quickly. Jason, let's talk about, again, balance sheet dynamics. It's been an extraordinary year for TerrAscend. It's been, again, a transformative year, when you think about the pay down of debt, the equitization of the Canopy loan, you've acquired.

So, where are our Canopy friends here?

Partners with Canopy for a long time though. I mean, it says a lot about a relationship that I think is evolved throughout 3 dispensaries in Maryland, a $20 million -- $21 million capital markets raise in a ridiculously difficult capital markets environment. I don't care what anybody says. And yes, there's been a couple of IPOs in New York. But -- so how is this getting done? What's -- talk to me about the team behind the balance sheet and the execution that's getting this done? Because obviously, that's what part of what this day is all about.

Yes, absolutely. And that was part -- yes, that was a big reason why we wanted to have this Investor Day was to have everybody meet -- everybody hears from me and Keith and Ziad at all the time, but they don't hear from a lot of the other people that are really the ones that are helping to drive things forward like our Head of Marketing, BJ Carretta and our President of Michigan, Mary Turon, who we're going to hear from in a few minutes, and Chantelle Elsner, who runs the Northeast for us, they have really impressed all of us with their drive and really with the results that they've help put together here over the last several months in as what I mentioned is really not a very easy environment, a difficult environment in fact. So -- the -- and also Lynn, most people have not heard from Lynn, our Superstar General Counsel or all right -- Chief Legal Officer, right? So yes, the team has done awesome. I mean I would tell you in terms of all those things that you mentioned over the last year on the progress on the loans and all of that. Yes. And it was like -- I mean, that was -- I know pretty practically every day for a long period of time. In the morning, it was -- there was a call between me and Keith and Lynn and Ziad to work on what we felt like and what we termed as landing 4, 747s about 1 minute apart. And that was all the work that we did last year with that with...

747 is still flying?

Yes, yes, yes, they are. They're still my favorite.

It's a metaphor.

Yes, 777s. So we really -- and it was like back then, it was more stressful, when we were working on all of the debt reduction and everything sort of had to be done in that order to make sure that we could go through with the next step. And I don't know really -- I feel like it bonded us together really well. And now that we were able to pull all of it off, yeah, it's just like now when we look at like other smaller problems, and there's always problems every day in the cannabis industry. We look at these other smaller problems and we keep saying that, that's like nothing compared to what we called off a few months ago.

What's your perspective, Lynn? And again, you come from a background of some of the most sophisticated companies in the world, and this is the road that TerrAscend is on?

Yes. So I agree with Jason, 100%. Having worked in with management teams and other industries and legal teams, like there's -- the way I would describe this team is there's tremendous passion. We coalesce around our goal. We're all rolling in the same direction, selflessly working toward on covering obstacles solving them, power decisioning, which comes from great leadership. I mean, you really can't -- I would say, from my perspective, I'd stand up this leadership team our cross-functional team and my legal team against any Fortune 500 company. And that's how I generally feel, that's what makes TerrAscend so special. There's people unwavering passion for delivering the goal and just staying focused and working together and actually enjoying what we do every day.

Yes. And we're all glutton for punishment. -- like there's -- the part of the reason -- and I agree with you, Lynn, Part of the reason that we could stand this team up to practically any other major company is because in my view, nothing else is as hard as cannabis. So most of them, if they try to do this, I'm not sure they would be as successful, no question...

Yes. And it's not only work. I mean we actually have some fun. We do some group chat. I mean it's actually a really great place to work genuinely.

Well, it's clear that the team is working. And I guess, Jason, before we wrap, I wanted to get your vision of the future in a world where the exciting moment, I always joke that, this is me just be kind of cynical guy that seeing a lot of companies, but you don't have an Investor Day unless you have good news. So you had great news this morning. And you updated upon a quarter that already had people buzzing about the second half. So it's exciting. How are you thinking about the future? We've talked about macro. We've talked about bottom up. We've talked about the team. We've talked about new states. What gets you most excited?

All of it. I mean, the team is working really well together, best we've ever worked together. So that's 1 major positive. We're just so excited about the lineup of states and the fact that we are not in that many states. We've approached this business from -- for the last 4 or 5 years has -- wanted to go deep and not wide because we felt like we would have a better chance of winning, if we were more focused because you have a lot of mom-and-pops that are in single states that, that are going to eat your lunch, if you're not paying attention. So because of that deep and not wide approach, a, we are some of the top operators in the states where we are. Maybe I can throw out the TDS data for August, which is the most recent month, showed us move from #3 market share in New Jersey to #2, and we're only 1 percentage point away from #1. And we know that with the Wana launch that, that we are going to get there. So that whole approach has helped us build our businesses in those states better. But now with the level of distress that's in the industry, we are really able to be the most opportunistic in terms of choosing additional states to go into. So super excited that, that strategy has worked out. And at this point, I mean it's just like Ziad and the team Chantelle and Mary, it's like we've got -- and BJ, we've got -- the machine is working pretty well. In fact, we're sort of like dialing it in more now and sort of attacking so many things that we didn't even have time to go after originally. So I think that the sky is the limit. We think that we are going to be a much, much larger business 2 or 3 years from now than where we are now. But now we are cash flow positive. So we can truly say that we are a sustainable company. And just the way Maryland when we dropped Maryland into our business and Rex started on July 1, that was 1 of the main aspects of what is -- has turned us to cash flow positive or while we're going to be cash flow positive in the second half of the year. But what happens when we drop a few other assets into our base of business, we feel like we're going to -- in an industry, where a lot of other operators profitability, their EBITDA margins and all that have been going down. We are so excited about the fact that over the last 4 quarters or 5 or whatever it's been, that we've made progress on those margins and our metrics. And we think that that's only going to get better as we are able to add some more businesses into our -- into ours.

So first of all, wrap here and just say it sounds like a relentless team with a clear vision of the future. So Jason, Lynn, thank you for the time. Let's bring Ziad back to the podium to talk a little bit about state-by-state marketing, et cetera.

Thank you, Tim, Jason and Lynn. Over the next few minutes, we'll talk a little bit about yesterday, today and tomorrow for TerrAscend, where we started and where we are today. Then we talk a little bit about 3 or 4 main differentiators for our company before I invite BJ, Chantelle and Mary to the stage to take us into a deeper dive into our brand strategy, marketing strategy and talk about each state in more depth. So we've talked about our differentiators. The #1 differentiator we had that Jason described is the lineup of the state that we have. Before we get in there, how did we get in there. In 2017, we started as a Canadian LP started all in here. From there, we started with a $52 million investment by Canopy and JWAM that progressed into 2018 to get our -- to transition into the operation in the U.S. market that Lynn talked about, we were the first company that transitioned from here to the U.S. The same year, we won our vertical license in New Jersey that today as a main piston of the machine that Jason was talking about. Then in 2019, we entered into both California and Pennsylvania through the acquisition of Apothecarium and Ilera Health. In 2021, we acquired 3 additional dispensaries in Pennsylvania before we acquired in Maryland the same year, a small grow and a processor -- processing facility. In 2022, we entered Michigan through the acquisition of Gage then later that same year, we went deeper into Michigan with the acquisition of Pinnacle and adding 5 operating dispensaries. And then today, in 2023, we are in the state that we are, we went fully vertical in Maryland and we transitioned the state into the adult-use program in July. But also on July 4, like we've mentioned multiple times, we started up listing on the TSX started up in this building. So that's our journey over the last few years, but where we are today is what really sets us apart. We are in a lineup of states between New Jersey turning recreational, Maryland in July turning recreational, Pennsylvania expected to turn recreational over the next 12 to 24 months. Organically, without any further investment without any acquisition. We will double our revenue by the time Pennsylvania turns recreational. Our CapEx is spent, our operation is fine-tuned and we are ready to go through that rapid growth. This is not a growth we are hoping we get. This is a growth that Keith will prove by numbers today that we are leading the industry in that story, and we're excited that we can do this for the next year to 2. Now within that lineup of the states, we have an open map. That open map will allow us to be pretty selective on how we bolt on to our machine further acquisition opportunities. When we think of acquisition, we think of it in 2 buckets. Internally, our top A priority is to go deeper in New Jersey through a bill that was signed recently, and I know Chantelle will talk about this. Our top B priority is to go deeper in Michigan. I'm excited about New Jersey. Obviously, I'm excited about Maryland. The state that I'm excited about the most is Michigan and will share why? It's a state that is an unlimited state, it's a state that we can get the scale and then if you give me an option to be in a 50-plus gross margin in a limited license state or to be in a mid-40 unlimited state with a potential to have 50, 70, 80, 100 stores, that is what is going to help us build that -- the growth that I talked about. So again, we'll double our revenue organically. We have those opportunities internally in New Jersey and Michigan. When we think of additional states, we think of Michigan East and up and down the coast, and we are having constant conversations with potential partners and potential additional family members that come in, but we will stay committed to our investors and our shareholders to be disciplined and not to have any fear of missing out and only look at deals that are cash flow accretive, not only EBITDA accretive and that's a focus that the team will continue to look at. We've talked about the first differentiator on the lineup of state. We talked about the second differentiator of the open map and then the third differentiator I've talked about in my opening remarks, and that's the sponsorship that we have, whether with our partners and from JWAM. And then all this is really powered or enabled by the team. Bare with me for a second, I want to share more about the team that we have that I'm so proud of. We had a team that bring a super effective diversity of thought that is pretty unique. We have a team that is connected to the culture and the cannabis experience. We have a team that is -- brings corporate experience and scar from Fortune 500 companies that we are implementing in the industry. We have a team that is determined to promise internally that we continue to fine tune and we will hopefully soon bring it externally, we are determined to build the best cannabis company. And Lynn, you said it, I've led a total of 19 teams in my career. And with a lot of confidence, I can say I can put this team against any of the teams I've led before or I supported before, and yet against any team and top 100 Fortune company because of the passion because of the experience, because of the collaboration. So I couldn't be any prouder of the team. Talking about the team, I'd like to invite 3 of them to the stage. BJ that you heard about, Chantelle from the Northeast and Mary from Michigan to talk further about state by state and operation.

All right. This is fun. We're really excited to be here. I'm really excited to be sitting next to both Chantelle and Mary. As Jason and Ziad had said, we are a machine, we are. I think I talked to you to maybe more than my wife on a consistent basis during the course of the day, since we're all remote. But our objective is to challenge each other, our objective is to set up the right operational procedures and our objective is to move fast. We look at data. This company is way ahead of everybody else, in my opinion, in the cannabis industry. As it relates to data and research and homework, we make decisions based on numbers. We look at consumer trends and we're constantly trying to evolve our brands, trying to evolve our products. Our cultivation facilities are top notch. Our product is amazing. Even when we talk about our lower level brands, it's still amazing flower. So we've got the system set up. We've got the operations set up. Chantelle and Mary will walk you through their markets and then we'll get into our brands and talk a little bit about our strategy.

Good morning, everyone. My name is Chantelle Elsner. For those of you that I didn't meet already either today or last night and I'm super excited to share an overview of our Northeast operations with you today. A little bit about me. I have been in the industry for about maybe a little over 7 years at this point, which as all of us will say, feels like a lifetime. I've led retail, wholesale, sales, marketing, operations. And about 3 years ago, I decided to move across the country to join TerrAscend, where I lived in Arizona before, I now live in Pennsylvania. So I can imagine you all understand how different that is, but it's really important for me to be in the markets that I'm leading and I often think about my why, right? I do a lot of research before I join companies. And my why today is very similar to the why that it was when I first joined. I did a lot of research. I knew I wanted to be part of a high-growth company. I knew I wanted to go all in. And part of that -- a huge part of that was the research I did on Jason, right? All of you have done your research, I did as well before I joined and he's a huge part of that. So our strategy, and you've heard us say it, we'll continue to say it is to go deep, not wide in our core markets. And it's this team relentless and JW is relentless, we all are, pursuit of continuous improvement day-by-day, quarter-by-quarter, year-by-year. That keeps me going. So, let's talk about New Jersey a little bit. At the heart of our success in New Jersey, which we're all very excited about, one of the best markets in the nation, is our state-of-the-art cultivation and manufacturing facility. So, this facility is beautiful for those of you that have had a chance to go see it, and if you haven't, we welcome you. We're looking at bringing on additional capacity next year, but the team has actually done an amazing job revolutionizing our growing practices. And over the last 8 months or so, we've seen about a 50% increase just using the current square footage that we have with those practices being in place, which has been amazing to see. I think we were all a little nervous about it in the beginning. Is it going to work? Is it not going to work? And we've seen it. We've applied it there. We've applied it across all of our markets. Our brands have really, really took off in New Jersey. So the Country brand, Wana, that we've launched recently and Cookies as well as all the others have started to become kind of household brands in New Jersey. The patients and the consumers have embraced them, they love them and JW kind of stole some of this from me, but I'm going to say it again because it's so important. According to BDSA, in August and we were waiting until this launch on BDSA, and sending out techs that got shared all too quickly, we secured #2 in the market. So it was such a closeness, I want to say, on #1. So between myself and this entire team and everyone, we are absolutely striving for #1 and we will get there. I know that we will, and I believe it's going to be quite quick. And we also hit #1 in 3 other categories: flower, vape and extract, that's #1 in the market, like that's pretty amazing. I know that I'm so proud of the team. I'm so proud of the quality of the flower that flows through all of the products that we produce. And it's all about what Lynn said about our innovation and that relentlessness about our team. So I know that we're going to get there to #1. Wana has been something for us that has fueled significant momentum on an edibles category. I think anybody who thinks about national brands definitely thinks about Wana, for sure. This brand has been amazing, and it's actually catapulted us just in the early months of launching to #3 in the edibles category. So as I mentioned, we're so committed to driving quality and efficiency throughout all of our operations. And in New Jersey and across the board, we continue to optimize our product mix, balancing our wholesale and retail offering, which has already and will continue to reduce our cost of goods and we're going to continue to see sequential revenue growth. We also have lots of really great opportunities in New Jersey on top of what we have. So I think Ziad kind of mentioned it a little bit earlier, there was a bill that recently passed, which allows us to own up to 35% of 7 additional stores. So we have 3 stores currently. We are currently in talks with lots of different partners. And this is going to be a huge leap for us in the state, which we're all super excited and very quickly working towards securing. So New Jersey for us is a pretty prime example of like the ideal state playbook, right? We take a lot of our learnings. We take a lot of our best practices from New Jersey and apply them across the board. And it's -- we have our diverse brand portfolio launched. We have exceptional growth prospects in New Jersey. And as I mentioned, we will be #1. So next time you hear from us and JW you'll probably steal my thunder on that one quickly. We will be #1. So really, really proud of the team in New Jersey. It's been an amazing road for us, and we are going to talk a little bit about Maryland next. So Maryland is a $1 billion adult-use market. We've had a pretty quick [ joint ] into this market and all my time in the business, I've never seen anything quite like the speed at which this team acquired and integrated 3 stores, just a moment before the adult-use launch on July 1 to get us to our now 4 store counts. Every leader was boots on the ground. Everyone was engaged. Everyone answers their phone 24/7. I think my phone was on at all times. We even acquired a store the day before July 1 and that store successfully converted to adult use the next day. We didn't actually even meet the team before they launched. In fact, Ziad, himself even took it upon himself to drive to all of the dispensaries in a rental car, which are, of course, strategically spread out amongst the state. He was taking calls from the car and doing his very best to get to everyone, so much so that he ran out of gas, somewhere on the border of Maryland and West Virginia, to where he had to call in a rescue to our Head of Security, who told me it was an honor to bring the CEO a can of gas. So he made it and he shook everybody's hand and he wished everyone congratulations and we're so happy that all levels of our leadership get to interact with all of our team members. So our journey in Maryland began with an acquisition of a small cultivation facility in 2022. We have since then and pretty quickly thereafter, relocated to our state-of-the-art facility in Hagerstown. We've learned our lessons along the way about balancing supply and demand in the ever-changing market. And to meet the now growing demand, we are doubling our capacity in 2024. And -- and this expansion really aligns with like our rapid market penetration plan for Maryland, right? Doubling the output, feeding our 4 stores in the entire wholesale market. Much like New Jersey, Maryland's margins and market structure are conducive to driving significant positive cash flow. We know Keith is going to talk a lot about that later. Which further reinforces our position in the state. We've really only scratched the surface of verticality in our own stores at this point, primarily due to the demand for all of our brands on the wholesale market. And that kind of brings me back, and I know BJ's going to talk a lot about this, but our proven brand strategy learned from all of this team's experiences and how we've seen it work in New Jersey and applying that to Maryland, I'm going to throw in some more BDSA stuff because I have them also fresh in my mind. We've seen a 200% increase quarter-over-quarter, right? Which tells us actually based on the data that we're like growing at nearly double the market rate. So it's been really amazing. We've acquired a lot of new faces, and the team is fully focused on producing all of the amazing brands that we sell in all of our other markets. The Maryland market, I think, overall, did an amazing job of converting to adult use quickly, easily, not every state is like that. New Jersey wasn't like that. Lots of other states that we've all operated in, were not like that. So we have really high hopes for every other state conversion to be much like Maryland, quick, easy, seamless. And I just saw my next slide moved. And we -- I think we're going to apply a lot of those lessons as we start to ramp up in the Pennsylvania market for when we go adult use there. So... On to Pennsylvania, which is my now home state, with a population of 13 million people, it's the largest in our Northeast region. So it's currently a $1.1 billion medical market, obviously poised for huge growth when adult-use launches. And it's the third state that I've been a part of here at TerrAscend taking adult use. However, we can't talk about Pennsylvania without maybe referencing some of the challenges that this state has seen over the last few years, including price compression, market consolidation. And we're actually now starting to see that the market is stabilizing, I mean, we're seeing gradual gains over the last couple of quarters. And I believe that our team, our proven playbook will continue to be the key to our success in each state. We've recalibrated a lot of how we operate in Pennsylvania based on those learnings. We've applied our proven innovation process. We've launched new brands. We've reinvented some existing ones and the data is showing us that we're delivering products that every consumer wants. Again, to highlight some of our recent successes. So we have 6 stores in Pennsylvania, and I mentioned some of those gradual gains. So we've grown about 6% sequentially and 8% year-over-year. And we're, again, going back to BDSA, because we've been so eager to see some of these amazing results and how we're trending in the states. Our flower category is seeing some remarkable growth with a 12% increase year-over-year and concentrates have shot up. So we see this a lot in adult-use markets, where a lot of consumers start to convert over to concentrates and it starts to change the mix of how people are shopping. And we saw a 25% increase in concentrates. Our Legend brand, which I know BJ is going to talk a lot about, that launched earlier this year, continues to be a key driver of our success amongst all of our other brands. And we saw an 8% increase in the last 2 quarters according to BDSA with overall flower sales with introducing that brand, right? So it's having all of the brands and the selection of products within each of those that are good for all consumers at every price point. So I talked a lot about and we all do right about our innovation mindset. Our innovation is always driven by our consumer demand. So in the case of the state's recent approval of edibles, select edibles, I'll say, not all edibles, we quickly brought our Valhalla brand to market and this has been a game changer. It's such a huge deal when a state adds categories and form factors. So Pennsylvania, for those of you that might not know doesn't allow or didn't allow edibles and pre-rolls, we know that those are in high demand in every market. Recent launch of our Valhalla brand has shown incremental revenue on top of everything else that we are already succeeding with across the state. And as far as our understanding, the state seems really open to expanding other categories, further expanding the edibles category as well as pre-rolls. So we know that, that's all going to be incremental when they do that. So I mean, Pennsylvania for me is it's -- on a promising trajectory. It might not be going quite as fast as we all want. And we're going to continue to leverage all those best practices that we've seen successful in our other market as we prepare for adult use. And I know that we're going to be 1 of the strongest players in the state. I'm going to hand it over to Mary, who leads our Michigan market. She continues to remind me of the friendly competition that the Michigan market is going to bring based on her unlimited license structure, which is very different than how we operate in the Northeast. Take it away, Mary.

Thank you so much, Chantelle. Well, I am Mary Turon. I'm delighted to be with you this morning. Just to share a little bit about my background for those of you, who didn't get to meet me last night, I'm probably a OG in cannabis after 7 years, you're lifer, spent 7 years in the cannabis industry and absolutely love it. Three of those last years, I have been honored to be representing the Michigan market. Despite joining TerrAscend only in June, I feel like I've been here my entire career. I can't tell you enough about this wonderful team. Their camaraderie, they're warm and their collaborative spirit, has truly been unique -- like a unique experience for me. So it is an amazing team. And I can't say enough about the support we've all received. Presently in Michigan, our state built 19 retail locations, soon to be 20 and we're determined to go further in strengthening our presence in this market. Michigan currently stands as a $2.9 billion juggernaut in annual sales, solidifying its position as the #2 in the United States just behind California. The key story here really is growth. It's all about growth, growth in a gross margin, our growth in increased profits, growth of brands and untapped potential of expansion in our state. Following the acquisition of Gage in April of '22, we took decisive action to streamline our cost structure in a challenging operating environment. We've successfully stabilized pricing, since the early 2023, thanks to favorable regulatory changes and decrease in statewide cultivation capacity. Our dedicated team has taken steps to balance our gross margin and revenue. Q3 gross margins are up with significant retail increases resulting from promotional strategy refinement and product assortment, we've also seen decent increases in our wholesale market driven by strong performance from Cookies, Wiz Khalifa and our own kind tree products. In retail, we've been adjusting our promotions and product strategies to focus more on increasing margins and streamlining promotional offerings and leveraging that data and consumer trends to drive traffic and increase frequency, our product assortment strategy, is the same as all of our states, which BJ will share with you, offering consumers the right products at fair prices and having the selection that consumers desire. Similarly, we are focused on building a national brand presence with our internal brands and the introduction of Gage, Kind Tree and Legends has enabled us to add SKUs, consistently tapping into new product categories and prioritizing our own brands on the shelf. In the last 2 quarters, we've reduced our reliance on third-party brands in Michigan by 20%, increasing our gross margins, which is really a great story and a huge success for our team. We've seen remarkable growth with partner brand Cookies, which had a substantial surge in August sales for us. This growth was propelled by popularity of our flower, our vape products reinforcing our strong presence in the Michigan market. Our vertically integrated setup with 3 cultivation facilities, a state-of-the-art lab and a packaging and distribution hub has leveraged our verticality and helped us control costs. Consequently, our gross profit margin has seen consistent growth every quarter. I'm highly confident we will achieve EBITDA positivity by the second half of 2023. We are currently exploring numerous opportunities to expand our retail footprint within Michigan through both organic growth and acquisitions. So the sky is truly the limit, when it comes to licenses and we're eager to seize all of these opportunities in the state. I'd like to truly express my heartfelt thanks and gratitude to all of our dedicated team members, all of our value partners, investors and loyal customers. I'm tremendously excited to see and be part of the growth that we're going to see out of Michigan. So thank you for having me here. It was so nice to get to know everybody last night and meet everybody and watch out for Michigan, we are coming, we are coming for you.

A lot I could say about Michigan. One thing is Michigan is also per capita, the largest U.S. market. California from a revenue perspective is, but Michigan this year overtook that, which is really impressive and really important for us as we continue to explore growth opportunities there. But -- we're going to get into the marketing strategy. Just sitting here, I realize that the 3 of us, when you combine our years in cannabis is probably the deepest bench at any of the larger cannabis companies. We've all got 5, 7, 8 years in the industry. So we're walking into the room with a deep round of experience. So that's just something for everybody to think about as we make decisions and continue to move forward. From a marketing perspective, just really quick, so everybody can understand our point of view. We operate as one. We have SOPs across every single market. We don't veer from them, structure, movement. We try to move quick. We try to make decisions. So we all work off of the same program, same operating procedures. We have the objective to unify all of our brands across all of our markets. We don't need different brands in different states. We need our brands in our states. We need the products to come out of cultivation. We need to put them into our brands. We've created a brand standard set that the entire company works off of with cultivation. We're lucky, I would say, the 3 of us are because our cultivation head, Jeremy Cohen, is tremendous, coming from Northern California in the State Flower brand. So we benefit from having just really, really good product right out of the gate. The marketing team services the whole entire organization. So we're set up as 1 marketing group. We have marketing leads in each market, but we come from the top-down approach. Things obviously move and weave depending on the market and what the data is telling us. But it's not a separate bunch of group of people. And then always have the objective of growing our consumer base. We have a thing with the retail teams of -- and when we do our -- the panel, I'm sure Nancy and I will talk about this a little bit more, but when you can bring them into the ecosystem, they're in the ecosystem. And that means when you walk through the door and you check in, are we getting your e-mail? Are we getting your phone number? Are you opting in? Once we get through in the ecosystem, it's in our job to leverage all those points and to continue to remarket back to them. Our Head of Technology, who is here, David Wheeler, is working on 1 system approach for everything that we do. So our POS system will be tied to our e-mail system, will be tied to our tech system. We are launching national loyalty programs across the country. We're rolling out a national app across the country. We're also getting into segmentation. So we're going to know it's like a D2C model for the most part. We're going to know when you come in, what you're purchasing, when the last time you purchased, how much you purchased. If we don't hear from you for a while we have flow set up that are going to ping you and say, "Hey, where have you been in for the last 30 days? Or hey, this flower promo is happening." Our objective is to talk to them through 1 system, using data at all points -- at all consumer touch points to really try to give us the edge because the marketing in cannabis, as everybody knows, not a whole lot you can do. Though the things you can do, you really got to do them well. And we were joking this past week. Some of it's boring, but it actually works. So if we can continue to evolve that and grow that across the country, I think it's going to put us in a really good position to have great success. So on to our brands, our brand portfolio. I'm the luckiest marketer in the industry because our 2 partner brands are Cookies and Wana. I mean you can't really ask for any larger national brands than Cookies and Wana in 2 separate categories. So walking into the room, it's amazing. They're not licensed partners. I've been involved with license partners in my previous lives. They're not licensed partners, they're partners. They dedicate marketing team to work with us. We talk to them on a daily basis. The Cookies team and the Wana team they drive innovation with their process, with their genetics. They are deeply ingrained into our culture. And it's really helped us, as it relates to our other brands because cannabis cultivars, I kind of view them as creative people. They can vibe off of each other. So when multiple groups of them are in the room, innovation happens, and we're really lucky to have them as partners. This is your typical CPG brand map. I'm not a huge fan of these type of brand maps. I think you're just kind of putting logos and squares at the end of the day, that doesn't really mean anything. Our brand map is more linear. We view it as premium to price savvy. The reason we do this is it allows us to move our pricing as the market is moving. So we're not just putting it in a quadrant and we're saying it has to be this price. We like it for the fact that we can make decisions based on what the market is telling us and put things in certain areas based on price and product. Let's start with Legend. So this is our lower-priced, lower-tiered brand, but it's not lower tiered, it's not value. I will not call it value because the product is fire. It's bigger pack sizes. It's 28 grams, it's 14 grams. It is your everyday consumer. It is people who walk in, they are rolling joints or they are consuming every single day of the week. The product is amazing and it's priced really, really well. We saw an opportunity in Michigan this year to launch this brand. And Mary and I kind of fell off our chairs after the first 3 days on the sheer volume of units that we're moving across the state of Michigan. So quickly got on the phone with Ziad and Chantelle and we made the decision. Let's replicate this. took it to Pennsylvania. The first weekend, it was flying off the shelves, got back on the phone, took it to New Jersey, same thing. It's moving. We're not taking Legend into the 3.5 gram pack. That's not the purpose of this brand. This is a brand that is good flower, it's priced well, it's larger pack sizes for the everyday consumer. We're going to replicate this over and over again and continue to be nimble with this brand. Valhalla is our in-house edible line, it's a lower-priced edible brand. It's mostly for the newbie or reentry, I would say. It comes from California and that group when they came into the family does very well for us. As they talked about when we launched it in -- in the Northeast, it's doing really well. It's not a competitor of Wana not much is, but it's our edible line, and it does really well for us. Kind Tree is the mid-tier brand. This is your workhorse, so to speak. This is what got us to #1 in New Jersey. This has the largest variety of strains that we grow, and we put into it. Its primary SKUs are 3.5 grams at the end of the day, we're constantly rotating strengths in and out of this. It's picked up on the Northeast really, really well. And it's the brand we can test a little bit more with the cultivation and having a lot of fun with. Gage is the legacy Michigan brand. So both retail and this brand exists in the State of Michigan. We've begun to roll it out across the Northeast in our other markets. It's doing pretty well, actually. There's a lot of passion in Michigan for this brand. We battle a lot on the Gates wine in Michigan in a good way. But we're working on continued growth across the country with this. It was the fastest-growing brand for us in New Jersey, it had a 110% increase in market share month-over-month. A lot of that was just our distro. State Flower is core to us because this is where Jeremy Cohen comes from. This was his baby in Northern California. It's only in California. It's a small batch brand, really consistent strains, we don't grow a ton of it, but we distribute it through all of our stores in Northern California, but it's the constant reminder for all of our cultivation on quality. Wana, I know we're going to have a panel with -- with Nancy shortly, it is North America's most trusted edible brand. It is. Plain and simple, anybody tells you that it's not, not true. They're all over the country. They've done an amazing job with market penetration. They're really focused. And like I said, they're huge partners for us moving forward. We launched them in both New Jersey and Maryland. And we saw a really substantial movement for us in the market. It's #3 month-over-month of edible, 67% distribution, plus 203% in overall sales month-over-month in Maryland. It's doing really well. New Jersey took off 12% share. It's on track to increase to 16% as we continue to do more with our partners in Wana. Cookies, the slow burn, is what we call it. They're a great group to work with. I was joking last night, where I can go to my family's soccer games and sporting events, and I see Cookies merch on everybody. That's a huge advantage for us at the end of the day because everybody knows the brand, their genetics are pretty amazing. They've been a really, really good partner for us. We've got some pretty cool things coming down the pipe with them. They're -- they call it 2.0. They've launched a lot of it in California. There's a dual chamber that's coming out that I've been able to get my hands on. It's pretty amazing. It's doing really well in California that we're bringing into other markets. So we're going to continue to evolve and grow with cookies. So what's next? These are -- this is our portfolio for now. Our objective is to continue to evolve, continue to do more, continue to look at the market, come up with SKUs that we think makes sense, find holes in the market or opportunities in the market and really work together with my partners here and then obviously, our California group on market penetration. We want to be #1. So that's what we're driving to at all times. So I think that's the end of our presentation, if I'm correct. I will welcome Tim back on stage.

And now we're going to have this conversation about brands. And in fact, I want to invite Nancy up to the stage, I want to invite Ziad back up to the stage. BJ's going to stay here. So please come on up and we're sitting on our marshmallows for our fireside chat, and we'll continue to kind of evolve this concept because if I want to continue down the line of slightly off-color jokes and things that Jason actually started earlier with this metaphor about the -- you see something walk in the street. But I mean, we've all heard a limerick, a metaphor and adage about opinions. And they're kind of like something everybody's got one. In the cannabis industry, it's brands, right? I mean everybody claims they've got a brand. This is the greatest CPG industry that's yet not really hatched. Nancy has certainly been about building a brand. And there's no questioning what BJ has said about the foundation of the 2 brands that are really truly partners for TerrAscend. But, now I want to talk a little bit about not only brands, but I want to talk about the data behind the brands, and that which gives you not only the -- it's the efficacy, right? And -- but it's also -- it's the thread that is the future to more customers. And I think data is really important in this industry. One of the cool things about -- again, I'm an emerging markets guy, one of the cool things about emerging markets, cannabis is an emerging market, right? Is there's this technology leap frog. So you've got brands growing up at a time, when digital e-commerce loyalty software is for every -- for the biggest brands in the world is changing by the second. And so this is the advantage that this team has, and it's happening very quick. Ziad talk to me a little bit about the integration of brand and data. And then BJ, I want to hear a little bit from you as well.

Yes. Thanks, Tim. I think one of my biggest challenge is my biggest surprise coming from a very well-established industry in a 117-year-old company, was the data that was not existing in the cannabis industry. and the gut instincts and the emotion and the decisions that were made based on, where the wind is and deciding what we do next and the inability to make the decision that drove the return. When I interviewed BJ, we talked a lot about data. I feel today, we have crossed a long distance leveraging our data, making decision based on the data, measuring the success, sunsetting decisions, not having egos, turning the page on emotion. So I'll let you share a little bit about how you're using this internally.

Yes. Cannabis is one of those industries, where we have the ability to constantly be seen what people are purchasing and why and how often. When you look at that you should be able to make informed decisions pretty quickly, right, at the end of the day, instead of saying, "Oh, this would be cool. We don't need to be cool. we need to provide a product for the consumer or the patient that they actually either want or need.

I thought you're going to say, we don't need to be cool. We are cool.

I might say that, but then I get made fun of a lot by my staff maybe a little bit, but that's how we use it. We use it from the perspective of what is the consumer telling us they want. So let's make it and let's give it to them in the way that they want it. Let's not deviate from that path because the data is telling us what we should be doing.

Right. So the data then leads you to, again, the consumer and most importantly, building this brand. And so I got my snarky comment in about brands and everyone's got one. But how far has the industry really come here, BJ? Because no question that the 2 brand partners here are the brands that people know, but what does the industry need to do to get to the next level?

I think it needs to just keep plowing forward. I think working with brands like Wana working with a brand like Cookies, they've done such a nice job already laying the foundation of what cannabis brands should be doing. Part of it is the innovation that the 2 of them bring to the table and collaborate with us. A brand in cannabis just can't be slapping somebody's face on a package at the end of the day because the product itself delivers a purpose to the consumer. So I think following in the footsteps of our partner brands and what Nancy has built is a road map for us as we move forward. I think the industry has a long way to go. The state-by-state differentiation doesn't help, but it is what it is, and it's something that we all have to continue to explore, review, evolve until that changes, if it ever changes.

Well, we've got someone, who can talk to us about that state-by-state dynamic, Nancy welcome. And first, talk a little bit about the background of the relationship between TerrAscend and Canopy and thus Wana and really how you have been involved in that relationship and obviously, how you see the future?

Yes. Thank you, and thank you to TerrAscend for inviting me to be here today. It's really a pleasure. I'm going to back up a little bit from the relationship with Canopy and just give sort of a 30-second overview on Wana to put it in a little bit of context. So I actually -- we've been talking about being in OG in the industry. And -- I actually started Wana in 2010. So that makes me like 107 years old in cannabis years. Started the company in Colorado. At that point, of course, it was 1 of the first medical markets. And so we were just in Colorado just in the medical market until 2013, when Colorado led the nation in adult use. And then we did our first out-of-state partnership, the following year in Oregon. Fast forward now, we're in 16 states plus Puerto Rico, 9 states -- 9 provinces in here in Canada. And we've got 3 more states coming on board first quarter of 2024. And -- and the brand has always really focused on innovation. We've really led the market on a number of sort of the gummy breakthroughs. You wouldn't think there'd be gummy breakthroughs, but in fact, there were. And we were the first to have class-specific gummies, the first to bring CBD ratios to market, the first to bring quick onset to market. And most recently, with our Optimus line, very highly formulated use case-specific products, which is what keeps us in that premium category. And so along the way, as I mentioned, we came to Canada and therein launched the beginning of our relationship with Canopy. Canopy was 1 of many companies that we spoke with in Canada. And we actually didn't end up partnering with Canopy initially. We started working with someone else, but we quickly built our toeholds in Canopy and then several years later, we kind of found each other again. And it's almost 2 years to the date today that we completed our transaction with Canopy, who purchased the option to purchase Wana, when either federal permissibility allowed, which is beginning to seem a little further off than we were hoping for 2 years ago. But we're in the process of rolling the Canopy U.S. entities into a subsidiary called Canopy USA or CUSA for short. So that's a little bit about our history with Canopy. And one of the wonderful outcomes of that has been that they had this relationship with TerrAscend. So that also was the beginning and the antre of our relationship with TerrAscend.

Thank you. And clearly, for a different company's Investor Day, the whole concept of the U.S. holdco is really about unlocking the value of these brands. I mean, let's be clear. And with all due respect to a great and pioneering Canadian business at Canopy, the investments in the U.S. have been about this. So BJ, just quickly about brands, but maybe we've talked a little bit about it, and you've talked a little bit about the evolution. So maybe a little snapshot on what you -- some trends you see? Maybe it's a segment, maybe it's form factor. However, you want to handle that?

Yes. Some of the trends we're seeing, we talked a little bit about with Legend, it's the segment, it's the form factor, but it all to me, comes down to the quality of the product at the end of the day. The quality of the product is what drives the consumer first and foremost, at least from my perspective, and I think our perspective as a marketing team. So as long as we start with quality and then we work on the brand, the look and feel we're going to be in a good position as opposed to just creating this beautiful image and then putting product in it. That's how CPG kind of works a little bit, where I feel like cannabis is in the other side of it, where if we start with the product, and we have a really good product, then we can work on what the brand is and what it represents. Because if the product isn't good, the consumer is never coming back at the end of the day. So starting with that. And I think you're starting to see it a little bit. And obviously, our partners have been paving that path. The Wana team and their innovation and the formulation and the things they're doing. that's our direction. That's where we go as opposed to just this is a beautiful image type of thing.

It sounds very also consistent with some of the things Jason said in terms of you lead with the product, the product you have that's good, that's winning market share. sounds a little bit like not trying to be everywhere. It sounds like being deep and narrow and taking those products. And so Ziad, let's transition this conversation about brands and marketing and -- and into a dynamic that I think is important for folks to think about because is it the product? Or is it the footprint? So on some level, thinking about retail versus branding, it's clear that on some level, the brand has been the retail presence so far for this industry. So if we want to put it in very clear marketing and branding terms, are you CVS or are you Advil? Obviously, the choice of that -- of those comps are interesting because we all see this as an OTC market at some point and a lot of the things that everyone is consuming cannabis for are some of the same reasons, a lot of it is basically at bill. But this is part of the evolution here. So I'd just like to hear, where TerrAscend has focused, clearly, there are brands. Clearly, that is part of it, but there's a lot to kind of evolve through.

Yes. We think about it as the quality brand that lives and tie the channel, whether it's retail, whether it's online, whether it's any channel that the consumer can reach us, in -- but the quality is the anchor of the plan. Are we -- did you ask if let's say, Walgreens or a Advil.