CNSX:TER keeps “Buy” rating with Clarus

Clarus Securities analyst Noel Atkinson reported on cannabis company TerrAscend (TerrAscend Stock Quote, Charts, News, Analysts, Financials CSE:TER) on Thursday, saying a groundbreaking move to the TSX will bring new interest in the stock.

TerrAscend, which has production and retail operations in Pennsylvania, new Jersey, Maryland, Michigan and northern California as well as a retail store in Mississauga, Ontario, announced on Thursday that it has received conditional approval from the Toronto Stock Exchange to list its common shares on the TSX.

The move would make it the first US multi-state operator (MSO) in the cannabis space to list on a major North American exchange.

“I speak for everyone at TerrAscend when I say we are honored to be in the position to blaze this trail for the industry,” stated Jason Wild, Executive Chairman of TerrAscend, in a press release. “We have an exciting future ahead of us and we can’t wait to share the TerrAscend story with the larger audience of participants that this listing brings.”

Under the terms of the move, TER will separate its US and Canadian assets into separate entities and issue re-purchasable non-voting shares to the US entity. TER will continue to report consolidated financials and operate in the US, where it has The Apothecarium and Gage dispensary brands along with cultivation, processing and manufacturing facilities. 

Atkinson said the uplisting should increase the potential investor pool and add the stock to multiple TSX indices along with drive buying by ETFs.

“TER’s innovative effort to list on the TSX may seem less noteworthy to U.S. investors than Canadian ones, but the move to the TSX (and the ring-fencing of U.S. cannabis assets) should increase the potential institutional investor pool, and add the stock to multiple TSX indices,” Atkinson wrote.

Also yesterday, TerrAscend announced two concurrent offerings for total gross proceeds of $15 million, comprised of an equity rise of $7.5 million for five million units at $1.50 for one share and 1/2 a warrant and a convertible debenture private placement for $7.5 million with a three-year term and 9.9 per cent interest. (All figures in US dollars except where noted otherwise.)

Atkinson commented on the US pot market where the state of Maryland is about to launch adult-use sales on July 1, a development which should be good for TER, which has a production facility and two dispensaries in the state.

“[TerrAscend] continues to pursue targets to reach a maximum of four dispensaries [in Maryland]; we would not be surprised if TER was focusing on more locations that are close to the Virginia or Delaware borders and relatively insulated from competition at the outset,” he said.

With the update, Atkinson reiterated a “Buy” rating on TER and 12-month target of C$3.00 per share, which implied a one-year return of 33 per cent.