TerrAscend to Close Acquisition of Gage Cannabis on Thursday March 10th

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Combines Strong Leadership Teams, a Portfolio of Powerful Brands and Operations Delivering Quality at Scale

Expanded Footprint Includes 7 Cultivation Facilities and 25 Retail Locations with Operations in 5 States and Canada

TORONTOMarch 9, 2022 /CNW/ – TerrAscend Corp. (“TerrAscend” or the “Company”) (CSE: TER) (OTCQX: TRSSF), a leading North American cannabis operator, and Gage Growth Corp. (“Gage”) (CSE: GAGE) (OTCQX: GAEGF), a leading high-quality premium cannabis brand and operator in Michigan, today announced that they intend to close the previously announced acquisition of Gage by TerrAscend by way of a court-approved plan of arrangement under the Canada Business Corporations Act (the “Transaction”) on March 10, 2022, subject to satisfaction or waiver of all remaining closing conditions.

Upon completion of the Transaction, TerrAscend will have an expanded footprint with owned and managed operations in CaliforniaMichiganMarylandNew JerseyPennsylvania, and Canada, including 7 cultivation and processing facilities and 25 operating dispensaries serving medical and adult-use cannabis markets in the U.S. and Canada.

This is a defining moment for TerrAscend as we combine two leading vertically integrated operators with proven cultivation and manufacturing expertise, deep portfolios of proprietary flower strains, and top-selling brands across our core markets.

Jason Wild, Executive Chairman of TerrAscend

I look forward to working with the talented Gage team as we integrate and align our cultivation, retail, and operational practices to continue providing our patients and customers with best-in-class product offerings and retail experiences.

“We are thrilled to join forces with TerrAscend to create one of North America’s most prominent cannabis companies,” said Fabian Monaco, CEO of Gage. “With our shared core philosophies and complementary areas of expertise, we can’t wait to execute on our collective vision.”

Key Transaction Highlights and Benefits

The Transaction is anticipated to result in the following benefits:

  • Leadership in a Top State: Gage has established itself as a leader in Michigan, which is the third largest cannabis market in the U.S. with reported cannabis sales of $168 million in the month of December 2021, representing an annualized market size of over $2.0 billion1.
  • Premium Brands: The Transaction provides access to Gage’s sought-after brand and pheno-hunting capabilities as well as Gage’s exclusive licensing partnerships in Michigan with Cookies, Blue River, Pure Beauty, Khalifa Kush, and others.
  • Efficient Operating Model: The combined company will operate or manage 7 cultivation facilities, including 3 facilities in Michigan, in addition to Gage’s multiple contract grow agreements.
  • Deep Market Penetration in Attractive Core Markets: The combined company will have a platform poised for significant growth and deep market penetration in its key markets. Gage’s highly coveted brands and proprietary product lines are expected to accelerate the performance of TerrAscend’s existing brand portfolio.
  • Expanding Retail Footprint: The combined company’s retail network is expected to reach 40 stores by the end of 2022. This includes 25 currently open dispensaries across 5 states with Gage managing 11 dispensaries in Michigan and 1 Cookies dispensary in Canada, in addition to TerrAscend’s 13-store footprint in key markets including CaliforniaNew Jersey and Pennsylvania.
  • A Leader in Experiential Retail: Gage dispensaries generate industry leading retail metrics, including strong average basket size and premium pricing for its flower products (50%+ relative to the Michigan market average price1). TerrAscend expects to leverage Gage’s portfolio and flower expertise in addition to brand and marketing capabilities, across its retail network and geographies (subject to applicable regulatory approval).
  • Expert Operating Teams: The Transaction combines management teams with similar core philosophies, strong track records of execution and operational expertise in building leading businesses in the most competitive cannabis markets. High quality products and experiences will remain a top priority while scaling the Company’s operations across North America.
  • Balance Sheet Strength: Gage’s $72.3 million pro forma cash position, which includes gross proceeds from its recently closed $55 million senior secured debt financing, combined with TerrAscend’s $103 million cash balance as of September 30, 2021,  positions the combined company to execute on its growth plans. Both companies have prudently managed their debt and expense levels, while entering into minimal sale leaseback transactions. This provides the Company with financial flexibility which is expected to drive above average long-term margins and cashflow.

NOTES:

1 Marijuana Regulatory Agency – State of Michigan – https://www.michigan.gov/mra/reports/marijuana-regulatory-agency-statistical-report

It is expected that the Gage shares will be halted after closing and the Canadian Securities Exchange will delist the Gage shares upon completion of the Transaction.

MIPA and Arrangement Agreement Amendments

In order to facilitate the closing of the Transaction for the benefit of both TerrAscend and Gage, the parties have agreed to certain amendments (the “Amendments”) to the arrangement agreement governing the Transaction, and the membership interest purchase agreement (the “MIPA”) entered into with the owner of the licenses that Gage supports in the State of Michigan (the “Licensed Operators”).

The Amendments will permit the Transaction to close based on the regulatory approvals that have been, and are expected to be, received by the expected closing date. Following the closing, the parties will continue to work to obtain, and expect to receive, the requisite approvals for TerrAscend to ultimately acquire ownership of all of the Licensed Operators. Until such time, TerrAscend’s wholly-owned subsidiary will operate the Gage business through existing service agreements with the Licensed Operators.

The disinterested directors of each of the TerrAscend and Gage boards determined that it is in the best interests of the respective companies to make the Amendments to facilitate closing of the Transaction at this time, given the strong approval obtained from the shareholders of both companies for the Transaction and the anticipated synergies and benefits to TerrAscend from the Transaction.

A copy of the Amendments are filed and are available under TerrAscend’s SEDAR profile and Gage’s SEDAR profile.

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 The Apothecarium dispensary retail locations as well as scaled cultivation, processing, and manufacturing facilities on both the East and West coasts. TerrAscend’s cultivation and manufacturing practices yield consistent, high-quality cannabis, providing industry-leading product selection to both the medical and legal adult-use markets. 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.

About Gage

Gage is innovating and curating the highest quality cannabis experiences possible for cannabis consumers in the state of Michigan and Canada, and bringing internationally renowned brands to market. Through years of progressive industry experience, the firm’s founding partners have successfully built and grown operations with federal and state licenses, including cultivation, processing and retail locations. For more information about Gage Growth Corp., visit www.gagecannabis.com or www.gageinvestors.com.

Original press release

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Published by NCV Newswire
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