TerrAscend Looks to Create New Holding Umbrella, List on TSX

The TMX Group has taken a more lax position regarding North American cannabis consolidation.

TerrAscend Corp. (CSE: TER) (OTCQX: TRSSF) submitted an application to list its shares on the Toronto Stock Exchange, with the creation of a separate holding company likely serving as the vehicle for the major exchange upgrade.

TerrAscend’s shares currently trade on the Canadian Securities Exchange and the U.S. over-the-counter markets. However, a TSX listing could provide the company with more visibility and legitimacy, potentially attracting more investors to its shares.

The company’s executive chair, Jason Wild, told Bloomberg News that a TSX listing would bring much-needed liquidity to their shares. The move would require TerrAscend to undergo an “internal reorganization,” which needs shareholder approval.

According to a Tuesday note by investment firm Jefferies Group, that reorganization would likely amount to the creation of a holding company that is either a non-U.S. cannabis company or a U.S. company that does not deal with cannabis or THC.

The move in many ways reflects Canopy Growth Corp.‘s (TSX: WEED) (Nasdaq: CGC) efforts to attain a Nasdaq listing and finally absorb its pending U.S.-based acquisitions.

Ontario-based TerrAscend has operations in five U.S. states, complicating potential placement on a major exchange. Still, the TMX Group, which operates the TSX, has taken a somewhat more lax position regarding Canopy’s consolidation.

Fittingly, Canopy and TerrAscend have been working together to accomplish their growth goals amid a stall in meaningful U.S. cannabis legislation. Canopy last December signaled support by converting $125.5 million owed by TerrAscend into shares in the company, allowing some breathing room on its balance sheet and lowering its yearly interest payments by $10 million.

With potential listings on larger exchanges, the companies could have access to greater pools of capital, allowing further expansion and partnership across North America as the industry continues to consolidate.

“The listing on the TSX is an incremental positive,” said Matt Karnes, a principal at GreenWave Advisors in New York City. “But that said, I believe many institutional investors will stay on the sidelines regardless until there is a meaningful change at the federal level.”

Other large cannabis corporations are watching the moves, as a viable path to list in the heavier securities markets would prove helpful for those trying to remain competitive in the industry’s patchwork landscape.

Adam Jackson

Adam Jackson writes about the cannabis industry for the Green Market Report. He previously covered the Missouri Statehouse for the Columbia Missourian and has written for the Missouri Independent. He most recently covered retail, restaurants and other consumer companies for Bloomberg Business News. You can find him on Twitter at @adam_sjackson and email him at adam.jackson@crain.com.

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