Cannabis Giant Announces Major Cuts: 'Extremely Difficult Market'
Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content.
A leading American cannabis company has announced that it will cease all operations in Michigan due to challenging market conditions.
TerrAscend Corp. said it will close 20 dispensaries and four cultivation and processing facilities in the state, while eliminating more than 230 jobs, according to a statement released last week and a notice filed with the state's labor bureau.
"After an extensive evaluation, we have made the strategic decision to exit the Michigan market," said TerrAscend's Executive Chairman Jason Wild. "Michigan is an extremely difficult market and we have come to the realization that our resources can be better utilized in our other markets."
Newsweek has reached out to TerrAscend for comment.
What To Know
A 'Weed' sign advertises a cannabis dispensary seen on May 24, 2024, in Los Angeles, California.
A 'Weed' sign advertises a cannabis dispensary seen on May 24, 2024, in Los Angeles, California.TerrAscend was founded in 2017 and has grown into one of the most prominent brands specializing in the cultivation and retail of cannabis products in the U.S., reporting over $300 million in net revenue last year.
Prior to its recent announcement, the company employed around 1,200 people, meaning the latest layoffs equate to an overall workforce reduction of roughly 21 percent. The layoffs and closures will impact all locations throughout Michigan, including Grand Rapids and Detroit.
The workforce reductions will take place in the third quarter, and the company expects its exit from the state to be "substantially completed" in the second half of 2025. TerrAscend said it plans to use the proceeds from the divestitures to "pay down existing company debt," and that the move is "expected to meaningfully enhance TerrAscend's financial profile."
The company had previously identified the Michigan market as an area of concern. In its most recent annual results, TerrAscend said it had incurred a $45.4 million noncash impairment charge—an on-paper reduction in the value of its assets—related to this business unit, contributing to its $72.7 million net loss for the year.
The recreational sale of cannabis became legal in Michigan in 2019, but issues with oversupply have in recent times seen prices fall and posed challenges to those in the industry. Earlier this year, Governor Gretchen Whitmer also proposed a 32 percent tax on marijuana products—compared with the 10 percent excise tax and 6 percent sales tax currently paid—to help finance a $3 billion road-building project in the state, which shop owners told news outlet Bridge Detroit would add to the industry's struggles.
What People Are Saying
Jason Wild, executive chairman of TerrAscend, said: "This move will unlock value for TerrAscend and its shareholders. By concentrating our efforts and resources in the Company's core northeastern U.S. markets—New Jersey, Maryland, Pennsylvania, and Ohio—I am confident that we are now positioned to deliver stronger financial performance including improved margins and operational efficiencies."
What Happens Next?
After completing the Michigan exit, TerrAscend will operate 19 dispensaries as well as four cultivation and processing facilities across five states, including New Jersey, Maryland, Pennsylvania, Ohio and California, as well as Toronto, Canada.
The restructured company, TerrAscend says, will focus on improving margins, operational efficiencies and cash flow in its remaining key markets.
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