In September, TerrAscend Corp. (CSE:TER) (OTCQX:TRSSF) revealed its plans to reach the third-largest cannabis market in the country via the acquisition of Michigan-based Gage Growth Corp (CSE:GAGE).

The transaction is poised to result in a combined company with operations across five states and Canada, including seven cultivation and processing facilities and 23 operating dispensaries.

And while TerrAscend is pawing its way toward wrapping up a $545-million all-stock deal, Executive Chairman Jason Wild has been reminiscing about the time he decided to venture into the cannabis at this week's Benzinga Cannabis Capital Conference.

He was interviewed by Tim Seymour, portfolio manager at Amplify Seymour Cannabis ETF (NYSE:CNBS) and senior advisor at JW Asset Management.

From Pharma To Cannabis

Originally a pharmacist, Wild said he was much more interested in the stock market and "investing in pharmaceutical stocks as opposed to filling prescriptions."

After starting a fund in 1998, Wild was primarily focused on pharmaceutical investments. Almost two decades later, his focus had shifted to medical cannabis companies in Canada.

"I was really excited to hear about all the true medical uses for cannabis," he said, adding that during his trip to Canada, around 2015 or 2016, he heard about CBD for the first time.

"At first, we were only doing Canada because I was honestly worried about getting arrested running a fund here in New York," Wild said.

However, after making a "large investment" into TerrAscend toward the end of 2017, "we pivoted the fun into the U.S.," he said.

In early 2019, TerrAscend expanded south of the border and established a presence in the U.S. through the $118.4-million acquisition of California-based retailer Apothecarium.

"The U.S. is a much more vibrant market," Wild said. "We can do the real business. Canada is very tough."

'The normalized growth is still pretty awesome'

Over the last year-and-a-half, TerrAscend has been seeing substantial growth, the same as a number of companies within the space.

"This was sort of a special situation for cannabis," Wild said of the period since the onset of the Covid-19 pandemic.

"People had been not going to work, and they stayed home during the day, they were not going out," he said, with "more time to consume cannabis." 

And now, as people are going back to normal, third-quarter previews suggest a slowing in the marketplace.

"We should have all expected that there would be a little bit of a slowdown in growth," Wild said, adding "the normalized growth that we're all going to experience is still pretty awesome."

Still, there aren't "any other sectors where you can get this growth rate at these multiples," Wild continued. "This is classic Peter Lynch growth-at-a-reasonable price type investing."

When talking about discounting that's occurring at the lower price points in the category, particularly flower, Wild said operators can still make very good money If they are efficient and cultivate good, high-quality product.

"My personal view is that the 20/80 rule applies to the cannabis industry," he said, further explaining that roughly "20% of the of the buyers are buying about 80% of the product."

Operators can afford to take lower prices and still be able to drive good margins, he said. 

"The high-quality stuff, you'll always be able to sell."

Collaboration With NBA All-Star Chris Webber

In the meantime, in February, Wild partnered with Chris Webber, a five-time NBA All-Star and founder of Webber Wellness, to launch a $100-million private equity cannabis fund.

Their goal was to invest in "underrepresented entrepreneurs pursuing careers in the cannabis sector."

As a social impact fund, Webber Wild Impact Fund is focused on minority entrepreneurs in the cannabis industry.

With people of color comprising "2%-3%percent of the state-level legal licensees, we decided that we wanted to try to have an impact on that and make a change," Wild added.

"The foundation is geared towards helping with records expungement and job training, Wild explained, adding that there are "a lot of investors that want to invest in the fund because they think we're going to make money."

Price Action

TerrAscend shares lost 0.23% Friday closing at $5.98. 

Photo: Courtesy of Esteban Lopez on Unsplash.