TerrAscend Withdraws Revenue Guidance Due to Weakness in Canada

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TerrAscend Corp. [stock_market_widget type="inline" template="generic" color="default" assets="TER.CN" markup="(CSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] has been forced to withdraw revenue guidance of $141 million for 2019 due to its weak performance in the Canadian market.

The Toronto-based firm has operations in Canada, the U.S. and Europe, and it is in the process of buying retail chain The Apothecarium. It has been releasing increasingly bullish messages throughout the year regarding its commercial potential, but it has now been forced to backtrack on those claims.

In April it reported that it expected 2019 revenue to hit $135 million. In August it increased its full-year guidance to $141 million after it enjoyed a 21% rise in revenue during Q2.

At the time, chief executive Michael Nashat said the firm was experiencing a substantial acceleration in sales growth and he declared that he expected this to continue through the fourth quarter. It has now been admitted that it was being overly optimistic.

Chairman Jason Wild said that TerrAscend previously thought its “continued ability to execute” would overcome slower than expected growth in the Canadian retail market. “Unfortunately, we have realized that achieving our 2019 revenue target would lower our return on capital due to unacceptable profit margins in Canada, especially as compared to our U.S. business units,” he added.

It has reported preliminary unaudited Q3 revenue of $26 million. It brought in $14.6 million during Q1 and revenue jumped up to $17.6 million in Q2, so it is continuing on an upward curve.

Wild admitted poor forecasting on its Canadian business, but said he hopes this does not detract from a “tremendous” year for the firm.

TerrAscend is planning to launch stores Berkeley, California, and Phillipsburg, New Jersey, before the end of 2019 after closing the deal for The Apothecarium, which already has three stores in San Francisco and another in Las Vegas. It began shipping medical cannabis to Europe earlier this year after tying up a deal with German pharmaceutical wholesaler Iuvo Therapeutics GmbH.

TerrAscend has just appointed New York-based Jason Ackerman, founder and former CEO of online grocer FreshDirect, as executive chairman. He will oversee day-to-day operations at the company and work alongside Wild and Nashat to drive it forward.

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Martin Green
Martin Green is an experienced journalist with a strong focus on the cannabis, alcohol, and gambling industries. He is particularly interested in the political issues affecting the global marijuana trade, and he has a keen focus on regulation changes and legal topics. He holds a BA English Literature, MA Creative Writing and a National Qualification in Journalism diploma. He has worked in journalism since 2009 and written for a broad range of newspapers, business titles and magazines, including The Sun, The Metro, The Journal, Livestrong, Drinks Retailing News, Harpers, Sportsbook Review, Vital Football, Essex Live and Surrey Live. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.
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