Sometimes the gold rush never actually happens.
There may be gold “in them there hills,” but mining it might be too expensive, or the quality of the ore may not be worth extracting.
In many ways, while certain opportunities seem like they're incredibly lucrative, it becomes a case of “Is the squeeze worth the juice?”.
Related: Another popular movie theater chain files Chapter 11 bankruptcy
There are a lot of good ideas that can be ruined by too many players entering the market. The first self-serve frozen yogurt place in your town was likely a huge hit, until another opened, leaving both on life support, and then a third killed the territory.
Even complicated businesses like Lyft and Uber sabotage each other. One ride service would have pricing power and be able to make sure every ride was profitable.
Once you add a second player, it becomes a pricing race to the bottom. That's why services like food delivery have struggled to actually make money.
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We want them and use them, but have very little allegiance, so margins remain thin or nonexistent.
Even the cannabis space, where competition has been at east somewhat regulated in most markets, has cannibalized itself. Legal dispensaries not only compete against each other, but also the illegal market, which never really went anywhere.
Large cannabis player pulls back
Cannabis has become a commodity. It's very hard to differentiate your brand, and even big-name players like MedMen ended up filing Chapter 11 bankruptcy. You could argue that only Planet 13 (PLNHF) , and really only the Las Vegas location, has carved out a brand-name market, aside from celebrities who lend their names to products.
“TerrAscend is a leading TSX-listed cannabis company with interests across North America, including vertically integrated operations in Pennsylvania, New Jersey, Maryland, Michigan, and California through TerrAscend Growth Corp. and retail operations in Ohio as well as in Canada through TerrAscend Canada, Inc.,” according to its website.
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- Popular vodka and gin brand files for Chapter 11 bankruptcy
The company has a long history for what has been a very transient space.
“Founded in 2017, Jason Wild co-led a major investment with Canopy Growth, launching TerrAscend as a Canadian LP. We pivoted operations to the U.S. in 2018, gaining a vertically integrated license in New Jersey. Over the next several years, we grew our operations through the acquisition of cultivation and manufacturing facilities and dispensaries in California, Pennsylvania, Maryland, Michigan, and New Jersey,” it added.
Now, the company has made a difficult decision to leave one major market.
TerrAscend closing 20 stores, four production facilities
TerrAscend has completed a strategic review of its Michigan business operations and decided to exit the Michigan market. As part of the exit plan, TerrAscend intends to sell or divest all of the Company’s Michigan assets, including four cultivation and processing facilities, 20 retail dispensaries, and real estate.
Net proceeds from the divestitures will be used to pay down existing company debt.
The Michigan exit is expected to be substantially completed in the second half of 2025. TerrAscend's business in Michigan will be reported as discontinued operations beginning with the Company’s financial results for the second quarter of 2025.
“After an extensive evaluation, we have made the strategic decision to exit the Michigan market,” said CEO 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.”
Following the completion of the Michigan exit, the company will operate 19 dispensaries and four cultivation and processing facilities across five states, including New Jersey, Maryland, Pennsylvania, Ohio, and California, and in Toronto, Ontario.
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About 21% of TerrAscend's workforce, or about 1,200 people, will lose their jobs as part of the change.
“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,” Wild added.
