Registrant’s telephone number, including area code: (~~855~~717) ~~837-7295~~610-4165

~~(Former name, former address and former fiscal year, if changed since last report)~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☒

As of May ~~11, 2023,~~8, 2024, the registrant had ~~274,653,743~~291,507,430 ~~shares of~~ common ~~stock,~~shares, $0.01 par value per share, outstanding.

This Quarterly Report on Form 10-Q contains statements that TerrAscend Corp. ~~("TerrAscend" or the "Company"~~(the "Issuer") believes are, or may be considered to be, “forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q regarding the prospects of ~~TerrAscend’s~~the industry in which the Issuer, its subsidiaries, TerrAscend Growth Corp. ("TerrAscend") and its subsidiaries (collectively, the "Company") operate or ~~TerrAscend’s~~the Company's prospects, plans, financial position or business strategy may constitute forward-looking statements. Such statements can be identified by the use of forward-looking terminology such as "can", “expect”, “likely”, “may”, “will”, “should”, “intend”, “anticipate”, “potential”, “proposed”, “estimate” and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions “may” or “will” happen, or by discussions of strategy. Forward-looking statements include estimates, plans, expectations, opinions, forecasts, projections, targets, guidance, or other statements that are not statements of fact. Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements with respect to:

Certain of the forward-looking statements contained herein concerning the cannabis industry and the general expectations of ~~TerrAscend~~the Company concerning the cannabis industry are based on estimates prepared by ~~TerrAscend~~the Company using data from ~~publicly available~~publicly-available governmental sources as well as from market research and industry analysis and on assumptions based on data and knowledge of the cannabis industry. Such data is inherently imprecise. The cannabis industry involves risks and uncertainties that are subject to change based on various factors, which factors are described further below.

With respect to the forward-looking statements contained in this Quarterly Report on Form 10-Q, ~~TerrAscend~~the Company has made assumptions regarding, among other things: (i) its ability to generate cash flows from operations and obtain necessary financing on acceptable terms; (ii) general economic, financial market, regulatory and political conditions in jurisdictions in which ~~TerrAscend~~the Company operates; (iii) the output from ~~TerrAscend’s~~the Company’s operations; (iv) consumer interest in ~~TerrAscend’s~~the Company’s products; (v) ~~competition;~~competition in the cannabis industry; (vi) anticipated and unanticipated costs; (vii) government regulation of ~~TerrAscend’s~~the Company’s activities and ~~products and in the areas~~products; (viii) government regulation of licensing, taxation and environmental protection; ~~(viii)~~(ix) the timely receipt of any required regulatory approvals; ~~(ix) TerrAscend’s~~(x) the Company’s ability to obtain qualified staff, equipment and services in a timely and cost efficient manner; ~~(x) TerrAscend’s~~(xi) the Company’s ability to conduct operations in a safe, efficient and effective manner; and ~~(xi)~~(xii) the Company’s construction plans and timeframe for completion of such plans.

Readers are cautioned that the above list of cautionary statements is not exhaustive. Known and unknown risks, many of which are beyond the control of ~~TerrAscend,~~the Company, could cause actual results to differ materially from the forward-looking statements in this Quarterly Report on Form 10-Q. Such risks and uncertainties include, but are not limited to, current and future market conditions; risks related to federal, state, provincial, territorial, local and foreign government laws, rules and regulations, including federal and state laws in the United States ~~("U.S.")~~ relating to cannabis operations in the ~~U.S.;~~United States; and those discussed under Item 1A – “Risk Factors” in ~~our~~the Company's Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, filed with the Securities and Exchange Commission (the “SEC”) on March ~~16, 2023~~14, 2024 and this Quarterly Report on Form 10-Q. The purpose of forward-looking statements is to provide the reader with a description of management’s expectations, and such forward-looking statements may not be appropriate for any other purpose. You should not place undue reliance on forward-looking statements contained in this Quarterly Report on Form 10-Q. ~~TerrAscend~~The Company can give no assurance that such expectations will prove to have been correct. Forward-looking statements contained herein are made as of the date of this Quarterly Report on Form 10-Q and are based on the beliefs, estimates, expectations and opinions of management on the date such forward-looking statements are made. ~~TerrAscend~~The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such forward-looking statements, except as required by applicable law.

(Amounts expressed in thousands of United States dollars, except for share and per share amounts)


	At			At			At			At
	March 31, 2023			December 31, 2022			March 31, 2024			December 31, 2023
Assets
Current Assets
Cash and cash equivalents	$	32,931		$	26,158		$	22,664		$	22,241
Restricted cash		606			605			3,110			3,106
Accounts receivable, net		8,993			22,443			17,013			19,048
Investments		2,026			3,595			1,965			1,913
Inventory		50,810			46,335			49,199			51,683
Assets held for sale		14,266			17,349
Prepaid expenses and other current assets		3,627			4,937			3,704			4,898
Current assets from discontinued operations		525			571
		113,784			121,993			97,655			102,889
Non-Current Assets
Property and equipment, net		214,035			215,812			194,256			196,215
Deposits		740			837			284			337
Operating lease right of use assets		29,951			29,451			41,488			43,440
Intangible assets, net		243,759			239,704			214,060			215,854
Goodwill		95,713			90,328			106,929			106,929
Other non-current assets		3,594			3,462			867			854
		587,792			579,594			557,884			563,629
Total Assets	$	701,576		$	701,587		$	655,539		$	666,518

Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and accrued liabilities	$	50,784			44,286		$	49,673		$	49,897
Deferred revenue		2,740			2,935			4,510			4,154
Loans payable, current		51,397			48,335			133,668			137,737
Contingent consideration payable, current		4,434			5,184			1,490			6,446
Operating lease liability, current		2,314			1,857			1,816			1,244
Lease obligations under finance leases, current		535			521			2,079			2,030
Corporate income tax payable		34,737			23,077			5,143			4,775
Other current liabilities		1,663			2,599			737			717
Current liabilities from discontinued operations		7,468			9,111
		156,072			137,905			199,116			207,000
Non-Current Liabilities
Loans payable, non-current		146,168			145,852			58,409			61,633
Operating lease liability, non-current		31,836			31,545			43,967			45,384
Lease obligations under finance leases, non-current		6,614			6,713			383			407
Warrant liability		267			711
Derivative liability								6,075			5,162
Convertible debt								7,682			7,266
Deferred income tax liability		34,498			30,700			16,919			17,175
Financing obligations		10,979			11,198
Other long term liabilities		15,841			15,792
Contingent consideration payable, non-current								1,424			—
Liability on uncertain tax position and other long term liabilities								89,455			81,751
		246,203			242,511			224,314			218,778
Total Liabilities		402,275			380,416			423,430			425,778
Commitments and Contingencies
Shareholders' Equity
Share Capital
Series A, convertible preferred stock, no par value, unlimited shares authorized; 12,350 and 12,608 shares outstanding as of March 31, 2023 and December 31, 2022, respectively		—			—
Series B, convertible preferred stock, no par value, unlimited shares authorized; 600 and 600 shares outstanding as of March 31, 2023 and December 31, 2022, respectively		—			—
Series C, convertible preferred stock, no par value, unlimited shares authorized; nil and nil shares outstanding as of March 31, 2023 and December 31, 2022, respectively		—			—
Series D, convertible preferred stock, no par value, unlimited shares authorized; nil and nil shares outstanding as of March 31, 2023 and December 31, 2022, respectively		—			—
Proportionate voting shares, no par value, unlimited shares authorized; nil and nil shares outstanding as of March 31, 2023 and December 31, 2022, respectively		—			—
Exchangeable shares, no par value, unlimited shares authorized; 63,492,038 and 76,996,538 shares outstanding as of March 31, 2023 and December 31, 2022, respectively		—			—
Common stock, no par value, unlimited shares authorized; 274,653,743 and 259,624,531 shares outstanding as of March 31, 2023 and December 31, 2022, respectively		—			—
Series A, convertible preferred stock, no par value, unlimited shares authorized; 12,350 and 12,350 shares outstanding as of March 31, 2024 and December 31, 2023, respectively								—			—
Series B, convertible preferred stock, no par value, unlimited shares authorized; 600 and 600 shares outstanding as of March 31, 2024 and December 31, 2023, respectively								—			—
Series C, convertible preferred stock, no par value, unlimited shares authorized; nil and nil shares outstanding as of March 31, 2024 and December 31, 2023, respectively								—			—
Series D, convertible preferred stock, no par value, unlimited shares authorized; nil and nil shares outstanding as of March 31, 2024 and December 31, 2023, respectively								—			—
Proportionate voting shares, no par value, unlimited shares authorized; nil and nil shares outstanding as of March 31, 2024 and December 31, 2023, respectively								—			—
Exchangeable shares, no par value, unlimited shares authorized; 63,492,038 and 63,492,038 shares outstanding as of March 31, 2024 and December 31, 2023, respectively								—			—
Common shares, no par value, unlimited shares authorized; 291,284,814 and 288,327,497 shares outstanding as of March 31, 2024 and December 31, 2023, respectively								—			—
Additional paid in capital		936,404			934,972			945,825			944,859
Accumulated other comprehensive income		1,738			2,085			2,197			1,799
Accumulated deficit		(641,517	)		(618,260	)		(717,398	)		(704,162	)
Non-controlling interest		2,676			2,374			1,485			(1,756	)
Total Shareholders' Equity		299,301			321,171			232,109			240,740
Total Liabilities and Shareholders' Equity	$	701,576		$	701,587		$	655,539		$	666,518

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Loss

(Amounts expressed in thousands of United States dollars, except for share and per share amounts)


	For the Three Months Ended							For the Three Months Ended
		March 31, 2023			March 31, 2022			March 31, 2024			March 31, 2023
Revenue		$	69,720		$	49,060
Excise and cultivation tax			(322	)		(475	)
Revenue, net			69,398			48,585			80,633			69,398

Cost of Sales			35,498			32,961			41,902			35,498

Gross profit			33,900			15,624			38,731			33,900

Operating expenses:
General and administrative			27,730			21,424			28,008			27,730
Amortization and depreciation			2,029			2,175			2,215			2,029
Impairment of property and equipment			335			—
Impairment of property and equipment and right of use assets									2,438			335
Total operating expenses			30,094			23,599			32,661			30,094

Income (loss) from operations			3,806			(7,975	)
Income from operations									6,070			3,806

Other (income) expense
Loss from revaluation of contingent consideration			—			119			1,393			—
Gain on fair value of warrants and purchase option derivative asset			(438	)		(5,713	)
Loss (gain) on fair value of warrants and purchase option derivative assets									983			(438	)
Finance and other expenses			10,087			6,655			8,589			10,087
Transaction and restructuring costs			3			615			—			3
Unrealized and realized foreign exchange (gain) loss			(31	)		356
Unrealized and realized foreign exchange loss (gain)									285			(31	)
Unrealized and realized loss on investments			699			—			—			699
Loss from continuing operations before provision from income taxes			(6,514	)		(10,007	)
Loss from continuing operations before provision for income taxes									(5,180	)		(6,514	)
Provision for income taxes			12,664			3,743			9,671			12,664
Net loss from continuing operations		$	(19,178	)	$	(13,750	)	$	(14,851	)	$	(19,178	)

Discontinued operations:
Loss from discontinued operations, net of tax			(3,591	)		(2,256	)	$	—		$	(3,591	)
Net loss		$	(22,769	)	$	(16,006	)	$	(14,851	)	$	(22,769	)

Foreign currency translation			347			3,607
Foreign currency translation adjustment									(398	)		347
Comprehensive loss		$	(23,116	)	$	(19,613	)	$	(14,453	)	$	(23,116	)

Net (loss) income from continuing operations attributable to:
Net loss from continuing operations attributable to:
Common and proportionate Shareholders of the Company		$	(21,364	)	$	(14,101	)	$	(17,055	)	$	(21,364	)
Non-controlling interests			2,186			351		$	2,204		$	2,186

Comprehensive (loss) income from continuing operations attributable to:
Comprehensive loss attributable to:
Common and proportionate Shareholders of the Company		$	(25,302	)	$	(19,964	)	$	(16,657	)	$	(25,302	)
Non-controlling interests			2,186		$	351		$	2,204		$	2,186

Net loss per share
Net loss per share - basic:
Continuing operations		$	(0.08	)	$	(0.07	)	$	(0.06	)	$	(0.08	)
Discontinued operations		$	(0.01	)	$	(0.01	)	$	—		$	(0.01	)
Net loss per share - basic		$	(0.09	)	$	(0.08	)	$	(0.06	)	$	(0.09	)
Weighted average number of outstanding common and proportionate voting shares			267,211,093			211,126,932
Weighted average number of outstanding common shares									290,618,567			267,211,093

Net loss per share - diluted:
Continuing operations		$	(0.08	)	$	(0.07	)	$	(0.06	)	$	(0.08	)
Discontinued operations		$	(0.01	)	$	(0.01	)	$	—		$	(0.01	)
Net loss per share - diluted		$	(0.09	)	$	(0.08	)	$	(0.06	)	$	(0.09	)
Weighted average number of outstanding common and proportionate voting shares, assuming dilution			267,211,093			211,126,932
Weighted average number of outstanding common shares, assuming dilution									290,618,567			267,211,093

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity

(Amounts expressed in thousands of United States dollars, except for share and per share amounts)

The accompanying notes are an integral part of these unaudited interim condensed consolidated ~~interim~~ financial ~~statements~~statements.

(Amounts expressed in thousands of United States dollars, except for share and per share amounts)

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

7In connection with the listing of the Common Shares on the TSX, the Company reorganized its ownership structure to segregate the Company’s Canadian retail operations from TerrAscend's cultivation and manufacturing operations in the United States (the "Reorganization"). Following the completion of the Reorganization, the Company owns 95% of its Canadian retail business. The Company continues to consolidate both its Canadian and U.S. cannabis operations under two different consolidation models.

Subsequent to the Reorganization, all operations in the United States have a functional currency of the U.S. dollar ("USD"). Canadian operations continue to have a functional currency of the Canadian dollar ("CAD").

A VOE is an entity in which (1) the total equity investment at risk is deemed sufficient to absorb the expected losses of the entity, (2) the at-risk equity holders, as a group, have all of the characteristics of a controlling financial interest and (3) the entity is structured with substantive voting rights. The Company consolidates the Canadian operations under a VOE model based on the controlling financial interest obtained through Common Shares with substantive voting rights.

A VIE is an entity that lacks one or more characteristics of a controlling financial interest defined under the voting interest model. The Company consolidates VIE when it has a variable interest that provide it with (1) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance (power) and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits).

In connection with the Reorganization, TerrAscend issued and sold, on a private placement basis, Class A shares in the capital of TerrAscend ("Class A Shares") for aggregate gross proceeds of $1,000 to an investor ("Investment"). See Note 10 for accounting treatment of the Class A Shares. Following the closing of the Investment, the Class B shares ("Class B Shares") in the capital of TerrAscend held by the Company, representing all of the issued and outstanding Class B shares, were automatically exchanged for non-voting, non-participating exchangeable shares in the capital of TerrAscend ("Non-Voting Shares"), representing approximately 99.8% of the issued and outstanding shares of TerrAscend on an as-converted basis. As a result of the limited rights associated with Non-Voting Shares that the Company holds following the closing of the Investment, the Company and TerrAscend entered into a protection agreement dated April 18, 2023 ("Protection Agreement"). The Protection Agreement provides for certain negative covenants in order to preserve the value of the Non-Voting Shares until such time as the Non-Voting Shares are converted into Class A Shares.

The Issuer determined that TerrAscend is a VIE, as all of the Company’s U.S. activities continue to be conducted on behalf of the Company which has disproportionately few voting rights. After conducting an analysis of the following VIE factors; purpose and design

of the VIE, the Protection Agreement in place, the structure of the Company's board of directors (the "Board"), and substantive kick-out rights of the holders of the Class A Shares, it was determined that the Company has the power to direct the activities of TerrAscend. In addition, given the structure of the Class A Shares where all of the losses and substantially all of the benefits of TerrAscend are absorbed by the Company, the Company consolidates as the primary beneficiary in accordance with Accounting Standards Codification ("ASC") 810, Consolidation.

The Company's U.S. operations are consolidated through the VIE model. Therefore, substantially all of the Company's current assets, non-current assets, current liabilities and non-current liabilities are consolidated through the VIE model. The Company's assets and liabilities that are not consolidated through the VIE model include convertible debt, and derivative liability. The Company also consolidates a minimal amount of assets and liabilities within Canada. See Note 21 for more information.

~~For the year ended December 31, 2022, the Company has an Employee Retention Credit ("ERC") for qualified wages of $14,903~~ ~~which was included in other receivables in the table above at December 31, 2022. During January 2023, the Company received $12,667, pursuant to a financing agreement with a third-party lender. In exchange, the Company assigned to the lender its interests in the $14,903~~ ERC claim that was submitted during December 2022. The difference between the amount of the claim and the amount received from the lender is the employee retention credits transfer fee which is equal to 15~~% of the total claim amount. The framework prescribed in ASC 860~~ ~~Transfers and Servicing~~ was reviewed and management has concluded that this should be accounted for as an asset transfer with recourse. This fee is included in finance and other expenses. If the Company does not receive the ERC claim, in whole or in part, the Company is required to repay the related portion of the funds received plus interest of 10% accrued from the date of the financing agreement through the repayment date. The Company’s obligation under the financing agreement will be satisfied upon receipt of the ERC claim or other full repayment. Management has concluded that collection remains probable and no additional recourse obligation was recorded for the three months ended March 31, 2023.

The over 90 days aged balance relates mainly to one customer which was deemed uncollectible.

~~The company wrote off $797~~ ~~of packaging inventory due primarily to defective cartridges during the three months ended March 31, 2023. On February 4, 2022, more than~~ ~~500~~ ~~vape products were recalled by the Pennsylvania's Department of Health, including several of the Company's SKUs. As a result of the recall, the Company wrote off $854~~ ~~of inventory during the three months ended March 31,2022. In addition, management impaired its inventory by $219~~ ~~as it was deemed unsaleable.~~

~~Certain assets of TerrAscend Canada were determined to be held for sale as they met the criteria under ASC 360~~ ~~Property, Plant and Equipment. TerrAscend Canada operated out of a~~ ~~67,300~~ square foot facility located in Mississauga, Ontario. Assets held for sale are reported at the lower of its carrying value or fair value less cost to sell. As of March 31, 2023, the Company determined the fair market value of the building based on the listing price and related commission and determined that the fair value was lower than its carrying value and therefore recorded impairment of $~~3,064. The fair value less cost to sell was included in assets held for sale in the Consolidated Financial Statements at March 31, 2023.~~

9.10.

Loans payable

The Company's loans payable consisted of the following:


	March 31, 2024			December 31, 2023
Chicago Atlantic term loan due November 2024
Principal amount	$	24,404		$	24,611
Deferred financing cost		—			—
Net carrying amount	$	24,404		$	24,611

Ilera term loan due December 2024
Principal amount	$	72,127		$	76,927
Deferred financing cost		(2,340	)		(3,191	)
Net carrying amount	$	69,787		$	73,736

Stearns loan due December 2024
Principal amount	$	24,721		$	24,809
Deferred financing cost		(611	)		(791	)
Net carrying amount	$	24,110		$	24,018

Pelorus term loan due October 2027
Principal amount	$	45,478		$	45,478
Deferred financing cost		(1,413	)		(1,490	)
Net carrying amount	$	44,065		$	43,988

Maryland Acquisition loans (1)
Principal amount	$	19,495		$	19,873
Unamortized discount		(1,229	)		(1,403	)
Net carrying amount	$	18,266		$	18,470

Other loans	$	2,322		$	2,698

Short-term debt	$	9,123		$	11,849
Current portion of long-term debt	$	124,545			125,888
Loans payable, current	$	133,668			137,737

Loans payable, non-current	$	58,409		$	61,633
Total loans payable	$	192,077		$	199,370

(1) For maturity breakout, refer to Maryland Acquisition Loans section below.

TerrAscend Corp.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(Amounts expressed in thousands of United States dollars, except for share and per share amounts)

Ilera Term Loan

Gage Loans

Pinnacle Loans

Pelorus Term Loan

Total

Balance at December 31, 2022

110,850

29,976

9,333

44,028

194,187

Interest and accretion

4,165

1,080

136

1,665

7,046

Principal and interest paid

—

(1,445
)

(636
)

(1,578
)

(3,659
)
Effects of movements in foreign exchange

—

(9
)

—

—

(9
)
Ending carrying amount at March 31, 2023

115,015

29,602

8,833

44,115

197,565

Less: current portion

(38,713
)

(3,291
)

(8,833
)

(560
)

(51,397
)
Non-current loans payable

$
76,302

$
26,311

—

$
43,555

$
146,168

Total interest paid on all loan payables was $~~2,456~~ ~~and $8,271~~6,264 for the three months ended March 31, 2024, and $2,456 for the three months ended March 31, 2023. The Company had accrued interest on loans payable of $3,064 and $3,491 as of March 31, 2024 and December 31, 2023, respectively, included in accounts payable and ~~2022, respectively.~~accrued liabilities on the Consolidated Balance Sheets.

Chicago Atlantic Term Loan

In connection with the acquisition of Gage Growth on March 10, 2022 (the "Gage Acquisition"), the Company assumed a senior secured term loan that was amended to provide an amount of $25,000 (the “Chicago Atlantic Term Loan”) bearing an interest rate equal to the greater of (i) the U.S. "prime rate" plus 6.00%, and (ii) 13.0% and matures on November 1, 2024. The Chicago Atlantic Loan was secured by a first lien on all Gage Growth assets.

As of March 31, 2024, there was an outstanding principal amount of $24,404 under the Chicago Atlantic Term Loan.

Ilera Term Loan

On ~~March 15, 2023,~~December 18, 2020, WDB Holding PA, ~~in exchange for~~ a ~~fee~~subsidiary of TerrAscend, entered into a senior secured term loan with a syndicate of lenders in the amount of $1120,000 ("Ilera Term Loan"). The Ilera Term Loan is solely secured by the Company’s Pennsylvania-based Ilera Healthcare LLC (“Ilera”). The Ilera Term Loan bears interest at 12.875% ofmatures on December 17, 2024.

On January 2, 2024, the then outstanding principal loan balance, agreed to an amendment among other things, to (i) extend the obligation date to prepay the Company's debt from March 15, 2023 to June 30, 2023 in which WDB Holding PA must use commercially reasonable efforts to add additional collateral toCompany completed a prepayment of the Ilera Term Loan ~~(ii) increase the amount~~ of ~~debt to be reduced by up to~~ $~~37,000~~4,800~~, subject to certain reductions in amount based on meeting certain time based milestones,~~ at athe prepayment price of ~~103.22~~100% to ~~par, and (iii) extend~~par. Subsequent to March 31, 2024, the ~~next test date in respect~~Company made a prepayment of $3,200 of the ~~interest coverage ratio until June 30, 2023. This amendment was not considered extinguishment~~Ilera Term Loan, at the prepayment price of ~~debt under~~100% to par. In accordance with ASC 470, Debt, these amendments were not considered extinguishment of debt.

As of March 31, 2024, there was an outstanding principal amount of $72,127 under the Ilera Term Loan.

Stearns Loan

As of March 31, 2024, there was an outstanding principal amount of $24,721 under the Stearns Loan.

Pelorus Term Loan

On October 11, 2022, subsidiaries of, TerrAscend, among others, entered into a loan agreement with Pelorus Fund REIT, LLC ("Pelorus") for a single-draw senior secured term loan (the “Pelorus Term Loan") in an aggregate principal amount of $45,478. The Pelorus Term Loan is based on a variable rate tied to the one month Secured Overnight Financing Rate ("SOFR"), subject to a base rate, plus 9.5%, with interest-only payments for the first 36 months and matures on October 11, 2027. The base rate is defined as, on any day, the greatest of: (i) 2.5%, (b) the effective federal funds rate in effect on such day plus 0.5%, and (c) one month Secured Overnight Financing Rate ("SOFR") in effect on such day. The obligations of the borrowers under the Pelorus Term Loan are guaranteed by the Company, TerrAscend USA and certain other subsidiaries of TerrAscend and are secured by all of the assets of TerrAscend's Maryland and New Jersey businesses, including certain real estate in Maryland and New Jersey, but excludes all MD dispensaries

As of March 31, 2024, there was an outstanding principal amount of $45,478 under the Pelorus Term Loan.

Maryland Acquisition Loans

In connection with the acquisition Derby 1, LLC ("Peninsula"), Hempaid, LLC ("Blue Ridge"), and Herbiculture Inc. ("Herbiculture"), (collectively, the "Maryland Acquisitions"), the Company entered into promissory notes with an aggregate principal amount of $20,625 that bear interest at rates ranging from 7.0% to 10.5% with maturities ranging from June 28, 2025 to June 30, 2027.

As of March 31, 2024, there was an outstanding principal amount of $19,495 under the Maryland Acquisition Loans.

TerrAscend Corp.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(Amounts expressed in thousands of United States dollars, except for share and per share amounts)

Other loans

Stadium Ventures

As of March 31, 2024, there was an outstanding principal amount of $1,322 under the Stadium Ventures loan.

Class A Shares of TerrAscend Growth

In connection with the Reorganization (see Note 3), TerrAscend issued $1,000 of Class A shares with a 20% guaranteed annual dividend to an investor (the “Investor”) pursuant to the terms of a subscription agreement between TerrAscend and the Investor dated April 20, 2023 (the “Subscription Agreement”). Pursuant to the terms of the Subscription Agreement, TerrAscend holds a call right to repurchase all of the Class A Shares issued to the Investor for an amount equal to the sum of: (a) the Repurchase/Put Price (as defined in the Subscription Agreement); plus (b) the amount equal to 40% of the subscription amount less the aggregate dividends paid to the Investor as of the date of the exercise of the option. In addition, the Investor holds a put right that is exercisable at any time after four months’ advanced written notice following the five-year anniversary of the closing of the investment to put all (and only all) of the Class A Shares owned by the Investor to TerrAscend at the Repurchase/Put Price, payable in cash or shares. The instrument is considered as a debt for accounting purposes due to the economic characteristics and risks

Short-Term Debt

The average dollar amount of short-term debt for the three months ended March 31, 2024 was $10,254 with a weighted-average interest rate of 16.69% as of March 31, 2024.

On January 15, 2024, the Company paid off the IHC Real Estate LP promissory note with a payment of $5,000.

Maturities of loans payable

Stated maturities of loans payable over the next five years are as follows:


	March 31, 2023		March 31, 2024
Remainder of 2023	$	47,613
2024		105,803	$	132,677
2025		758		7,942
2026		2,274		11,082
2027		42,446		44,483
2028				1,000
Thereafter		—		—
Total principal payments	$	198,894	$	197,184

TerrAscend Corp.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(Amounts expressed in thousands of United States dollars, except for share and per share amounts)

~~10.~~11.

Leases

The majority of the Company’s leases are operating leases used primarily for corporate offices, retail, cultivation and manufacturing. The operating lease periods generally range from 1 to 28 26years. The Company had ~~five~~ ~~and~~ ~~three~~two finance leases at March 31, ~~2023~~2024 and December 31, ~~2022, respectively.~~2023.

Amounts recognized in the consolidated balance sheet were as follows:


	March 31, 2023		December 31, 2022		March 31, 2024		December 31, 2023
Operating leases:
Operating lease right-of-use assets	$	29,951	$	29,451	$	41,488	$	43,440

Operating lease liability classified as current		2,314		1,857		1,816		1,244
Operating lease liability classified as non-current		31,836		31,545		43,967		45,384
Total operating lease liabilities	$	34,150	$	33,402	$	45,783	$	46,628

Finance leases:
Property and equipment, net	$	6,531	$	6,673	$	2,073	$	2,112

Lease obligations under finance leases classified as current		535		521		2,079		2,030
Lease obligations under finance leases classified as non-current		6,614		6,713		383		407
Total finance lease obligations	$	7,149	$	7,234	$	2,462	$	2,437

The Company recognized operating lease expense of $2,034 for the three months ended March 31, 2024 and $1,254 for the three months ended March 31, 2023.

Other information related to operating leases at March 31, 2024 and December 31, 2023 consisted of the following:


	March 31, 2024			December 31, 2023
Weighted-average remaining lease term (years)
Operating leases		12.5			12.5
Finance leases		2.0			1.2

Weighted-average discount rate
Operating leases		11.43	%		11.43	%
Finance leases		9.47	%		9.47	%

Supplemental cash flow information related to leases are as follows:


	March 31, 2024		December 31, 2023
Cash paid for amounts included in measurement of operating lease liabilities	$	2,034	$	6,264
Right-of-use assets obtained in exchange for operating lease obligations		—		16,603
Cash paid for amounts included in measurement of finance lease liabilities		32		153

TerrAscend Corp.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(Amounts expressed in thousands of United States dollars, except for share and per share amounts)

Undiscounted lease obligations are as follows:


	Operating			Finance			Total
2024	$	5,513		$	98		$	5,611
2025		7,393			2,132			9,525
2026		7,158			134			7,292
2027		7,014			136			7,150
2028		6,852			80			6,932
Thereafter		56,206			—			56,206
Total lease payments		90,136			2,580			92,716
Less: interest		(44,353	)		(118	)		(44,471	)
Total lease liabilities	$	45,783		$	2,462		$	48,245

12.

Convertible Debt

The Company's convertible debt consisted of the following:


	March 31, 2024			December 31, 2023
Convertible debt proceeds, net of transaction costs - Maturing June 2026	$	10,098		$	10,098
Allocation to conversion option		(3,600	)		(3,600	)
Allocation to debt		6,498			6,498
Interest and accretion		1,184			768
Net carrying amount	$	7,682		$	7,266

The Company had accrued interest on convertible debt of $577 and $nil as of March 31, 2024 and December 31, 2023, respectively, included in accounts payable and accrued liabilities on the Consolidated Balance Sheets.

13.

Shareholders' equity

Warrants

The following is a summary of the outstanding warrants for Common Shares:


	Number of Common Share Warrants Outstanding		Number of Common Share Warrants Exercisable		Weighted Average Exercise Price $		Weighted Average Remaining Life (years)
Outstanding, December 31, 2023		23,330,542		818,927	$	4.56		8.74
Granted		—		—		—		—
Expired		—		—		—		—
Outstanding, March 31, 2024		23,330,542		818,927	$	4.45		8.49

TerrAscend Corp.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(Amounts expressed in thousands of United States dollars, except for share and per share amounts)

The weighted-average exercise price in the above table is denominated in a currency that is different from the functional currency of the Company and can influence the USD conversion.

The ~~Company recognized operating lease~~following is a summary of the outstanding warrant liabilities that are exchangeable into Common Shares:


	Number of Common Share Warrants Outstanding		Number of Common Share Warrants Exercisable		Weighted Average Exercise Price $		Weighted Average Remaining Life (years)
Outstanding, December 31, 2023		3,590,334		—	$	1.95		1.48
Granted		—		—		—		—
Expired		—		—		—		—
Outstanding, March 31, 2024		3,590,334		—	$	1.95		1.23

14.

Share-based compensation plans

Share-based payments expense ~~of $1,254~~

~~and $~~

~~1,182~~Total share-based payments expense was as follows:


	For the Three Months Ended
		March 31, 2024		March 31, 2023
Stock options		$	904	$	1,260
Restricted share units			581		453
Total share-based payments		$	1,485	$	1,713

Stock Options

The following table summarizes the stock option activity for the three months ended March 31, 2024:


	Number of Stock Options			Weighted average remaining contractual life (in years)		Weighted Average Exercise Price (per share) $		Aggregate intrinsic value
Outstanding, December 31, 2023		16,278,380			4.74	$	3.35	$	658
Granted		495,000			—		1.86		—
Exercised		—			—		—		—
Forfeited		(219,312	)		—		1.67		—
Expired		(1,256,315	)		—		2.55		—
Outstanding, March 31, 2024		15,297,753			5.64	$	3.48	$	1,917

Exercisable, March 31, 2024		10,437,578			4.25	$	3.78	$	636

Nonvested, March 31, 2024		4,860,175			8.63	$	2.82	$	1,281

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between Company’s closing stock price on March 31, 2024 and December 31, 2023, respectively, and ~~2022.~~the exercise price, multiplied by the number of the in-the-money options) that would have been received by the option holders had they exercised their in-the-money options on March 31, 2024 and December 31, 2023, respectively.

~~Other information~~The total pre-tax intrinsic value (the difference between the market price of the Common Shares on the exercise date and the price paid by the option holder to exercise the option) related to ~~operating leases at March 31, 2023 and December 31, 2022 consisted of the following:~~stock options exercised is presented below:

March 31, 2023

December 31, 2022

Weighted-average remaining lease term (years)

Operating leases

12.4

12.8

Finance leases

6.5

6.8

Weighted-average discount rate

Operating leases

10.70
%

10.69
%
Finance leases

9.89
%

9.89
%

~~Supplemental cash flow information related to leases are as follows:~~

March 31, 2023

December 31, 2022

Cash paid for amounts included in measurement of operating lease liabilities

$
1,254

$
5,053

Right-of-use assets obtained in exchange for operating lease obligations

780

3,097

Cash paid for amounts included in measurement of finance lease liabilities

222

220

Assets under finance leases obtained in exchange for finance lease obligations

—

6,913

~~Undiscounted lease obligations are as follows:~~

Operating

Finance

Total

Remainder of 2023

4,089.00

652.00

$
4,741

2024

5,434.00

2,887.00

8,321

2025

5,414.00

908.00

6,322

2026

5,137.00

928.00

6,065

2027

4,635.00

956.00

5,591

Thereafter

39,547.00

3,870.00

43,417

Total lease payments

64,256.00

10,201.00

74,457

Less: interest

(30,106
)

(3,052
)

(33,158
)
Total lease liabilities

$
34,150

$
7,149

$
41,299

~~Under the terms of these operating sublease agreements, future rental income from such third-party leases is expected to be as follows:~~

Remainder of 2023

$
468

2024

550

2025

445

2026

261

2027

—

Thereafter

—

Total rental payments

$
1,724

A sale-leaseback transaction occurs when an entity sells an asset it owns and then immediately leases the asset back from the buyer. The seller then becomes the lessee and the buyer becomes to the lessor. Under Financial Accounting Standards Board Accounting Standards Codification 842, both parties must assess whether the buyer-lessor has obtained control of the asset and a sale has occurred. Through the Gage Acquisition, the Company entered into leaseback transactions on ~~six~~ properties of owned real estate. The Company has determined that these transactions do not qualify as a sale because control was not transferred to the buyer-lessor. Therefore, the Company has classified the lease portion of the transaction as a finance lease and continues to depreciate the asset. The Gage acquisition included financing obligations. The balance at March 31, 2023 was $~~11,809. Of this amount, $830~~ ~~is included in other current liabilities~~

TerrAscend Corp.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(Amounts expressed in thousands of United States dollars, except for share and per share amounts)

~~and $10,979~~ ~~is included in financing obligations in the unaudited consolidated balance sheets. The financing obligations had a weighted average term and weighted average discount rate of~~ ~~7.5~~ ~~years and~~ ~~9.5%, respectively, at March 31, 2023.~~

~~Undiscounted financing obligations as of March 31, 2023 are as follows:~~

Remainder of 2023

1,444

2024

1,940

2025

1,986

2026

2,032

2027

2,079

Thereafter

5,680

Total payments

15,161

Less: interest

(3,352
)
Total financing obligations

$
11,809

~~11.~~

~~Shareholders’ equity~~

~~Warrants~~

~~The following is a summary of the outstanding warrants for Common Shares:~~

Number of Common Share Warrants Outstanding

Number of Common Share Warrants Exercisable

Weighted Average Exercise Price $

Weighted Average Remaining Life (years)

Outstanding, December 31, 2022

23,240,330

728,715

$
4.49

9.72

Exercised

—

—

—

—

Outstanding, March 31, 2023

23,240,330

728,715

$
4.49

9.47

~~The Gage Acquisition also included warrant liabilities that are exchangeable into Common Shares.~~

Number of Common Share Warrants Outstanding

Number of Common Share Warrants Exercisable

Weighted Average Exercise Price $

Weighted Average Remaining Life (years)

Outstanding, December 31, 2022

7,129,517

7,129,517

$
8.66

0.99

Exercised

—

—

—

—

Outstanding, March 31, 2023

7,129,517

7,129,517

$
8.66

0.74

~~The following is a summary of the outstanding Preferred Share warrants at March 31, 2023. Each warrant is exercisable into~~ ~~one~~ ~~preferred share:~~

Number of Preferred Share Warrants Outstanding

Number of Preferred Share Warrants Exercisable

Weighted Average Exercise Price $

Weighted Average Remaining Life (years)

Outstanding, December 31, 2022

15,106

15,106

$
3,000

0.39

Exercised

—

—

—

—

Outstanding, March 31, 2023

15,106

15,106

$
3,000

0.15

~~12.~~

~~Share-based compensation plans~~

~~Share-based payments expense~~

~~Total share-based payments expense was as follows:~~

~~TerrAscend Corp.~~

~~Notes to the Unaudited Interim Condensed Consolidated Financial Statements~~

~~(Amounts expressed in thousands of United States dollars, except for share and per share amounts)~~

For the Three Months Ended

March 31, 2023

March 31, 2022

Stock options

$
1,260

$
2,590

Restricted share units

453

766

Warrants

—

—

Total share-based payments

$
1,713

$
3,356

~~Stock Options~~

~~The following table summarizes the stock option activity for the three months ended March 31, 2023:~~

Number of Stock Options

Weighted average remaining contractual life (in years)

Weighted Average Exercise Price (per share) $

Aggregate intrinsic value

Weighted average fair value of nonvested options (per share) $

Outstanding, December 31, 2022

20,111,246

4.86

$
3.63

$
320

N/A

Granted

630,000

—

1.75

—

—

Exercised

(405,134
)

—

0.19

—

—

Forfeited (1)

(666,665
)

—

5.14

—

—

Expired

(497,019
)

—

4.83

—

—

Outstanding, March 31, 2023

19,172,428

4.78

$
3.56

364

—

Exercisable, March 31, 2023

12,415,653

2.94

$
3.52

162

—

Nonvested, March 31, 2023

6,756,775

8.16

$
3.65

$
202

—

~~(1)~~

~~For stock options forfeited, represents one share for each stock option forfeited.~~

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between Company’s closing stock price on March 31, 2023 and December 31, 2022, respectively, and the exercise price, multiplied by the number of the in-the-money options) that would have been received by the option holders had they exercised their in-the-money options on March 31, 2023 and December 31, 2022, respectively.

The total pre-tax intrinsic value (the difference between the market price of the Company’s common stock on the exercise date and the price paid by the option holder to exercise the option) related to stock options exercised is presented below:

For the Three Months Ended

March 31, 2023

March 31, 2022

Exercised

$
551

$
61


	For the Three Months Ended
		March 31, 2024		March 31, 2023
Exercised		$	—	$	551

The fair value of the various stock options granted were estimated using the Black-Scholes ~~option pricing model~~Model with the following assumptions:


	March 31, 2023			December 31, 2022			March 31, 2024			March 31, 2023
Volatility	80.04% - 80.16%			77.55% -77.89%			77.70% - 77.79%			80.04% - 80.16%
Risk-free interest rate	2.85% - 3.21%			1.63% - 3.51%			3.18% - 3.50%			2.85% - 3.21%
Expected life (years)	10.01			9.62 - 10.01			10.01			10.01
Dividend yield		0.00	%		0.00	%		0.00	%		0.00	%
Forfeiture rate		26.11	%		26.11	%		26.11	%		26.11	%

~~TerrAscend Corp.~~

~~Notes to the Unaudited Interim Condensed Consolidated Financial Statements~~

~~(Amounts expressed in thousands of United States dollars, except for share and per share amounts)~~

Volatility was estimated by using the historical volatility of the Company's stock price. The expected life in years represents the period of time that the options issued are expected to be outstanding. The risk-free rate is based on USU.S. treasury bond issues with a remaining term approximately equal to the expected life of the options. Dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay cash dividends in the foreseeable future.

The total estimated fair value of stock options that vested during the three months ended March 31, ~~2023~~2024 and ~~2022~~2023 was $~~4,263~~3,395 and $~~2,511~~4,263, respectively. As of March 31, ~~2023,~~2024, there was $~~24,540~~8,570 of total unrecognized compensation cost related to unvested options.

Restricted Share Units

The following table summarizes the activities for the RSUs for the three months ended March 31, ~~2023:~~2024:

Number of RSUs

Number of RSUs vested

Weighted average remaining contractual life (in years)

Outstanding, December 31, 2022

415,640

13,050

N/A

Vested

(110,406
)

—

—

Forfeited

(40,606
)

—

—

Outstanding, March 31, 2023

264,628

13,050

N/A


	Number of RSUs
Outstanding, December 31, 2023		1,078,584
Granted		3,750
Vested		(82,365	)
Forfeited		—
Outstanding, March 31, 2024		999,969

As of March 31, ~~2023,~~2024, there was $~~3,371~~2,232 of total unrecognized compensation cost related to unvested RSUs.

~~13.~~15.

Non-controlling interest

Non-controlling interest consists mainly of ~~the Company’s~~TerrAscend's minority ownership ~~minority~~ interest in ~~its~~TerrAscend's New Jersey ~~operations and IHC Real Estate operations and consists~~operations.

On January 19, 2024, the Company reduced its non-controlling interest through the acquisition of the remaining 50.1% equity in both State Flower and three Apothecarium dispensaries in California. The carrying amount of non-controlling interest was adjusted by $1,374 and recognized in additional paid in capital and attributed to the parent's equity holders.

The following ~~amounts:~~table summarizes the non-controlling interest activity for the three months ended March 31, 2024:


	March 31, 2023			December 31, 2022			March 31, 2024			December 31, 2023
Opening carrying amount	$	2,374		$	5,367		$	(1,756	)	$	2,374
Capital distributions		(1,884	)		(7,550	)		(337	)		(11,622	)
Acquisition of non-controlling interest								1,374			(1,323	)
Net income attributable to non-controlling interest		2,186			4,557			2,204			8,815
Ending carrying amount	$	2,676		$	2,374		$	1,485		$	(1,756	)

TerrAscend Corp.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(Amounts expressed in thousands of United States dollars, except for share and per share amounts)

~~14.~~16.

Related parties

Parties are related if one party has the ability to control or exercise significant influence over the other party in making financing and operating decisions. At March 31, ~~2023~~2024, amounts due to/from related parties consisted of:

(a)

Loans payable: During the year ended December 31, 2020, a small number of related persons, which consisted of key management of the Company, participated in the Ilera term loan (Note 9)10), which makes up $~~240~~149 and $159 of the total loan principal balance at March 31, ~~2023~~2024 and December 31, ~~2022.~~2023, respectively.

~~15.~~17.

Income taxes

The Company's effective tax rate was (~~194~~186.7)%~~) and (~~37%) for the three months ended March 31, ~~2023,~~2024 and ~~March 31, 2022, respectively. The effective tax rate~~(194.4)% for the three months ended March 31, ~~2023 differed from~~2023. As the ~~federal statutory tax rate primarily due to~~Company operates in the ~~disallowed tax deductions for business expenses pursuant~~cannabis industry, it is subject to Section 280E of the Internal Revenue Code ~~and a return~~of 1986, as amended (the "Code"), under which the Company is only allowed to ~~provision adjustment primarily~~deduct expenses directly related to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed non-deductible under the ~~Company's New Jersey tax return filings. The~~Code. Therefore, the effective tax rate ~~for the three months ended~~can be highly variable and may not necessarily correlate with pre-tax income or loss.

The Company had an unrecognized tax benefits of $93,955 and $84,485 as of March 31, ~~2022 differed from~~2024 and December 31, 2023, respectively. The increase in uncertain tax positions is primarily due to legal interpretations that challenge the Company's tax liability under the Code (“280E Tax Position”). The Company believes that it is reasonably possible that the unrecognized tax benefits will increase over the next 12 months due to its 280E Tax Position. Of the unrecognized tax benefits amounts, $11,537 and $10,459 as of March 31, 2024 and December 31, 2023, respectively, is unrelated to its 280E Tax Position.

Related to its 280E Tax Position, the Company has filed amended federal ~~statutory~~returns related to 2020 and 2021 and is in the process of completing various other federal and state amendments related to 2020, 2021 and 2022. The Company’s tax ~~rate~~returns generally remain subject to examination by the U.S. Federal, U.S. State and non U.S. taxing authorities for years ending December 31, 2020 and forward.

18.

General and administrative expenses

The Company’s general and administrative expenses were as follows:


	For the Three Months Ended
	March 31, 2024		March 31, 2023
Office and general	$	3,956	$	4,004
Professional fees		3,061		3,373
Lease expense		1,820		1,244
Facility and maintenance		1,325		1,244
Salaries and wages		14,896		13,496
Share-based compensation		1,485		1,713
Sales and marketing		1,465		2,656
Total	$	28,008	$	27,730

19.

Revenue, net

The Company’s disaggregated net revenue by source, primarily due to the ~~disallowed tax deductions for business expenses pursuant to Section 280E of the Code.~~Company’s contracts with its external customers was as follows:


	For the Three Months Ended
		March 31, 2024		March 31, 2023
Retail		$	53,858	$	55,422
Wholesale			26,775		13,976
Total		$	80,633	$	69,398

TerrAscend Corp.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(Amounts expressed in thousands of United States dollars, except for share and per share amounts)

TerrAscend's effective tax rate can vary each reporting period depending on, among other factors, the geographic and business mix of TerrAscend's earnings, changes to the valuation allowance, and permanently non-deductible expenses. Certain of these and other factors, including TerrAscend's history and projections of pre-tax earnings, are considered in assessing TerrAscend's ability to realize any deferred tax assets including net operating losses.

~~16.~~

~~General and administrative expenses~~

~~The Company’s general and administrative expenses were as follows:~~

For the Three Months Ended

March 31, 2023

March 31, 2022

Office and general

$
4,004

$
3,310

Professional fees

3,373

2,720

Lease expense

1,244

1,246

Facility and maintenance

1,244

607

Salaries and wages

13,496

8,798

Share-based compensation

1,713

3,356

Sales and marketing

2,656

1,387

Total

$
27,730

$
21,424

~~17.~~

~~Revenue, net~~

~~The Company’s disaggregated net revenue by source, primarily due to the Company’s contracts with its external customers were as follows:~~

For the Three Months Ended

March 31, 2023

March 31, 2022

Retail

$
55,422

$
25,718

Wholesale

13,976

22,867

Total

$
69,398

$
48,585

For the three months ended March 31, ~~2023 and 2022~~,2024, the Company did not have any single customer that accounted for 10% or more of the Company’s revenue.

~~As a result of the vape recall in Pennsylvania (refer to note 5), the Company recorded sales returns of $1,040~~ ~~during the three months ended March 31, 2022.~~

~~18.~~20.

Finance and other expenses

The Company’s finance and other expenses included the following:


	For the Three Months Ended
								For the Three Months Ended
		March 31, 2023			March 31, 2022				March 31, 2024			March 31, 2023
Interest and accretion		$	7,875		$	6,926			$	8,872		$	7,875
Employee retention credits transfer with recourse			2,235			—
Other (income) expense			(24	)		(271	)
Employee retention credits and transfer fee										—			2,235
Other income										(283	)		(23	)
Total		$	10,087		$	6,655			$	8,589		$	10,087

~~Refer to note 3, for further explanation about employee retention credits transfer with recourse.~~

~~19.~~21.

Segment information

Operating Segment

~~TerrAscend Corp.~~

~~Notes to the Unaudited Interim Condensed Consolidated Financial Statements~~

~~(Amounts expressed in thousands of United States dollars, except for share and per share amounts)~~

The Company determines its operating segments according to how the business activities are managed and evaluated by the Company’s chief operating decision maker. The Company operates under one operating segment, being the cultivation, production and sale of cannabis products.

Geography

The Company has subsidiaries located in Canada and the United States. For ~~each of~~ the three months ended March 31, ~~2023 and 2022, all~~2024, net revenue was primarily generated from sales in the United States. ~~The~~As a result of the Reorganization (Note 3), the Company consolidated its retail location in Canada and generatedno net revenue ~~in Canada in each~~ of $264 the three months ended March 31, ~~2023 and 2022.~~2024.

The Company had non-current assets by geography of:


	March 31, 2023		December 31, 2022		March 31, 2024		December 31, 2023
United States	$	585,974	$	577,750	$	557,235	$	562,854
Canada		1,818		1,844		649		775
Total	$	587,792	$	579,594	$	557,884	$	563,629

~~20.~~22.

Capital management

The Company’s objective in managing capital is to ensure a sufficient liquidity position to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders. In order to achieve this objective, the Company prepares a capital budget to manage its capital structure. The Company defines capital as borrowings, equity comprised of issued share capital, share-based payments, accumulated deficit, as well as funds borrowed from related parties.

Since inception, the Company has primarily financed its liquidity needs through the issuance of share capital and debt. The equity issuances are outlined in Note ~~11 and~~13, debt ~~modification~~modifications are outlined in Note 9.10, and debt financing are outlined in Note 12.

The Company is subject to financial covenants as a result of its loans payable with various lenders. The Company is in compliance with its debt covenants as of March 31, ~~2023.~~2024. In the event that, in future periods, the Company’s financial results are below levels required to maintain compliance with any of its covenants, the Company will assess and undertake appropriate corrective initiatives with a view to allowing it to continue to comply with its covenants. Other than these items related to loans payable, the Company is not subject to externally imposed capital requirements.

TerrAscend Corp.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(Amounts expressed in thousands of United States dollars, except for share and per share amounts)

~~21.~~23.

Financial instruments and risk management

Assets and liabilities measured at fair value

Cash and cash equivalents, net accounts receivable, accounts payable and accrued liabilities, loans payable, convertible debentures, and other current receivables and payables represent financial instruments for which the carrying amount approximates fair value due to their short-term maturities.

The following table represents the fair value amounts of financial assets and financial liabilities measured at estimated fair value on a recurring basis:


	At March 31, 2023								At December 31, 2022								At March 31, 2024							At December 31, 2023
		Level 1		Level 2			Level 3			Level 1		Level 2			Level 3			Level 1		Level 2		Level 3			Level 1		Level 2		Level 3
Assets
Cash and cash equivalents		$	32,931		—	—		—		$	26,158		—	—		—		$	22,664		—		—		$	22,241		—		—
Restricted cash			606		—			—			605		—			—			3,110		—		—			3,106		—		—
Purchase option derivative asset			—		—			50			—		—			50
Total Assets		$	33,537	$	-		$	50		$	26,763	$	-		$	50		$	25,774		—		—		$	25,347		—	$	—
Liabilities
Contingent consideration payable			—	$	4,434			—			—	$	5,184			—			—		2,914		—			—		2,012		4,434
Warrant liability			—		267			—			—		711			—
Derivative liability																			—		6,075		—			—		5,162		—
Total Liabilities			—	$	4,701			—			—	$	5,895			—		$	—	$	8,989	$	—		$	—	$	7,174	$	4,434

There were no transfers between the levels of fair value hierarchy during the three months ended March 31, ~~2023.~~

~~TerrAscend Corp.~~

~~Notes to the Unaudited Interim Condensed Consolidated Financial Statements~~

~~(Amounts expressed in thousands of United States dollars, except for share and per share amounts)~~2024.

The valuation approaches and key inputs for each category of assets or liabilities that are classified within levels of the fair value hierarchy are presented below:

Level 1

Cash, ~~and~~ cash equivalents, and restricted cash, net accounts receivable, accounts payable and accrued liabilities, ~~loans payable, convertible debentures,~~ and other current receivables and payables represent financial instruments for which the carrying amount approximates fair value due to their short-term maturities.

Level 2

~~Warrant liability~~

The following table summarizes the changes in the ~~warrant~~derivative liability for the three months ended March 31, ~~2023:~~2024:

Balance at December 31, 2022

$
711

Included in gain on fair value of warrants

(438
)
Effects of movements in foreign exchange

(6
)
Balance at March 31, 2023

$
267


Balance at December 31, 2023	$	5,162
Fair value gain on revaluation of warrants and conversion option		983
Effects of movements in foreign exchange		(70	)
Balance at March 31, 2024	$	6,075

Warrant liability and conversion option

The Company's warrant liability consists of ~~its Series A, B, C, and D convertible preferred stock~~a detachable warrant issued through ~~its 2020 private placements ("~~the private placement ~~warrant liability")~~(Note 13), ~~as well as~~and a conversion option related to the ~~warrant liability acquired through its Gage Acquisition ("Gage warrant liability")~~convertible debenture offering (Note 12).

Detachable Warrants

The detachable warrants issued as a part of the June 2023 private placement ~~warrant liability has~~(Note 13) have been measured at fair value atas of March 31, ~~2023.~~2024. Key inputs and assumptions used in the ~~Black Scholes valuation~~Black-Scholes Model were as follows:

March 31, 2023

December 31, 2022

Common Stock Price of TerrAscend Corp.

$
1.52

$
1.13

Warrant exercise price

$
3,000

$
3,000

Warrant conversion ratio

$
1,000

$
1,000

Annual volatility

52.7
%

105.3
%
Annual risk-free rate

4.8
%

4.6
%
Expected term (in years)

0.1

0.4

~~The Gage warrant liability has been remeasured to fair value. Key inputs and assumptions used in the Black Scholes model were as follows:~~

March 31, 2023

December 31, 2022

Common Stock Price of TerrAscend Corp.

$
1.52

$
1.13

Warrant exercise price

$
8.66

$
8.66

Annual volatility

104.6
%

97.1%-98.4%

Annual risk-free rate

4.9
%

4.8
%
Expected term (in years)

0.7

1.0


	March 31, 2024			December 31, 2023
Common Stock Price of TerrAscend Corp.	$	1.89		$	1.63
Option exercise price	$	1.95		$	1.95
Annual volatility		64.6	%		74.7	%
Annual risk-free rate		5.03	%		4.23	%
Expected term (in years)		1.23			1.48

~~22.~~

~~Commitments and contingencies~~

In the ordinary course of business, the Company is involved in a number of lawsuits incidental to its business, including litigation related to intellectual property, employment, and commercial matters. Although it is difficult to predict the ultimate outcome of these cases, management believes that any ultimate liability would not have a material adverse effect on the Company's consolidated balance sheets

TerrAscend Corp.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(Amounts expressed in thousands of United States dollars, except for share and per share amounts)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of ~~TerrAscend's~~ financial condition and results of operations of TerrAscend Corp. (the “Issuer”), its subsidiaries, TerrAscend Growth Corp. (“TerrAscend”) and its subsidiaries (collectively, the “Company”) should be read in conjunction with ~~TerrAscend's~~the Company's unaudited interim condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial information and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, which was filed with the Securities and Exchange Commission, ~~or SEC,~~(the “SEC”) , on March ~~16, 2023, or the Annual Report.~~14, 2024, (the “Annual Report”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q including information with respect to ~~TerrAscend's~~the Company's plans and strategy for its business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth under "Risk Factors" in ~~our~~the Company's Annual Report, its actual results could differ materially from the results described in or implied by the "Cautionary Note Regarding Forward-Looking Statements" contained in this Quarterly Report on Form 10-Q and in the following discussion and analysis.

Unless otherwise noted, dollar amounts in this Item 2 are in thousands of U.S. dollars.

This Management’s Discussion and Analysis (“MD&A”) of the financial condition and results of operations of ~~TerrAscend~~the Company is for the three months ended March 31, ~~2023~~2024 and ~~2022~~2023 and the accompanying notes for each respective period.

~~TerrAscend~~The Company is a leading North American cannabis ~~operator with~~company. The Company has vertically integrated licensed operations in Pennsylvania, New Jersey, Michigan, Maryland and ~~California, and is a cannabis retailer~~California. In addition, the Company has retail operations in Ontario, Canada with a ~~minority-owned~~majority-owned dispensary in Toronto, Ontario, Canada. ~~TerrAscend’s cultivation and manufacturing practices yield consistent and high-quality cannabis, providing industry-leading product selection to both the medical and legal adult-use markets.~~ Notwithstanding the fact that various states in the U.S. have implemented medical marijuana laws or ~~that~~ have otherwise legalized the use of cannabis, the use of cannabis remains illegal under U.S. federal law for any purpose, by way of the Controlled Substances Act of 1970.

~~TerrAscend~~The Company operates under one operating segment, which is the cultivation, production and sale of cannabis products.

The Company owns a portfolio of operating businesses, ~~and several synergistic brands~~ including:

~~TerrAscend’s head office and registered office is located at 77 City Centre Drive, Suite 501 - East Tower, Mississauga, Ontario, Canada, L5B 1M5.~~

~~TerrAscend’s telephone number is 1.855.837.7295 and its website is~~ ~~www.terrascend.com~~. Information contained on or accessible through TerrAscend’s website is not a part of this Quarterly Report, and the inclusion of TerrAscend’s website address in this Quarterly Report on Form 10-Q is an inactive textual reference only.

The following discussion sets forth certain components of ~~our~~the Company's Unaudited Condensed Consolidated Statements of Comprehensive Loss as well as factors that impact those items.

~~TerrAscend~~The Company generates revenue from the sale of cannabis products, brands, and services to the ~~United States~~U.S. and Canadian markets. Revenues consist of wholesale and retail sales in the legal medical and ~~legal adult use~~adult-use market across Canada and in several U.S. states where cannabis has been legalized for medical or ~~adult use.~~adult-use cannabis.

Cost of sales primarily consists of expenses related to providing cannabis products and services to ~~TerrAscend's~~the Company's customers, including personnel-related expenses, the depreciation of property and equipment, amortization of acquired intangible assets, certain royalties, and other overhead costs.

General and administrative ("G&A") ~~consists~~expenses consist primarily of personnel costs related to finance, human resources, legal, certain royalties, and other administrative functions. Additionally, G&A ~~expense includes~~expenses include professional fees to third parties, as well as marketing expenses. ~~In addition,~~Moreover, G&A ~~expense~~expenses includes share-based compensation on options, restricted stock units and warrants. ~~TerrAscend~~The Company expects that G&A ~~expense~~expenses will increase in absolute dollars as the business grows.

Amortization and depreciation includes the amortization of intangible assets. Amortization is calculated on a ~~straight line~~straight-line basis over the following terms:

Depreciation of property and equipment is calculated on a straight-line basis over the estimated useful life of the asset using the following terms:

Goodwill and indefinite lived intangible assets are reviewed for impairment annually and whenever there are events or changes in circumstances that indicate that the carrying amount has been impaired. ~~TerrAscend~~The Company first performs a qualitative assessment. If based on the results of a qualitative assessment it has been determined that it is more likely than not that the fair value of a reporting unit ~~exceeds~~

exceeds its carrying value, an additional quantitative impairment test is performed which compares the carrying value of the reporting unit to its estimated fair value. If the carrying value exceeds the estimated fair value, an impairment is recorded.

Definite lived intangible assets are tested for impairment when there are indications that an asset may be impaired. When indicators of impairment exist, ~~TerrAscend~~the Company performs a quantitative impairment test which compares the carrying value of the assets for intangible assets to their estimated fair values. If the carrying value exceeds the estimated fair value, an impairment is recorded.

~~(Gain) loss from revaluation~~Impairment of ~~contingent consideration~~property and equipment and right of use assets

~~As a result of some of its acquisitions, TerrAscend recognizes a contingent consideration payable, which is an obligation to transfer additional assets to the seller if future events occur.~~ The ~~liability is revalued at the end of each reporting period to determine its fair value. A gain or loss is recognized as a result of the revaluation.~~

During the year ended December 31, 2020, TerrAscend closed a non-brokered private placement by issuing 18,679 convertible preferred stock units, each unit consisting of one non-voting, non-participating preferred share and one preferred share warrant ("Preferred Warrant"). The Preferred Warrants were recorded as a warrant liability and are remeasured to fair value at the end of each reporting unit using the Black Scholes model. A gain or loss is recognized as a result of the revaluation.

~~Finance and other expenses consists primarily of interest expense on TerrAscend's outstanding debt obligations.~~

Transaction costs include costs incurred in connection with TerrAscend's acquisitions, such as expenses related to professional fees, consulting, legal and accounting. Restructuring costs are those costs associated with severance and restructuring of business units.

~~TerrAscend~~Company evaluates the recoverability of property and equipment and right of use assets whenever events or changes in circumstances indicate that the carrying value of the asset, or asset group, may not be recoverable. When ~~TerrAscend~~the Company determines that the carrying value of the long-lived asset may not be recoverable based upon the existence of one or more indicators, the assets are assessed for impairment based on the estimate of future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the carrying value of an asset exceeds its estimated future undiscounted cash flows, an impairment loss is recorded for the excess of the asset’s carrying value over its fair value.

As a result of some of its acquisitions, the Company recognizes a contingent consideration payable, which is an obligation to transfer additional assets to the seller if future events occur. The liability is revalued at the end of each reporting period to determine its fair value. A gain or loss is recognized as a result of the revaluation.

The Company issues warrants that are remeasured to fair value at the end of each reporting unit using the Black-Scholes Option Pricing Model. A gain or loss is recognized as a result of the revaluation.

Finance and other expenses consist primarily of interest and accretion expense on the Company's outstanding debt obligations.

Transaction costs include costs incurred in connection with the Company's acquisitions, such as expenses related to professional fees, consulting, legal and accounting. Restructuring costs are those costs associated with severance and restructuring of business units.

Unrealized and realized foreign exchange loss represents the loss recognized on the remeasurement of USD denominated cash and other assets recorded in the Canadian dollars functional currency at ~~TerrAscend's~~the Company's Canadian operations.

~~TerrAscend~~The Company accounts for its investment in equity securities without readily determinable fair values using a valuation technique which maximizes the use of relevant observable inputs, with subsequent holding changes in fair value recognized in unrealized gain or loss on investments in the ~~consolidated statement~~Consolidated Statement of ~~loss.~~Comprehensive Loss.

Provision for income taxes consists of U.S. federal and state income taxes in certain jurisdictions in which ~~TerrAscend~~the Company conducts business.

Results from ~~Operations-~~Operations - Three ~~months ended~~Months Ended March 31, ~~2023~~2024 and March 31, ~~2022~~2023

The following tables represent the Company’s results from operations for the three months ended March 31, ~~2023~~2024 and ~~2022.~~2023.

Revenue increased from ~~$49,060~~$69,398 to ~~$69,720 driven by growth in retail offset by a decline in wholesale. Retail revenue increased from $25,718 during~~$80,633 for the three months ended March 31, ~~2022~~2024 as compared to ~~$55,422 during~~ the three ~~months-ended~~months ended March 31, ~~2023. The increase is~~2023 primarily driven by the implementation of adult-use sales in Maryland and the Company's four Maryland acquisitions in 2023, a ~~result~~doubling of ~~adult use coming online~~wholesale sales in New Jersey, ~~in April 2022~~ and ~~the Gage acquisition, which closed on March 10, 2022. The~~an 80% increase in ~~retail revenue is~~wholesale sales in Pennsylvania, partially offset by ~~$8,891 decrease~~retail declines in ~~wholesale revenue related to the company’s decision to discontinue bulk wholesale sales in~~New Jersey and Michigan.

The increase of ~~$2,537~~$6,404 in cost of sales for the three months ended March 31, ~~2023~~2024 as compared to the three months ended March 31, ~~2022 is~~2023 was mainly ~~a result of the Gage, Pinnacle and AMMD acquisitions. The decrease~~due to an increase in ~~cost~~sales. Cost of sales as a percentage of revenue ~~is primarily a result of greater operating leverage driven by adult use implementation in New Jersey in April 2022.~~

The company wrote off $797 of packaging inventory due primarily to defective cartridges during the three months ended March 31, 2023. On February 4, 2022, more than 500 vape products were recalled by the Pennsylvania's Department of Health, including several of the Company's SKUs. As a result of the recall, the Company wrote off $854 of inventory during the three months ended March 31,2022. In addition, management impaired its inventory by $219 as it was ~~deemed unsaleable.~~

~~The increase in G&A expense of $6,306~~relatively constant for the three months ended March 31, ~~2023~~2024, as compared to the three months ended March 31, ~~2022 was primarily a result of payroll and marketing expense increasing by $4,698 and $1,269, respectively, as a result of the Gage acquisition that closed on March 10, 2022.~~2023.

~~Amortization and Depreciation Expense~~Loss from revaluation of contingent consideration

The ~~decrease~~loss from the revaluation of ~~$146 in amortization and depreciation expense~~contingent consideration for the three months ended March 31, ~~2023~~2024 as compared to the three months ended March 31, ~~2022 is primarily~~2023 was due to fair value changes of $1,915 relating to the settlement of the State Flower and The Apothecarium contingent consideration. This was offset by a ~~brand intangible asset that was fully amortized during 2022.~~gain on the revaluation of contingent liability for Peninsula acquisition of $522, resulting from the increase in the Company's share price from December 31, 2023, as compared to March 31, 2024.

~~Gain~~Loss (gain) on fair value of warrants and purchase option derivative asset

The ~~Preferred Share~~ warrant liability ~~has been~~was remeasured to fair value at March 31, ~~2023~~2024 using the ~~Black Scholes model.~~Black-Scholes Model. The Company recognized a ~~gain~~loss of $983 during the three months ended March 31, 2024 as a result of the rising share price from March 31, 2024, as compared to December 31, 2023.

During the three months ended March 31, 2023, the Company recognized a gain on fair value warrants of $438 as a result of the reduction of the Company's share price from ~~December 31, 2022 to~~ March 31, 2023, as ~~well as from warrants exercised during~~compared to December 31, 2022.

During the three months ended March 31, ~~2023. The combined impact resulted in a gain on fair value~~2024, the Company recorded an impairment of ~~warrants~~property and equipment of ~~$438~~$2,438 due to the wind-down of one of its California dispensaries.

The Preferred Share warrant liability was remeasured to fair value at March 31, 2022 using the Black Scholes model. The Company recognized a gain during the three months ended March 31, 2022 as a result of the reduction of the Company's share price from December 31, 2021 to March 31, 2022, as well as from warrants exercised during the three months ended March 31, 2022. The combined impact resulted in a gain on fair value of warrants of $7,208. Additionally, the Company remeasured the warrant liability acquired through the Gage Acquisition at March 31, 2022 using the Black Scholes model. The Company recognized a loss of $3,864 during the three months ended March 31, 2022 as a result of the increase in the Company's stock price between March 31, 2022 and the acquisition date of March 10, 2022.

For the three months ended March 31, 2022, the purchase option derivative asset related to the option to purchase an additional 6.25% ownership of the Company's New Jersey partnership, was remeasured using the Monte Carlo simulation model and resulted in a loss of $318.

The ~~increase of $3,432~~change in ~~finance and other expenses~~provision for income taxes from $12,664 for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022 is primarily due to the Gage acquisition which closed on March 10, 2022, the Pelorus loan agreement that was entered into on October 11, 2022 and the $2,235 employee retention credits transfer fee that was incurred during the three months ended March 31, 2023.

~~The decrease~~a provision for income taxes of ~~$612 in transaction and restricting costs~~$9,671 for the three months ended March 31, ~~2023 as compared to the three months ended March 31, 2022 relates primarily to the Gage Acquisition, which closed on March 10, 2022.~~

The decrease of $387 in unrealized foreign exchange loss for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022 is a result of the remeasurement of US dollar denominated cash and other assets recorded in Canadian dollar functional currency at the Company’s Canadian operations.

~~The increase of 8,921 in provision for income taxes for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022~~2024 was primarily driven by ~~the increase in gross profit as~~ a ~~result of growth in new jurisdictions.~~return to provision adjustment.

The calculation of working capital provides additional information and is not defined under GAAP. ~~TerrAscend~~The Company defines working capital as current assets less current liabilities. This measure should not be considered in isolation or as a substitute for any standardized measure under GAAP.

At March 31, ~~2023, TerrAscend~~2024, the Company had an accumulated deficit of ~~$641,517.~~$717,398. During the three months ended March 31, ~~2023, TerrAscend~~2024, the Company incurred a net loss from continuing operations of ~~$19,178.~~$14,851. Additionally, as of March 31, ~~2023~~2024 the Company’s current liabilities exceed its current assets. Therefore, ~~TerrAscend expects~~it is possible that ~~it will~~the Company may need additional capital to continue to fund its operations.

The aforementioned indicators raise substantial doubt about ~~TerrAscend's~~the Company's ability to continue as a going concern for at least one year from the issuance of ~~these financial statements. TerrAscend~~the Consolidated Financial Statements included elsewhere in this Quarterly Report on From 10-Q. The Company believes this concern is mitigated by steps it has taken, or intends to take to improve its operations and cash position, ~~including~~including: (i) identifying access to future capital required to pay down or refinance the Company’s maturing debt, (ii) ~~continued sales~~improved cashflow growth from ~~TerrAscend's~~the Company's consolidated operations, particularly TerrAscend's operations in New Jersey and most recently Maryland with conversion to adult-use sales, and (iii) various ~~actions that were implemented during the latter part of 2022 and continued during the three months ended March 31, 2023 leading to general and administrative expense reductions and other~~ cost and efficiency improvements. The Consolidated Financial Statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amounts of and classification of liabilities that may result should the Company be unable to continue as a going concern.

Since its inception, ~~TerrAscend's~~the Company's primary sources of capital have been through the issuance of equity securities or debt facilities, and ~~TerrAscend~~the Company has received aggregate net proceeds from such transactions totaling ~~$608,315~~$656,143 as of March 31, ~~2023.~~2024.

~~TerrAscend~~The Company expects to fund any additional future requirements through the following sources of capital:

The Company has ~~$198,894~~$197,184 in principal amounts of loans payable at March 31, ~~2023.~~2024. Of this amount, ~~$48,292~~$136,291 are due within the next twelve months.

~~TerrAscend~~The Company has entered into leases for certain premises and offices for which it owes monthly lease payments. ~~TerrAscend~~The Company has ~~$74,457~~$92,716 in lease obligations. Of this amount, ~~$6,264~~$9,479 are due in the next twelve months. ~~Additionally, TerrAscend makes monthly payments on financing obligations on six~~

The Company's undiscounted contingent consideration payable is $2,914 at March 31, 2024, of ~~its real estate properties with $15,161 payable, $1,926 of~~ which, $1,490 is due in the next twelve ~~months~~

~~TerrAscend's undiscounted contingent consideration payable is $4,434 at March 31, 2023.~~months. The contingent consideration payable relates to ~~TerrAscend's business~~the Company's acquisitions of Peninsula and the ~~Apothecarium and~~remaining 50.1% equity in both State Flower and ~~is due~~three Apothecarium dispensaries in California. The contingent considerations are based upon the ~~next twelve months.~~

~~During~~price protection of Common Shares issued under the ~~year ended December 31, 2020, TerrAscend expensed $7,500 related to amounts payable to an entity controlled by~~terms of the ~~minority shareholders~~applicable acquisition agreements. The contingent considerations are measured at fair value using the Black-Scholes Model and revalued at the end of ~~TerrAscend NJ pursuant to services surrounding the granting of certain licenses. The final payment of $3,750 is expected to be due in 2023.~~each reporting period.

At March 31, ~~2023,~~2024, the Company had accounts payable and accrued liabilities of ~~$50,784~~$49,673 and corporate income taxes payable of ~~$34,737.~~$5,143.

~~TerrAscend~~The Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on ~~TerrAscend's~~the Company's results of operations or financial condition, including and without limitation, such consideration as liquidity and capital resources.

~~TerrAscend~~The Company intends to meet its capital commitments through any or all of the sources of capital noted above. ~~TerrAscend's~~The Company's objective with respect to its capital management is to ensure it has sufficient cash resources to maintain its ongoing operations and finance future obligations.

On December 18, 2020, WDB Holding PA, a subsidiary of TerrAscend, entered into a senior secured term loan with a syndicate of lenders in the amount of $120,000 ~~("Ilera~~(the “Ilera Term ~~Loan"~~Loan”). The ~~term loan~~Ilera Term Loan is solely secured by Ilera. The Ilera Term Loan bears interest at 12.875% per annum and matures on December 17, 2024. ~~TerrAscend~~Subject to certain conditions of the agreement, the Company has the ability to increase the facility by up to $30,000. WDB Holding PA's ~~obligation~~obligations under the Ilera Term Loan and related transaction documents are guaranteed by ~~TerrAscend,~~the Company, TerrAscend USA, Inc. ("TerrAscend USA"), and certain subsidiaries of WDB Holding PA, and secured by TerrAscend ~~USA Inc.'s~~USA's equity interest in WDB Holding PA and substantially all of the assets of WDB Holding PA and the subsidiary guarantors party thereto. The loan can be refinanced at the option of the ~~borrower~~WDB Holding PA after 18 months from the closing date subject to a premium payment due. Of the total proceeds received, $105,767 was used to satisfy the remaining Ilera earn-out payments.

On April 28, 2022, the Ilera Term Loan was amended to provide WDB Holding PA with greater flexibility by resetting the minimum consolidated interest coverage ratio levels that must be satisfied at the end of each measurement period and extending the date in which WDB Holding PA is required to deliver its budget for the fiscal year ending December 31, 2021. In addition, the no-call period was extended from 18 months to 30 months, subject to a premium payment. This modification was not considered ~~extinguishment~~extinguishments of debt under ASC 470, Debt.

On November 11, 2022, WDB Holding PA, ~~TerrAscend,~~the Company, TerrAscend USA ~~Inc.~~ and the subsidiary guarantors party to the Ilera Term Loan and the PA Agent (on behalf of the required lenders) entered into an amendment to the ~~PA Credit Agreement,~~Ilera Term Loan, pursuant to which ~~PA Agent and~~ the ~~required lenders~~parties agreed that WDB Holding ~~PA's~~PA’s obligation to maintain the consolidated interest coverage ratio as set forth in the ~~PA Credit Agreement~~Ilera Term Loan for the period ended September 30, 2022, shall not apply, subject to certain conditions, including (but not limited to) an obligation to enter into a subsequent amendment agreement on or before December 15, 2022, documenting certain enhancements and amendments to the ~~PA Credit Agreement to be agreed.~~Ilera Term Loan. In addition, WDB Holding PA offered a prepayment of $5,000 pro rata to all lenders holding outstanding loans thereunder at a price equal to 103.22% of the principal amount prepaid, plus accrued and unpaid interest.

On December 21, 2022, WDB Holding PA completed an amendment to reduce ~~TerrAscend's~~the Company’s principal debt by $35,000 and annual interest expense by $5,000. ~~TerrAscend~~The Company agreed to make a $35,000 payment at the original prepayment price of 103.22% to par, and

agreed to use commercially reasonable efforts to add certain collateral to the Ilera Term Loan, collectively by March 15, 2023. The amendment further provided that should WDB Holding PA ~~not~~fail to maintain the prescribed interest coverage ratio, the Company shall be required to deposit funds, as outlined in the amendment, into a restricted account, and no event of default shall occur. This amendment was not considered an extinguishment of debt under ASC 470, Debt.

On March 15, 2023, WDB Holding PA, in exchange for a fee in the amount of 1% of the then outstanding principal loan balance, agreed to an amendment to, among other ~~things, to~~things: (i) extend the obligation date to prepay ~~TerrAscend's~~the Company’s debt from March 15, 2023 to June 30,

2023, induring which WDB Holding PA ~~must~~agreed to use commercially reasonable efforts to add additional collateral to the Ilera Term Loan, (ii) increase the amount of debt to be reduced by up to $37,000, subject to certain reductions in amount based on meeting certain time based milestones, at a prepayment price of 103.22% to par, and (iii) extend the next test date in respect of the interest coverage ratio until June 30, 2023. This amendment was not considered an extinguishment of debt under ASC 470, Debt. ~~There is $115,000 of principal amounts outstanding at March 31, 2023.~~

~~Gage Loans~~On April 14, 2023, WDB Holding PA entered into an amendment to the Ilera Term Loan to, among other things, (i) permit changes necessary for the TSX Transaction (as defined in the Ilera Term Loan), and (ii) to waive certain tax provisions.

~~The~~On June 8, 2023, June 15, 2023, and June 29, 2023, WBD Holding PA made repayments of principal in the amounts of $7,896, $442, and $28,236, respectively.

On June 22, 2023, WDB Holding PA entered into a further amendment to the Ilera Term Loan to, among other things, (i) extend the next test date for the interest coverage ratio from June 30, 2023 to September 30, 2023, and (ii) amend the terms for which WDB Holding PA may incur certain indebtedness and liens. This amendment was not considered extinguishment of debt under ASC 470, Debt.

On October 2, 2023, the Company made a mandatory prepayment of the Ilera Term Loan of $1,500 at the original prepayment price of 103.22% to par.

On December 4, 2023, the parties entered into an amendment that requires WDB Holding PA to make a prepayment of $4,800 by January 2, 2024 and a prepayment of $3,200 by April 30, 2024, at the prepayment price of 100% to par. On January 2, 2024, the Company made a prepayment of $4,800 of the Ilera Term Loan, at the prepayment price of 100% to par.

On April 30, 2024, the Company made a prepayment of the Ilera Term Loan of $3,200 of the Ilera Term Loan, at the prepayment price of 100% to par.

As of March 31, 2024, there was an outstanding principal amount of $72,127 under the Ilera Term Loan. Subsequently, the Company paid an additional $3,200 which resulted in a current outstanding principal amount of $68,927.

In connection with the Gage Acquisition, ~~included~~the Company assumed a senior secured term loan (the ~~"Original Gage~~"Chicago Atlantic Term Loan") with an acquisition date fair value of $53,857. The credit agreement bears interest at a rate equal to the greater of (i) the Prime Rate plus 7% or (ii) 10.25%. The term loan iswas payable monthly and ~~matures on~~had a maturity date of November 30, 2022. The ~~term loan is~~Chicago Atlantic Term Loan was secured by a first lien on all Gage Growth assets. As a result of the amendment, the Company paid a loan amendment fee of $1,109 which was capitalized.

On August 10, 2022, the ~~Original Gage~~Chicago Atlantic Term Loan was amended as a result of the corporate restructure in conjunction with the Gage Acquisition. The amendment to the ~~Original Gage~~Chicago Atlantic Term Loan includes the addition of a borrower and guarantor under the term loan and a right of first offer in favor of the administrative agent for a refinancing of the term loan. This amendment was not considered extinguishment of debt under ASC 470, Debt.

On November 29, 2022, ~~TerrAscend~~the Company repaid $30,000 outstanding principal amount on the ~~Original Gage~~Chicago Atlantic Term Loan. On November 30, 2022, the remaining loan principal amount of $25,000 on the ~~Original Gage~~Chicago Atlantic Term Loan was amended (the "Amended ~~Gage~~Chicago Atlantic Term Loan"). The Amended ~~Gage~~Chicago Atlantic Term Loan bears interest on $25,000 at a per annum rate equal to the greater of (i) the U.S. "prime rate" plus 6.00%, and (ii) 13.0% and matures on November 1, 2024. Commencing on May 31, 2023, ~~TerrAscend~~the Company will make monthly principal repayments of 0.40% of the aggregate principal amount outstanding. Additionally, the unpaid principal amount of the loan shall bear paid in kind interest at a rate of 1.50% per annum. No prepayment fees are owed if ~~TerrAscend~~the Company voluntarily prepays the loan after 18 months. If such prepayment occurs prior to 18 months, a prepayment fee equal to all of the interest on the loans that would be due after the date of such prepayment, is owed. Under the Amended ~~Gage~~Chicago Atlantic Term Loan, ~~TerrAscend~~the Company has the ability to borrow incremental term loans of $30,000 at the option of ~~TerrAscend~~the Company and subject to consents from the required lenders. The additional $30,000 incremental term loans available under the amendment have not been drawn as of December 31, ~~2022.~~2023. This loan represents a loan syndication, and therefore ~~TerrAscend~~the Company assessed each of the lenders separately under ASC 470, Debt to determine if

this represents a modification, or an extinguishment of debt. For three of the four remaining lenders, it was determined that this was a modification. For the remaining lender, it was determined that this represented an extinguishment of debt and therefore the fees paid to the lenders on modification were expensed. As a result of this transaction, ~~TerrAscend~~the Company expensed $1,907 of fees paid to the lenders and third parties as they did not meet the criteria for capitalization under ASC 470, Debt.

~~Additionally,~~On June 9, 2023, the ~~Gage Acquisition included a loan payable~~Company agreed to ~~a former owner~~an amendment, among other things, to (i) permit changes necessary for the TSX Transaction (as defined therein) and (ii) to permit certain indebtedness and waive certain tax provisions. This amendment was not considered extinguishment of ~~a licensed entity with an acquisition date fair value~~debt under ASC 470, Debt.

As of $2,683, and a promissory note with an acquisition date fair value of $4,065. The loan payable to the former owner bears interest at a rate of 0.2%. The promissory note bears interest at a rate of 6%. There is $4,583 of principal amounts outstanding at March 31, ~~2023 on~~2024, there was an outstanding principal amount of $24,404 under the ~~loan payable and promissory note.~~Chicago Atlantic Term Loan.

The Pinnacle Acquisition purchase price included two promissory notes in an aggregate amount of $10,000 to pay down all Pinnacle liabilities and encumbrances. The promissory note matures on June 30, 2023 and bears interest rates of 6%. ~~There is $8,833~~On June 27, 2023, Spartan Partners Properties, LLC, agreed to an amendment among other things, to extend the obligation date of ~~principal amounts outstanding at~~the loan until December 1, 2023. As of March 31, ~~2023~~2024, there was an outstanding principal amount of $5,582 on the two promissory notes. The obligations are subject to restructuring upon the resolution of indemnity claims.

On October 11, 2022, subsidiaries of TerrAscend, among others, entered into a loan agreement with Pelorus Fund REIT, LLC ("Pelorus") for a single-draw senior secured term loan ("Pelorus Term Loan") in an aggregate principal amount of $45,478. The Pelorus Term Loan bears interest at a variable rate tied to the one month ~~secured overnight financing rate (SOFR),~~SOFR, subject to a base rate, plus 9.5%, with interest-only payments for the first 36 months. The base rate is defined as, on any day, the greatest of ~~(i)~~(a) 2.5%, (b) the effective federal funds rate in effect on such day plus 0.5%, and (c) ~~one month~~ SOFR in effect on such day. The obligations of the borrowers under the Pelorus Term Loan are guaranteed by ~~TerrAscend,~~the Company, TerrAscend USA ~~Inc.~~ and certain other subsidiaries of TerrAscend and are secured by all of the assets of ~~TerrAscend's~~the Company's Maryland and New Jersey businesses, including certain real estate in Maryland and New Jersey, but ~~excluding the AMMD.~~excludes all Maryland dispensaries. The Pelorus Term Loan matures on October 11, 2027. ~~There is $45,478 of principal amounts outstanding at March 31, 2023.~~

31On April 17, 2023, TerrAscend NJ, LLC agreed to an amendment to the Pelorus Term Loan to, among other things, (i) permit changes necessary for the TSX Transaction (as defined therein), and (ii) to waive certain tax provisions.

On June 22, 2023, TerrAscend NJ, LLC further agreed to an amendment to the Pelorus Term Loan to permit the Company to incur certain indebtedness. This amendment was not considered an extinguishment of debt under ASC 470, Debt. As of March 31, 2024, there was an outstanding principal amount of $45,478 under the Pelorus Term Loan.

On June 26, 2023, the Company closed on a $25,000 commercial loan with Stearns Bank, secured by the Company's cultivation facility in Pennsylvania and its Allegany Medical Marijuana Dispensary ("AMMD") dispensary in Cumberland, Maryland (the “Stearns Loan”). The Company was required to hold $5,000 on deposit in a restricted account, of which $2,500 of the restricted cash was released on July 28, 2023 upon meeting certain criteria pursuant to the terms of the Stearns Loan. The Stearns Loan bears interest at a rate of prime plus 2.25% and matures on December 26, 2024. The proceeds from the loan were used to pay down the Company's higher interest rate debt, thereby lowering the Company's overall interest expense. As of March 31, 2024, there was an outstanding principal amount of $24,721 under the Stearns Loan.

On June 28, 2023, in connection with the Peninsula Acquisition, the Company assumed existing indebtedness in the form of a promissory note in the amount of $7,698, which matures on June 28, 2025. The promissory note bears interest at a rate of 8.25%. The Company will make monthly payments of principal and interest totaling $157 beginning on July 28, 2023. The Company is required to make a mandatory prepayment of 50% of the outstanding principal balance on January 28, 2025. The consideration also included a promissory note in the amount of $3,927. The promissory note interest at a rate of 7.25% and is payable in twelve quarterly installments, maturing on June 28, 2026.

On June 30, 2023, in connection with the Blue Ridge Acquisition, the Company entered into a promissory note in the amount of $3,750 payable in four quarterly installments of accrued interest commencing on September 30, 2023 and twelve equal quarterly installments of principal and accrued interest commencing on September 30, 2024. The remaining amount of the principal and accrued interest is due on June 30, 2027, the maturity date. The promissory note bears interest at a rate of 7.0%.

On July 10, 2023, in connection with the Herbiculture Acquisition, the Company entered into a promissory note in the amount of $5,250. The promissory note bears interest at a rate of 10.50%. Commencing on September 30, 2023, and thereafter until December 31, 2024, all accrued interest during each quarter will be added to the outstanding principal balance on the last day of each fiscal quarter. Beginning on March 31, 2025, and thereafter until March 31, 2026, only interest payments will be due on the last day of each fiscal quarter. The entire outstanding balance of the principal and accrued interest is due on June 30, 2026, the maturity date of the promissory note.

As of March 31, 2024, there was an outstanding principal amount of $19,495 under the promissory notes related to the Maryland acquisitions.

In connection with the Gage Acquisition, the Company assumed existing indebtedness in the form of a promissory note in the amount of $4,065, which matures on December 31, 2024. The promissory note bears interest at a rate of 6%. As of March 31, 2024, there was an outstanding principal amount of $1,322 on the promissory note.

In connection with the Reorganization (see Note 3), TerrAscend Growth Corp. ("TerrAscend") issued $1,000 of Class A shares with a 20% guaranteed annual dividend ("Class A Shares") to an investor (the “Investor”) pursuant to the terms of a subscription agreement between TerrAscend and the Investor dated April 20, 2023 (the “Subscription Agreement”). Pursuant to the terms of the Subscription Agreement, TerrAscend holds a call right to repurchase all of the Class A Shares issued to the Investor for an amount equal to the sum of: (a) the Repurchase/Put Price (as defined in the Subscription Agreement); plus (b) the amount equal to 40% of the subscription amount less the aggregate dividends paid to the Investor as of the date of the exercise of the option. In addition, the Investor holds a put right that is exercisable at any time after four months’ advanced written notice following the five-year anniversary of the closing of the investment to put all (and only all) of the Class A Shares owned by the Investor to TerrAscend at the Repurchase/Put Price, payable in cash or shares. The instrument is considered as a debt for accounting purposes due to the economic characteristics and risks. As of March 31, 2024, there was an outstanding principal amount of $1,000.

On June 26, 2023, the Company bought out the minority interest in IHC Real Estate LP and entered into a promissory note of $7,500. The promissory note carries an interest rate of 15% and matures on January 15, 2024. On June 28, 2023 and July 31, 2023, the Company made a payment of $1,500 and $1,000, respectively. On January 15, 2024, the Company paid off all amounts owed under the promissory note with a payment of $5,000.

The increase of ~~$27,281~~$4,826 in net cash provided by operating activities for the three months ended March 31, ~~2023~~2024 as compared to three months ended March 31, ~~2022~~2023 is due primarily to ~~lower interest of $5,815, reduced taxes of $8,921~~growth in revenue and ~~an increase of $6,882 from December 31, 2022 to March 31, 2023 as compared to a decrease of $11,151 from December 31, 2021 to March 31, 2022~~gross margin while maintaining SG&A expenses relatively flat.

Cash flows used in ~~accounts payable and accrued liabilities and other payables due to timing of those payments. Additionally, the Frederick lease termination fee of $3,300 was paid during~~investing activities

The net cash used in investing activities for the three months ended March 31, ~~2022.~~2024 primarily relates to investment in property and equipment of $2,796.

~~The net~~Net cash used in investing activities for the three months ended March 31, 2023 primarily relates to the cash paid to AMMD of $9,611. Additionally, ~~TerrAscend increased the~~ investment in property and equipment bywas $2,497 during the three months ended March 31, 2023.

~~In comparison, the net~~Net cash ~~provided by investing~~used in financing activities for the three months ended March 31, ~~2022~~2024 was primarily ~~relates~~due to ~~the cash acquired through the Gage Acquisition~~net loan principal payments of ~~$ 24,716. The cash provided by investing activities is offset by investments in property~~$9,078 and ~~equipment~~distributions to minority partners of $10,251 primarily related to the buildout of a cultivation site in Maryland, continuing renovations at the Company's Pennsylvania cultivation site, as well as the continued buildout of the Company's Lodi alternative treatment center in New Jersey.

Net cash provided by financing activities for the three months ended March 31, 2023 was primarily due to cash inflow of $12,677 as a result of transfer with recourse of Employee Retention Credit, offset by principal payments on loans of $1,204 and capital contributions paid to non-controlling interest holders of $1,884.

During the three months ended March 31, 2022, 7,989,436 Common Share warrants were exercised for total proceeds of $23,330 and 68,215 stock options were exercised at $1.93-$5.21 (C$2.42-$6.53) per unit for total gross proceeds of $192. The cash provided by financing activities was offset by payments of contingent consideration related to the acquisition of State Flower of $6,630.

In addition to reporting the financial results in accordance with GAAP, ~~TerrAscend~~the Company reports certain financial results that differ from what is reported under GAAP. Non-GAAP measures used by management do not have any standardized meaning prescribed by GAAP and may not be comparable to similar measures presented by other companies. ~~TerrAscend~~The Company believes that certain investors and analysts use these measures to measure a company’s ability to meet other payment obligations or as a common measurement to value companies in the cannabis industry, and ~~TerrAscend~~the Company calculates (i) ~~Adjusted gross profit as gross profit~~Free cash flow from net cash provided by (used in) operating activities from continuing operations ~~adjusted~~less capital expenditures for ~~certain material non-cash items,~~property and equipment which management believes is an important measurement of the Company's ability to generate additional cash from its business operations, and (ii) Adjusted EBITDA from continuing operations as ~~EBITDA from continuing operations~~net (loss) income, adjusted to exclude provision for ~~certain material non-cash items~~income taxes, finance expenses, depreciation and amortization, relief of fair value upon acquisition, share-based compensation, gain on extinguishment of debt, restructuring related charges, impairment of goodwill and intangible assets and certain other ~~adjustments~~items, which management believes ~~are~~is not reflective of the ongoing operations and performance. Such information is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

~~TerrAscend~~The Company believes Adjusted EBITDA from continuing operations is a useful performance measure to assess the performance of ~~TerrAscend~~the Company as it provides more meaningful ongoing operating results by excluding the effects of expenses that are not reflective of ~~TerrAscend’s~~the Company’s underlying business performance and other one-time or non-recurring expenses. The table below reconciles net loss to

EBITDA from continuing operations and Adjusted EBITDA from continuing operations for the three months ended March 31, ~~2023~~2024 and ~~2022.~~2023:

TerrAscend calculates adjusted gross profit by adjusting gross profit for the one-time relief of fair value of inventory upon acquisition, non-cash write downs of inventory, vape recall, and other one time adjustments to gross profit as TerrAscend does not believe that these impacts are reflective of ongoing operations. The table below reconciles ~~gross profit~~net cash provided by (used in) operating activities from continuing operations to ~~adjusted gross profit~~free cash flow for the three months ended March 31, ~~2023~~2024 and ~~2022:~~2023:

The increase in Adjusted EBITDA from continuing operations for the three months ended March 31, ~~2023~~2024 compared to the three months ended March 31, ~~2022~~2023 was primarily due to the implementation of ~~adult use~~adult-use sales in ~~New Jersey~~Maryland and ~~improvement~~the Company's four Maryland acquisitions in ~~operations in Michigan.~~

The condensed consolidated financial statements have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements ~~require us~~requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. The Company bases its estimates on historical experience and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and actual results, the Company's future financial statements will be affected.

There have been no significant changes to the critical accounting estimates from the information provided in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of ~~Operation," included~~Operations", as contained in the ~~2022~~Company's Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2023.

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that the Company (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably ~~opt~~opts out of the extended transition period provided in the JOBS Act. As a result, the ~~condensed consolidated financial statements~~Company's Consolidated Financial Statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

The Company will remain an emerging growth company until the earlier to occur of: (i) ~~the last day of the fiscal year~~December 31, 2027 (a) ~~following the fifth anniversary of the completion of its initial public offering, (b)~~ in which ~~we have~~the Company has total annual gross revenue of ~~$1.235 billion~~$1,235,000 or more, or ~~(c)~~(b) in which the Company is deemed to be a large accelerated filer, which means the market value of ~~our~~the Company's Common Stock that is held by non-affiliates exceeds ~~$700.0 million~~$700,000 as of the ~~prior June 30th ;~~last business day of the Company’s most recent second fiscal quarter; and (ii) the date on which the Company has issued more than ~~$1.0 billion~~$1,000,000 in non-convertible debt during the prior three-year period.

There have been no material changes in the Company's primary risk exposures or management of market risks from those disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, ~~2022.~~2023.

~~Our~~The Company's management, with the participation of ~~our~~its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of ~~our~~the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, ~~our~~the Company's Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, ~~2023 our~~2024, the Company's disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to ~~our~~the Company's management, including ~~our~~its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in ~~our~~the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, ~~2023,~~2024, that have materially affected, or are reasonably likely to materially affect, ~~our~~the Company's internal control over financial reporting.

In designing and evaluating ~~our~~the Company's disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

In the ordinary course of business, ~~TerrAscend~~the Company is involved in a number of lawsuits incidental to its business, including litigation related to intellectual property, product liability, employment, and commercial matters. Although it is difficult to predict the ultimate outcome of these ~~cases,~~matters, management believes that any ultimate liability would not have a material adverse effect on ~~TerrAscend's consolidated balance sheets~~the Company’s Consolidated Balance Sheets or results of operations. AtAs of March 31, ~~2023,~~2024, there were no pending lawsuits that could reasonably be expected to have a material effect on the results of ~~TerrAscend's~~the Company’s consolidated financial ~~statements.~~statements, except for the proceedings described below.

On August 9, 2023, AEY Capital LLC (“AEY”), a licensed subsidiary of the Company, filed a lawsuit in Oakland County Circuit Court (the “Oakland Court”) against Pure X, LLC (“Pure X”) seeking damages in the amount of $14,969 (the “AEY Claim”). The AEY Claim alleges breach of contract, quantum meruit/unjust enrichment, account stated and statutory conversion. AEY’s alleged damages are related to Pure X’s failure to pay for various cannabis products sold by AEY. This matter is still pending.

Investing in ~~our common stock~~the Company's Common Shares involves a high degree of risk. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors described in Part I, Item 1.A. “Risk Factors” in ~~our~~the Company's Annual Report. WeThe Company may disclose changes to risk factors or disclose additional factors from time to time in ~~our~~its future filings with the SEC. Additional risks and uncertainties not presently known to usthe Company or that wethe Company currently ~~deem~~deems immaterial may impair ~~our~~its business operations.

On May 11, 2023, the Company entered into an Amended and Restated Employment Agreement (the “Gefen A&R Agreement”) with Lynn Gefen, the Company’s Chief Legal Officer & Corporate Secretary, which among other things, provides for certain change of control provisions. In the event of a change of control, 100% of Ms. Gefen’s unvested options and RSUs will accelerate and vest immediately. In addition, if Ms. Gefen’s employment is terminated without cause or for good reason within 12 months following a change of control, Ms. Gefen will be entitled to two times her Severance Pay (as defined in the Gefen A&R Agreement), two times

her COBRA Cash Stipend (as defined in the Gefen A&R Agreement) and, if not yet paid, her full bonus for the prior calendar year and full bonus for the current calendar year. The foregoing description of the Gefen A&R Agreement is qualified in its entirety by reference to the full text of such agreement, which will be filed as an Exhibit to the Quarterly Report on Form 10-Q for the quarter ending June 30, 2023 and is incorporated by reference herein.

* This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not ~~filed for purposes~~to be incorporated by reference into any filing of ~~Section 18 of~~TerrAscend Corp. under the Securities Exchange Act of 1934, as amended (whether made before or ~~otherwise subject to~~after the ~~liability~~date of ~~that section, nor shall it be deemed incorporated by reference into~~the Form 10-Q), irrespective of any ~~filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.~~general incorporation language contained in such filing.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Ontario	N/A
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
77 City Centre Drive Suite 501 - East Tower Mississauga, Ontario, Canada	L5B 1M5
(Address of principal executive offices)	(Zip Code)


		Page

PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements (Unaudited)	1
	Unaudited Interim Condensed Consolidated Balance Sheets as of March 31, ~~2023~~2024 and December 31, ~~2022~~2023	1
	Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, ~~2023~~2024 and ~~2022~~2023	2
	Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 31, ~~2023~~2024 and ~~2022~~2023 Unaudited Interim Condensed Consolidated Statements of Cash Flows for the three months ended March 31, ~~2023~~2024 and ~~2022~~2023	4
	Notes to Unaudited Interim Condensed Consolidated Financial Statements	75
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2322
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3433
Item 4.	Controls and Procedures	3533

PART II.	OTHER INFORMATION	3534

Item 1.	Legal Proceedings	3534
Item 1A.	Risk Factors	3534
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3534
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	3534
Item 6.	Exhibits	3634
Signatures		3736


	For the Three Months Ended
		March 31, 2023			March 31, 2022
Operating activities
Net loss from continuing operations		$	(19,178	)	$	(13,750	)
Adjustments to reconcile net loss to net cash used in operating activities
Non-cash write downs of inventory			797			1,073
Accretion expense			4,763			(1,337	)
Depreciation of property and equipment and amortization of intangible assets			4,771			4,642
Amortization of operating right-of-use assets			454			487
Share-based compensation			1,713			3,356
Deferred income tax expense			1,446			(1,134	)
Gain on fair value of warrants and purchase option derivative			(438	)		(5,713	)
Gain on disposal of fixed assets			307			—
Revaluation of contingent consideration			—			119
Loss on derecognition of right of use assets			205			—
Release of indemnification asset			—			(25	)
Unrealized and realized foreign exchange (gain) loss			(31	)		356
Unrealized and realized loss on investments			699			—
Changes in operating assets and liabilities
Receivables			773			(2,656	)
Inventory			(4,969	)		3,755
Prepaid expense and other current assets			1,203			985
Deposits			97			(593	)
Other assets			(131	)		571
Accounts payable and accrued liabilities and other payables			6,882			(11,151	)
Operating lease liability			(473	)		(271	)
Other liability			(14	)		(437	)
Contingent consideration payable			—			(324	)
Corporate income tax payable			11,773			4,869
Deferred revenue			(195	)		395
Net cash (used in) / provided by operating activities- continuing operations			10,454			(16,783	)
Net cash (used in) operating activities- discontinued operations			(2,020	)		(2,064	)
Net cash (used in) / provided by operating activities			8,434			(18,847	)

Investing activities
Investment in property and equipment			(2,497	)		(3,812	)
Investment in intangible assets			(14	)		(106	)
Principal payments received on lease receivable			111			156
Receipt of convertible debenture payment			738			-
Deposits for property and equipment			—			(6,058	)
Deposits for business acquisition			—			(602	)
Payments made for land contracts			(308	)		—
Cash portion of consideration paid in acquisitions, net of cash of acquired			(9,611	)		24,716
Net cash (used in) / provided by investing activities- continuing operations			(11,581	)		14,294
Net cash (used in) /provided by investing activities- discontinued operations			—			(381	)
Net cash (used in) / provided by investing activities			(11,581	)		13,913

Financing activities
Transfer of Employee Retention Credit			12,677			—
Proceeds from options and warrants exercised			81			23,925
Loan principal paid			(1,204	)		—
Capital contributions paid to non-controlling interests			(1,884	)		(227	)
Payments of contingent consideration			—			(6,630	)
Payments made for financing obligations			(157	)		—
Net cash provided by financing activities- continuing operations			9,513			17,068
Net cash provided by financing activities- discontinued operations			(115	)		—
Net cash (used in) /provided by financing activities			9,398			17,068

Net increase in cash and cash equivalents and restricted cash during the period			6,251			12,134
Net effects of foreign exchange			523			(3,369	)
Cash and cash equivalents and restricted cash, beginning of the period			26,763			79,642
Cash and cash equivalents and restricted cash, end of the period		$	33,537		$	88,407

Supplemental disclosure with respect to cash flows
Income taxes (refund received) paid		$	(551	)	$	8
Interest paid		$	2,456		$	8,271
Lease termination fee paid			—		$	3,300
Non-cash transactions
Equity and warrant liability issued as consideration for acquisition		$	750		$	294,800
Shares issued for liability settlement		$	593		$	22
Accrued capital purchases		$	555		$	56


	For the Three Months Ended
	March 31, 2024			March 31, 2023
Operating activities
Net loss from continuing operations	$	(14,851	)	$	(19,178	)
Adjustments to reconcile net loss to net cash provided by operating activities
Non-cash adjustments of inventory		—			797
Accretion expense		5,875			4,763
Depreciation of property and equipment and amortization of intangible assets		5,000			4,771
Amortization of operating right-of-use assets		716			454
Share-based compensation		1,485			1,713
Deferred income tax expense		(256	)		1,446
Loss (gain) on fair value of warrants and purchase option derivative		983			(438	)
Gain on disposal of fixed assets		—			307
Loss from revaluation of contingent consideration		1,393			—
Impairment of property and equipment and right of use assets		2,438			—
Loss on derecognition of right of use assets and lease termination		—			205
Bad debt expense		67			—
Unrealized and realized foreign exchange loss (gain)		285			(31	)
Unrealized and realized loss on investments		—			699
Changes in operating assets and liabilities
Receivables		1,954			773
Inventory		2,476			(4,969	)
Prepaid expense and other current assets		1,189			1,203
Deposits		—			97
Other assets		(12	)		(131	)
Accounts payable and accrued liabilities and other payables		(3,511	)		6,882
Operating lease liability		(670	)		(473	)
Other liability		(537	)		(14	)
Uncertain tax position liabilities		8,503			—
Corporate income tax payable		368			11,773
Deferred revenue		356			(195	)
Net cash provided by operating activities- continuing operations		13,251			10,454
Net cash used in operating activities - discontinued operations		—			(2,020	)
Net cash provided by operating activities		13,251			8,434

Investing activities
Investment in property and equipment		(2,796	)		(2,497	)
Investment in intangible assets		(127	)		(14	)
Principal payments received on lease receivable		—			111
Success fees related to ATC and other investment		—			738
Payment for land contracts		(250	)		(308	)
Cash portion of consideration paid in acquisitions, net of cash of acquired		(250	)		(9,611	)
Net cash used in investing activities - continuing operations		(3,423	)		(11,581	)
Net cash provided investing activities - discontinued operations		—			—
Net cash used in investing activities		(3,423	)		(11,581	)

Financing activities
Transfer of Employee Retention Credit		—			12,677
Proceeds from loan payable, net of transaction costs		3,137			—
Proceeds from options and warrants exercised		—			81
Loan principal paid		(12,215	)		(1,204	)
Capital distributions paid to non-controlling interests		(337	)		(1,884	)
Payments made for financing obligations and finance lease		(184	)		(157	)
Net cash (used in) provided by financing activities- continuing operations		(9,599	)		9,513
Net cash used in financing activities- discontinued operations		—			(115	)
Net cash (used in) provided by financing activities		(9,599	)		9,398

Net increase in cash and cash equivalents and restricted cash during the period		229			6,251
Net effects of foreign exchange		198			523
Cash and cash equivalents and restricted cash, beginning of the period		25,347			26,763
Cash and cash equivalents and restricted cash, end of the period	$	25,774		$	33,537

Supplemental disclosure with respect to cash flows
Income taxes paid (refund received)	$	1,013		$	(551	)
Interest paid	$	6,264		$	2,456
Lease termination fee paid	$	163		$	—
Non-cash transactions
Equity and warrant liability issued for acquisitions and non-controlling interest	$	4,674		$	750
Shares issued for Canopy USA arrangement	$	—		$	593
Accrued capital purchases	$	1,253		$	555


	March 31, 2023			December 31, 2022			March 31, 2024			December 31, 2023
Trade receivables	$	18,394		$	14,786		$	26,535		$	28,403
Sales tax receivable		235			277			515			408
Other receivables		1,241			17,936			887			1,154
Expected credit losses		(10,878	)		(10,556	)
Provision for current expected credit losses								(10,924	)		(10,917	)
Total receivables, net	$	8,993		$	22,443		$	17,013		$	19,048


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐
~~Non-accelerated filer~~	☒	Smaller reporting company	☐
Emerging growth company	☒


	Number of Shares
								Convertible Preferred Stock
	Common Stock		Exchangeable Shares			Proportionate Voting Shares		Series A			Series B		Series C		Series D		Common Shares Equivalent		Additional paid in capital			Accumulated other comprehensive income (loss)			Accumulated deficit			Non-controlling interest			Total
Balance at December 31, 2022		259,624,531		76,996,538			—		12,608			600		—		—		349,829,273	$	934,972		$	2,085		$	(618,260	)	$	2,374		$	321,171
Shares issued - stock options, warrant and RSU exercises		392,846		—			—		—			—		—		—		392,846		81			—			—			—			81
Shares, options and warrants issued - acquisitions		471,681		—			—		—			—		—		—		471,681		743			—			—			—			743
Shares, options and warrants issued - legal settlement		402,185		—			—		—			—		—		—		402,185		593			—			—			—			593
Shares issued - conversion		13,762,500		(13,504,500	)		—		(258	)		—		—		—		—		—			—			—			—			—
Share-based compensation expense		—		—			—		—			—		—		—		—		1,713			—			—			—			1,713
Options and warrants expired/forfeited		—		—			—		—			—		—		—		—		(1,698	)		—			1,698			—			—
Capital distributions		—		—			—		—			—		—		—		—		—			—			—			(1,884	)		(1,884	)
Net loss for the year		—		—			—		—			—		—		—		—		—			—			(24,955	)		2,186			(22,769	)
Foreign currency translation		—		—			—		—			—		—		—		—		—			(347	)		—			—			(347	)
Balance at March 31, 2023		274,653,743		63,492,038			—		12,350			600		—		—		351,095,985	$	936,404		$	1,738		$	(641,517	)	$	2,676		$	299,301


	Number of Shares
					Convertible Preferred Stock
	Common Shares		Exchangeable Shares		Series A		Series B		Common Shares Equivalent		Additional paid in capital			Accumulated other comprehensive income		Accumulated deficit			Non-controlling interest			Total
Balance at December 31, 2023		288,327,497		63,492,038		12,350		600		364,769,739	$	944,859		$	1,799	$	(704,162	)	$	(1,756	)	$	240,740
Shares issued - stock options, warrant and RSU exercises		69,229		—		—		—		69,229		—			—		—			—			—
Share-based compensation expense		—		—		—		—		—		1,485			—		—			—			1,485
Options and warrants expired/forfeited		—		—		—		—		—		(3,819	)		—		3,819			—			—
Capital distributions		—		—		—		—		—		—			—		—			(337	)		(337	)
Acquisition of non-controlling interest		2,888,088		—		—		—		2,888,088		3,300			—		—			1,374			4,674
Net loss for the period		—		—		—		—		—		—			—		(17,055	)		2,204			(14,851	)
Foreign currency translation adjustment		—		—		—		—		—		—			398		—			—			398
Balance at March 31, 2024		291,284,814		63,492,038		12,350		600		367,727,056	$	945,825		$	2,197	$	(717,398	)	$	1,485		$	232,109


	State Flower			Apothecarium			Peninsula			Total
Carrying amount, December 31, 2023	$	1,406		$	3,028		$	2,012		$	6,446
Reduction of contingent consideration		(1,334	)		(3,591	)		—			(4,925	)
Loss (gain) on revaluation of contingent consideration		519			1,396			(522	)		1,393
Carrying amount, March 31, 2024	$	591		$	833		$	1,490		$	2,914
Less: current portion		—			—			(1,490	)		(1,490	)
Non-current contingent consideration	$	591		$	833		$	—		$	1,424


	$
~~Cash and cash equivalents~~		20
~~Inventory~~		~~303~~
~~Prepaid expense~~		4
~~Operating right of use asset~~		~~781~~
~~Fixed assets~~		~~416~~
~~Intangible asset~~		~~5,950~~
~~Goodwill~~		~~5,385~~
~~Accounts payable and accrued liabilities~~		(~~135~~	)
~~Deferred tax liability~~		(~~2,021~~	)
~~Corporate income taxes payable~~		(~~291~~	)
~~Operating lease liability~~		(~~781~~	)
~~Net assets acquired~~		~~9,631~~

~~Cash~~		~~10,000~~
~~Working capital adjustment~~		(~~369~~	)
~~Total consideration~~		~~9,631~~


	State Flower			Apothecarium			Pinnacle			Total
Carrying amount, December 31, 2022	$	1,406		$	3,028		$	750		$	5,184
Payments of contingent consideration		—			—			(750	)		(750	)
Carrying amount, March 31, 2023	$	1,406		$	3,028			—		$	4,434
Less: current portion		(1,406	)		(3,028	)		—			(4,434	)
Non-current contingent consideration		—			—			—			—


	March 31, 2023		December 31, 2022
Land	$	734	$	734
Buildings & improvements		13,460		16,529
Office furniture & equipment		72		86
Total assets held for sale	$	14,266	$	17,349

Prepaid expenses and other current assets		525		571
Current assets from discontinued operations	$	525	$	571

Accounts payable and accrued liabilities	$	2,082	$	3,747
Loans payable		5,386		5,364
Current liabilities from discontinued operations	$	7,468	$	9,111


At March 31, 2024	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite lived intangible assets
Software	$	2,177	$	(1,217	)	$	960
Licenses		187,759		(21,631	)		166,128
Non-compete agreements		280		(280	)		—
Total finite lived intangible assets		190,216		(23,128	)		167,088
Indefinite lived intangible assets
Brand intangibles		46,972		—			46,972
Total indefinite lived intangible assets		46,972		—			46,972
Intangible assets, net	$	237,188	$	(23,128	)	$	214,060


	March 31, 2023		December 31, 2022		March 31, 2024		December 31, 2023
Raw materials	$	1,664	$	1,181	$	730	$	378
Finished goods		16,500		15,280		17,650		18,821
Work in process		28,724		26,406		27,559		28,451
Accessories, supplies and consumables		3,922		3,468		3,260		4,033
	$	50,810	$	46,335	$	49,199	$	51,683


Remainder of 2023	$	5,798
2024		7,739	$	5,257
2025		7,473		6,835
2026		7,458		6,820
2027		7,378		6,740
2028				6,740


Balance at December 31, 2022	$	90,328
Acquisitions (see Note 4)		5,385
Balance at March 31, 2023	$	95,713


Balance at December 31, 2023	$	106,929
Additions at acquisition date		-
Impairment of goodwill		-
Balance at March 31, 2024	$	106,929


	Ilera Term Loan			Gage Loans			Pinnacle Loans			Pelorus Term Loan			Total
Balance at December 31, 2022		110,850			29,976			9,333			44,028			194,187
Interest and accretion		4,165			1,080			136			1,665			7,046
Principal and interest paid		—			(1,445	)		(636	)		(1,578	)		(3,659	)
Effects of movements in foreign exchange		—			(9	)		—			—			(9	)
Ending carrying amount at March 31, 2023		115,015			29,602			8,833			44,115			197,565
Less: current portion		(38,713	)		(3,291	)		(8,833	)		(560	)		(51,397	)
Non-current loans payable	$	76,302		$	26,311			—		$	43,555		$	146,168



Remainder of 2023		1,444
2024		1,940
2025		1,986
2026		2,032
2027		2,079
Thereafter		5,680
Total payments		15,161
Less: interest		(3,352	)
Total financing obligations	$	11,809


	Number of Preferred Share Warrants Outstanding		Number of Preferred Share Warrants Exercisable		Weighted Average Exercise Price $		Weighted Average Remaining Life (years)
Outstanding, December 31, 2022		15,106		15,106	$	3,000		0.39
Exercised		—		—		—		—
Outstanding, March 31, 2023		15,106		15,106	$	3,000		0.15


	Number of RSUs			Number of RSUs vested		Weighted average remaining contractual life (in years)
Outstanding, December 31, 2022		415,640			13,050	N/A
Vested		(110,406	)		—		—
Forfeited		(40,606	)		—		—
Outstanding, March 31, 2023		264,628			13,050	N/A


Balance at December 31, 2022	$	711
Included in gain on fair value of warrants		(438	)
Effects of movements in foreign exchange		(6	)
Balance at March 31, 2023	$	267


	March 31, 2024			January 19, 2024
Common Stock Price of TerrAscend Corp.	$	1.89		$	1.95
Option exercise price	$	1.76		$	1.76
Annual volatility		70.0	%		68.7	%
Annual risk-free rate		5.38	%		5.21	%
Expected term (in years)		1.81			2.00


Brand intangibles- indefinite lives	Indefinite useful lives
Brand intangibles- definite lives	3 years
Software	5 years
Licenses	5-30 years
~~Customer relationships~~	~~5 years~~
Non-compete agreements	3 years


Buildings and improvements	~~Lesser of useful life or 30~~15-30 years
Land	Not depreciated
Machinery & equipment	5-15 years
Office furniture & production equipment	3-5 years
Right of use assets	Lease term
Assets in process	Not depreciated


		For the Three Months Ended

	Notes		March 31, 2023			March 31, 2022			Notes	March 31, 2024			March 31, 2023
Net loss			$	(22,769	)	$	(16,006	)		$	(14,851	)	$	(22,769	)
Loss from discontinued operations				3,591			2,256				—			3,591
Loss from continuing operations				(19,178	)		(13,750	)			(14,851	)		(19,178	)

Add (deduct) the impact of:
Provision for income taxes				12,664			3,743				9,671			12,664
Finance expenses				7,875			6,605				8,872			7,875
Amortization and depreciation				4,771			4,525				5,000			4,771
EBITDA from continuing operations	(a)			6,132			1,123		(a)		8,692			6,132
Add (deduct) the impact of:
Relief of fair value upon acquisition	(b)			—			1,806
Vape recall	(c)			—			1,894
Share-based compensation	(d)			1,713			3,356		(b)		1,485			1,713
Loss on lease termination and derecognition of ROU asset	(e)			205			—
Loss from revaluation of contingent consideration	(f)			—			119		(c)		1,393			—
Other one-time items	(g)			1,358			1,974		(d)		958			1,358
Employee Retention Credits Transfer Fee	(h)			2,235			—
Gain on fair value of warrants and purchase option derivative asset	(i)			(437	)		(5,713	)
Indemnification asset release	(j)			—			(25	)
Impairment of property and equipment and loss on disposal of fixed assets	(k)			334			—
Employee Retention Credits and Transfer Fee									(e)		—			2,235
Loss on lease termination and derecognition of right of use assets									(f)		—			205
Loss (gain) on fair value of warrants and purchase option derivative asset									(g)		983			(438	)
Impairment of property and equipment and right of use assets									(h)		2,438			335
Unrealized and realized loss on investments	(l)			699			—		(i)		—			699
Unrealized and realized foreign exchange loss	(m)			(31	)		356
Unrealized and realized foreign exchange loss (gain)									(j)		285			(31	)
Adjusted EBITDA from continuing operations			$	12,208		$	4,890			$	16,234		$	12,208


Exhibit		Description of Exhibit Incorporated Herein by Reference				Filed
Number	Description	Form	File No.	Exhibit	Filing Date	Herewith

10.1	Fourth Amendment to Credit Agreement, dated March 15, 2023 by and among WDB Holding PA, Inc., the lenders party thereto and Acquiom Agency Services LLC as Administrative Agent	10-K	000-56363	10.6	3/16/2023

10.2	Executive Employment Agreement, dated March 29, 2023, by and between TerrAscend USA, Inc. and Ziad Ghanem.	8-K	000-56363	10.1	3/31/2023

31.1*	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
31.2*	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X

101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)


	TerrAscend Corp.

Date: May ~~11, 2023~~9, 2024	By:	/s/ Ziad Ghanem
		Ziad Ghanem
		President and Chief Executive Officer (Principal Executive Officer)






Date: May 9, 2024	By:	/s/ Keith Stauffer
		Keith Stauffer
		Chief Financial Officer (Principal Financial Officer)