TerrAscend Expands to Maryland Through Acquisition of HMS

CFO Ryan McWilliams says the opportunity is strategically and geographically advantageous for the company, which now has a presence in four U.S. states.

November 17, 2020

TerrAscend, a multi-state cannabis operator with a presence in Pennsylvania, New Jersey, California and Canada, has announced that the company will expand to Maryland through the acquisition of HMS Health, LLC and HMS Processing, LLC, one of the state’s licensed medical cannabis cultivators and processors.

The acquisition, announced Nov. 6, is strategically and geographically advantageous for the company, according to Ryan McWilliams, CFO of Ilera Healthcare, which was acquired by TerrAscend last year.

“Geographically, Maryland is kind of an obvious fit, and there are so many similarities across all these Northeastern cannabis markets in terms of the fact that they’re all medical but on the verge of going recreational,” McWilliams told Cannabis Business Times and Cannabis Dispensary. “There’s a very limited availability of these licenses in each of these states, so when there was an opportunity to acquire a new one that is strategically and geographically advantageous for the organization, we were immediately very interested in that opportunity.”

HMS currently operates a 22,000-square-foot cultivation and processing facility in Frederick, Md., which produces flower and oil products for the state’s medical cannabis market. The facility will also be able to produce edibles upon receiving regulatory approval.

“Looking ahead, we’ve done our due diligence and met all of the current operators of the HMS facility, and [we] are very impressed by what they’ve been able to do,” McWilliams said, adding that TerrAscend plans to integrate HMS’ employees into its operations.

TerrAscend plans to purchase HMS from multi-state cannabis operator Curaleaf for $27.5 million, and the transaction is expected to close in the first quarter of 2021.

At that time, the TerrAscend team will evaluate the HMS facility and decide whether it can be expanded to better meet patient demand.

Photo courtesy of TerrAscend
An Apothecarium dispensary location in Berkeley, Calif., that is owned and operated by TerrAscend

“We’ve expanded in Pennsylvania and we’re in the middle of a big investment in our cultivation and processing facilities in New Jersey right now,” McWilliams said. “Once we get into that Maryland market and take over that operation, we don’t see why we wouldn’t apply the same to Maryland, that we would thoughtfully grow as the size of the market increases and our share of that market increases.”

TerrAscend has proprietary product formulations that it plans to introduce to the Maryland market, McWilliams added, including topicals, tinctures, vape cartridges and concentrates.

While navigating the unique regulations in a new market can be challenging, the company has a Maryland native on the team, Greg Rochlin, CEO of TerrAscend Northeast, to help guide it as it transitions into a new state.

“Sometimes there are a lot of similarities state to state, but sometimes there are nuances that make [the regulations] very different in a lot of ways, too, so we’re beginning to learn what the differences of Maryland look like compared to New Jersey and Pennsylvania, and really commit the resources required to understanding them as well as possible,” McWilliams said. “That will be a key focus for us in the beginning of 2021.”

TerrAscend’s focus headed into next year will be integrating the HMS operations with the rest of its Northeastern footprint.

“Obviously, the short-term goal with any acquisition is just smooth integration—really optimizing our cultivation and processing practices, introducing our brand portfolio on a broader scale, expanding that footprint in the Northeast region, and going even deeper than our current presence is,” McWilliams said. “In [the] long-term, we want to be the go-to supplier of medical—and if they should pass it—recreational products in the market. We want to be the best-in-class operator that we’ve shown we’ve been able to accomplish in the states we’re operating in and really leverage that operation."