Good morning. My name is Dennis, and I'll be your conference operator today. At this time, I would like to welcome everyone to TerrAscend's second quarter 2021 investor call. Joining us for today's call is Jason Wild, Executive Chairman, and Keith Stauffer, Chief Financial Officer, and Ryan McWilliams, EVP, Northeast Region, will be available during our Q&A session. Listeners are reminded that certain matters discussed in today's conference call, or answers that may be given to questions asked, could constitute forward-looking statements that are subject to risks and uncertainties related to TerrAscend's future financial or business performance. Actual results could differ materially from those anticipated in the forward-looking statements. The risk factors that may affect results are detailed in TerrAscend's MD&A and other periodic filings and registration statements. These documents may be accessed via the SEDAR database. The company began reporting results in US dollars in the first quarter of 2021, and as a result, all figures in the prepared remarks are in US dollars unless otherwise noted. Please note this call is being recorded today, Thursday, August 19th, 2021. I would now like to introduce Mr. Jason Wild. Please go ahead, Mr. Wild. Thank you. Good morning, everybody. Thank you for joining us today. TerrAscend has established itself in a very short period of time as a leading multi-state operator within the large and rapidly growing U.S. cannabis market. Our strategy, business model, and focus have positioned us extremely well. We continue to increase our scale in our existing markets, both organically and through M&A, while also continuing to evaluate entrance into new states. Before getting into our second quarter financial results, this morning, we announced the signing of a licensing agreement with Cookies, one of the most recognized and highest-grossing cannabis brands in the country, to supply Cookies-branded products across the state of New Jersey and to bring Cookies Corners, a store-within-a-store concept, to each of our dispensaries in New Jersey. This is exciting news and bolsters for us what was already a very attractive path forward for our business in New Jersey. Our vision for TerrAscend is to establish a leading presence in attractive states by going deep through vertical integration, great branding, high-quality products, and leading execution. Our agreement with Cookies allows us to continue down this path, enabling us to further solidify our leading position in the state as it is expected to turn adult use by the end of the year. Turning to a discussion of our 2nd quarter results. For the second quarter of 2021, revenue increased 72% year-over-year and 10% sequentially. Adjusted gross margin and Adjusted EBITDA margins were 61% and 41% respectively, maintaining TerrAscend's position among the best in the industry on these important financial indicators. Additionally, we continue to have one of the strongest balance sheets in the industry, especially relative to our size, with over $150 million in cash. In Pennsylvania, as we mentioned on previous calls, construction is well underway to further expand our cultivation capacity. Our latest expansion plans are to add an additional 50% of canopy space with the potential for a 60%+ increase in output at that facility. The greater increase in output relative to canopy will be the result of converting lower-yielding hybrid greenhouse rooms to higher-yielding and higher-quality indoor grow rooms. The market in Pennsylvania remains very healthy, with the recent Headset data pointing to 41% growth year-over-year for the period and continued sequential growth. We are investing into this growth as we see great opportunity over a multiple-year horizon. This additional expansion is expected to be completed by year-end and will be a key driver of growth for the company in 2022. Related to this ongoing construction and expansion work, in the middle of the second quarter, we began to see cultivation yields at our Fulton facility impacted by this activity. We experienced similar challenges in 2019 during one of our last major expansions, and we were able to remediate the situation in relatively short order. Our team has been working on getting the yields back up to previous levels while also working towards completion of the project. Our recently acquired KCR stores are performing very well, similar to our other three Apothecarium dispensaries in Pennsylvania. We have also made operational improvements to the acquired stores as part of our integration efforts. While we did not break out revenue per store, KCR did materially contribute to revenue during the quarter, and growth was 10% in those three stores on a pro forma full quarter-over-quarter comparison. We have a total of six retail locations now in Pennsylvania, and we fully intend over time to go deeper with the ability to increase our store base up to the state licensed maximum of 18 stores. Turning to New Jersey, our second store in Maplewood opened in early May. This store is built for volume with 6,500 sq ft of space, 15 point-of-sale registers, an express pickup location, and it is in a very densely populated region of New Jersey. We estimate that this location can do $40+ million in revenue annually in an adult-use program. Given the limited number of dispensaries opened in the state, we expect each store, and especially those like ours, located in densely populated regions of the state, to perform extremely well in the soon-to-be-implemented adult use program. Also, it's important to note that each of the three towns in New Jersey where TerrAscend already has or will have dispensaries, that they have passed ordinances protecting our continued operation and enabling our dispensaries to participate in the adult use market as well. These same towns have also banned all other cannabis establishments. Therefore, TerrAscend's dispensaries will be the exclusive cannabis establishments in all three of those towns. This could change in the future, but this is an extremely attractive situation for us at this time. Today, I am also excited to unveil the location of our third New Jersey dispensary, which will be in Lodi. It's in one of the best locations, if not the best, in the state right now, in my opinion. Directly off of Route 17 and I-80, this location has approximately 107,000 vehicles that pass by per day. For those who are fans of "The Sopranos," our location is right next to the famous Bada Bing. This new location is 5,000 sq ft with ample parking space for parking, as well as a drive-through. We believe that Lodi has the potential to deliver even higher revenues than our Maplewood store. By the end of this year, we will have Phillipsburg, Maplewood, and Lodi up and running in New Jersey. Our 140,000 sq-ft cultivation and processing facility in the state is now fully operational and prepared to supply the market. While New Jersey is an extremely attractive market for us, we are seeing temporary market dynamics that we believe are related to the unique situation that exists in anticipation of the expected upcoming adult use transition in Q4. For example, patients with a medical cannabis card are tied to a specific medical dispensary. This uniqueness to New Jersey specifically can create a longer sales cycle to attract new patient growth to new dispensaries. Additionally, new patient growth has somewhat slowed with consumer anticipation of adult use in the coming months. We believe that both of these dynamics are temporary, and that once the state transitions to adult use, which we expect by the end of the year, it will be a whole new ballgame. Furthermore, in anticipation of a dramatic increase in demand once adult use goes into effect, we have made the decision to increase allocation of our own branded products to our own Apothecarium dispensaries ahead of the anticipated demand surge to ensure that our own stores are fully stocked. This decision will have an impact on our sales in the second half of this year. However, it will result in future, more profitable sales and will guard against out-of-stock situations in our own dispensaries. I'm as excited about Pennsylvania and New Jersey as I've ever been. In both high-growth and limited license states, I believe we will continue to grow and scale our business and continue to own meaningful market share. In Maryland, with the closing of the HMS acquisition earlier in the quarter, we are now focused on expanding our capacity in the state to a scale which will enable us to be a leading branded manufacturer. Since we have taken over the business, we have implemented improved cultivation and processing techniques, grown our own high-quality strains, and introduced our own brands. It's still early days for us in Maryland, but we're already very excited about the future in this highly attractive market. Turning to California, our stores experienced signs of recovery during the quarter as commuters and tourists began to return to San Francisco. That traffic has started to come back. As an indication, sales at our five Apothecarium dispensaries in California grew 13% sequentially in Q2. At our Berkeley location specifically, we expect increased demand as students return to campus for the first time since that store opened in the middle of 2020. That store in particular should see a notable pickup in sales. We expect this to be a great location for us. In Canada, the business grew sequentially, driven by top-selling flower SKUs that we recently introduced, including Retrograde, Indigo Daze, and Secret Address. For example, Retrograde and Indigo Daze were number two and number four top-selling 3.5 g SKUs at the Ontario Cannabis Store for the quarter. Our commercial focus and product portfolio are much improved, and our cost structure is now aligned with all of the work that we did last year. We have expectations for Canada to continue to progress both on the top line and from a profitability perspective. Subsequent to Q2, we made the decision to undertake a strategic review process to explore, review, and evaluate potential alternatives for our Arise CBD business. This business has not recently represented a material part of our strategy. As a result, we will conduct this review with an eye towards focusing our efforts and resources on our core THC businesses. I would like to thank the Arise team for all of their efforts as we continue to work through this process. In closing, TerrAscend has established itself in a very short period of time as a leading multi-state operator in the large and rapidly growing U.S. cannabis market. 2022 is going to be a great breakout year for TerrAscend. Our licensing agreement with Cookies, New Jersey going adult use, expansion in Maryland, and our larger footprint in Pennsylvania will solidify TerrAscend as one of the leading and most profitable multi-state operators in the U.S. I would now like to turn the call over to Keith to discuss the financial results for the quarter. Thank you. Thanks, Jason. Good morning, everyone. As a reminder, the results I'll be going over today can be found on our financial statements in MD&A on SEDAR. In Q1, we transitioned our reporting currency to US dollars, so all figures discussed this morning are in US dollars unless otherwise noted. Net sales for Q2 increased 72% year-over-year and 10% sequentially to $58.7 million. This significant year-over-year growth was driven by 2020 cultivation expansions in Pennsylvania and California, the initial ramp-up of both wholesale and retail sales in New Jersey, the continued growth and ramp-up of our three Apothecarium dispensaries in Pennsylvania and two newer locations in California, as well as the acquisitions of HMS in Maryland and KCR in Pennsylvania. The 10% growth sequentially was driven by the continued ramp-up of our New Jersey business, the two aforementioned acquisitions, some recovery of retail in California that Jason just mentioned, and a strong quarter in Canada, all partially offset by the temporary yield declines related to our construction and expansion in Pennsylvania. Regarding net sales by channel, our branded manufacturing business was down 5% sequentially, driven by the lower PA yields, while our retail channel grew 50% sequentially, largely driven by two months of the KCR acquisition, but also by the 13% growth at our California stores and continued ramp-up of our New Jersey stores. Branded manufacturing, with its healthier EBITDA profile, represented 62% of our revenue mix for the quarter. This percentage continues to represent the highest mix in the industry and is a key pillar of our business model and strategy as a branded manufacturer first. Adjusted gross margin for Q2 was 61%, compared with 65% in Q1. Note that adjusted gross margin is a non-GAAP measure, which excludes fair value of biological assets and other non-recurring adjustments. The 400 basis points of sequential decline in adjusted gross margin was primarily driven by lower yields in PA, resulting in an unfavorable mix of branded manufacturing relative to retail and lower absorption of fixed costs. We have maintained our strong focus on cost control with SG&A as a percent of revenue at 25% for the quarter, a 500 basis point decline sequentially, partly due to some one-time costs in Q1, but also due to operating leverage. Overall, we remain at or near best-in-class levels of SG&A leverage in the sector, and our strategy to go deep, build scale, and leverage our cost structure, teams, and capabilities remains a central focus. Q2 Adjusted EBITDA was $24.3 million, representing a 41% Adjusted EBITDA margin and 3x the Adjusted EBITDA levels of Q2 of last year. This also represents our third consecutive quarter with Adjusted EBITDA margins above 40%, which continues to place us among the best in the industry with this important indicator. Net loss for the quarter was $23 million, driven by a non-cash loss on fair value of warrant liability of $20 million, a non-cash $8.6 million impairment related to Arise goodwill and intangibles, and a $3 million unrealized loss on foreign exchange, primarily driven by revaluation of US dollar-denominated cash in Canada related to our January equity raise. Turning to the balance sheet, we ended the quarter with a very strong cash position of $154 million. This level of cash balance is among the highest in the industry, especially relative to our size, and positions us well to further invest in the business, both organically and through M&A. In Q2, we generated $3.4 million in cash from operations, while CapEx spending during the quarter was $ 2.5 Million, leading to a slightly positive free cash flow for the quarter, our third consecutive quarter with positive free cash flow generation. Year-to-date cash from operations, perhaps a better indicator given the timing of tax payments in particular, was almost $17 million. During the quarter, we also made some significant payments related to M&A transactions. We paid $22 million as part of the closing of HMS in Maryland, $20 million as part of the closing of KCR in Pennsylvania, and $30 million as part of the final Ilera earnout payment. For the full year, we expect that our cash flow from operations will partially fund our organic expansion plans, while the cash on our balance sheet will continue to largely be used to execute on our M&A agenda. Also of note, we received approximately $3 million of proceeds from warrant exercises in the quarter. Over the course of the coming months, we expect to receive approximately $40 million of additional proceeds from warrants that will expire in January of 2022, and approximately $50 million of proceeds from warrants that expire in August of 2022. Lastly, before turning the call over to questions, I want to take a few minutes to discuss our 2021 outlook. As a result of what Jason outlined in Pennsylvania and New Jersey, we are withdrawing 2021 financial guidance. This is primarily due to the temporary reduction in yields of quality flower caused by the ongoing capacity expansion in Pennsylvania. It also relates to our decision to increase our allocation of branded products to our own Apothecarium Dispensaries in New Jersey in anticipation of increased demand in an adult use environment. While more profitable in the long run, retail sales take longer to sell through when compared to wholesale sales. When evaluating the potential of our dispensaries in an adult use environment, we think prioritizing our retail channel in a supply-constrained market is the best path for building long-term shareholder value. For the second half of 2021, although we have withdrawn our guidance, we do expect to continue to deliver strong year-over-year growth in both revenue and Adjusted EBITDA. Finally, I'm pleased to report that we are at the final stages of our work to convert from IFRS to U.S. GAAP and are advancing in our preparations to become a U.S. filer at the end of the year. This ends our prepared remarks. I'd now like to ask the operator to open the call for questions. Thank you. Ladies and gentlemen, we now begin the question and answer session. Should you have any questions, please press star followed by one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from the polling process, please press star followed by two. If you're using a speakerphone, please lift your hand before pressing any keys. We also ask that you limit your time to one question plus one follow-up. One moment for your first question. Your first question comes from Vivien Azer with Cowen. Please go ahead. Thank you. Good morning. Appreciating that this might be hard to answer specifically, but order of magnitude, is there a way for you guys to quantify what the yield disruption impact was to your total company revenue or U.S. revenue in the quarter? Thanks. Keith. Sorry, I was on mute. Keith, you want to take a stab at that? Hi, Vivi. Good morning. That's one of the reasons, quite frankly, why we decided to withdraw the guidance, is we're assessing that. It started to occur in the middle of the quarter in Q2, and the team is already well in terms of getting the situation in hand. We expect that in the next few months that we cycle through it, and leading into 2022, we're going to be ready to go with the full expansion and looking forward to getting that new space in the facility up and running at the higher outputs. Yeah. Vivien, what I would just add to that is, there's always a lag in terms of flower that you're growing, and then obviously, by the time that it turns into revenue, out in the stores. There was a decent-sized impact in Q2, and even though in Q3, we've already made substantial progress, because of the lag, we will actually see more of an impact in Q3 than we did in Q2. Thanks for that call-out. That's very helpful from a modeling perspective. Jason, not tying these two questions together, but can you update us on where you stand on the CEO search? Sure. We are still actively searching for a CEO. As I've mentioned in the past, we don't feel like it's a fire drill or anything like that, or there's a very urgent need in the near term. We are still conducting that search, and we look forward to being able to share the results of that in the coming months. Understood. Thank you. Thank you. Your next question comes from Matt McGinley with Needham. Please go ahead. Thank you. In Pennsylvania, if the yields declined there related to the construction disruptions and your customers sourced product from other suppliers and didn't seem to skip a beat, why would they come back when you're in a better in-stock position in the third and the fourth quarter? What would change with their need to come back to you when you're in a better in-stock position, given they, I guess, they moved on in this quarter and, like I said, didn't skip a beat? Sure. I think this would be a good time to introduce Ryan McWilliams, our new EVP of the Northeast. I think he can answer that question. Yeah. Hey, Matt. Thanks, Jason. I think one thing that we can point to is that we've seen an issue very similar to this at the tail end of 2019 as we went through the first phase of expansion in the same facility. Since we've been such a large contributor to this wholesale market, we're a known quantity, a known entity with the current patient base in Pennsylvania. I think that when we come back online bigger and higher quality than ever, that same trend will continue like we saw it following the end of 2019 and that construction project. Yeah. The thing that I would add also is that the impact that we felt was on the flower side. It was not on the manufactured product side in terms of vapes and concentrates and things like that. That side of the business has continued to be strong. We do believe when it comes down to a mat, I think, it always comes down to if you can produce high-quality products. There's no magic. If you produce high-quality products, dispensaries are going to buy those products and the customers are going to buy them as well and pull them through. In every market where we are, we very strongly believe that the better our products are, and the higher the quality they are, that they will continue to gain share, or in the case of Pennsylvania, to take back that share. Okay. Thanks for that, Jason. On the inventory, I'm trying to reconcile the comments on not having the inventory to sell in Pennsylvania and then allocating more to your own dispensaries in New Jersey with the $23 million increase you had in inventory in the quarter. If you're having top-line issues related to supply constraints, why would that inventory be building at such a high rate? I guess, moreover, how much of that inventory build that you saw in the quarter was actually in New Jersey versus build in other states? Keith? Should I take that, Jason? Yeah. Yeah. Yeah, when you peel the onion on the inventory, it's divided across a few of the areas. In Pennsylvania, the dynamic is that a lot more of the biomass is needing to get converted to manufactured product formats, which is then a longer process and then a longer lead time to sale. That's sort of the dynamic in Pennsylvania. In New Jersey, it's just like we said, where we've made the choice to build the inventory ahead of time in anticipation of adult use later in the year, to make sure that our own stores are fully stocked. Those are the 2 drivers for the 2 main buildups. I would say, roughly, a third and a third of each of those two, and then there's a third of purchases that we've made in Canada to procure products and strains against the high-selling SKUs that we talked about earlier. Okay. Thank you very much. Thank you. Your next question comes from Kenric Tyghe with ATB Capital Markets. Please go ahead. Thank you. Good morning. Jason, I'd like to just better understand the construction and Pennsylvania-related delays. Is it a function of there are equipment and supply delays, and you're actually not able to complete construction, the expansion as quickly as you could, and that contributed to the disruption? Is it simply a case of construction is disruptive and these things happen? I'm just trying to unpack the actual construction-related angle on this, because we have seen a number of other players referencing delays on sourcing and securing of key parts or components of their capacity expansion and the like. Could you sort of speak to that so we can better understand the construction delay as it impacts yields in Pennsylvania? Sure. Yeah. I wouldn't describe it as a construction delay. We actually expanded the expansion in terms of, I believe on the last call, we said we were undertaking a 30%+ expansion of our canopy. It's actually going to be more like 50%. That has not been delayed. The issue that occurs often when you try to undertake a large expansion at a facility that is currently producing product is that just the addition of that construction, the sort of the excavation of the dirt outside of the facility, the extra people that might be in the facility, things like that, just you end up introducing more issues and more potential issues into the grow. That's practically exactly what happened to us in Q4 of 2019, when I believe we expanded our footprint at that time by 4x. We ended up having the same issues in terms of that current quarter sales. The thing is, nobody was really I don't believe we were covered by analysts at that point, so nobody was really paying attention. Then once we got all of that straightened out, it was off to the races. We believe that it'll be the same case here. It's just we think we're going to go through another couple of months of remediating some of these issues. We've already made substantial progress. It's just that it's going to show up as a lag in terms of revenue. That's really the bottom line on it. It's not that the construction was delayed, I would say, at least relative to what we had disclosed. It's actually ahead of plan, and our production is going to go up. Our output should go up even more than the 50% increase in Canopy, because we are also converting some of these hybrid greenhouse rooms into indoor rooms, which will substantially increase both the quality and the yield in those rooms. Thanks for that, Jason. If I could, just switching to sort of a combined one on guidance versus Pennsylvania and New Jersey. It's all of guidance essentially predicated on, as you've discussed, the yields challenges in Pennsylvania and evolving market dynamics in New Jersey. Could you speak to, in New Jersey, you commented that you would still expect to see recreational use sales late in the year. Can you just help us better understand that in context of the inventory build end market and the fact that those sales can't commence until there is sufficient inventory, my apologies, to supply the medical market? Do you actually still believe we get there in New Jersey this year? How should we think about your positioning on the assumption that we do? It sounds like things in New Jersey are tracking well. I'd like to just better understand the New Jersey in the context of the evolving dynamics and New Jersey in the context of the constraints on adult use sales, only beginning once medical use has been covered. Sure. The reason that we've been building inventory in Jersey is because we think that once adult use kicks in, New Jersey's going to be a completely different market. We think that we are going to have demand pretty much for everything that we currently have in inventory that's ready to go, and whatever we're going to be producing on a run rate basis once adult use kicks in. In the meantime, the dynamics are not great as a medical market. As we mentioned earlier, new patient growth in the state has slowed down because everybody's just waiting for adult use. You wouldn't believe how many calls our dispensaries get per day from people asking if we already have adult use in place and if they can come to the store. We think that there's just sort of been a little bit of a natural lull in terms of new patient growth. New Jersey has its own unique dynamic where when you sign up for a card, you choose a specific dispensary to be your main dispensary. That just results in a little bit of a longer sales cycle for our dispensaries under medical, because there are several other established dispensaries that have been around for a while, and people were already signed up with them. All of that being said, we think that things are going to be completely different come adult use. That demand is going to be more than what we can potentially supply. That's the reason that we made this decision to move towards having our brands be almost exclusively sold through our own stores. We don't want to have any stock-outs in our stores. We want them to be some of the best-supplied stores in the state, and we think that these can be some of the best revenue-generating and profit-generating stores in the country. While that serves to, from a timing perspective, move sales from the second half of this year into, say, the first and second quarter of next year, just because to book a retail sale, the patient has to buy the product from your store. To book a wholesale sale, all you have to have is a dispensary buys your products to put it out on the shelf. To us, it's more of a timing issue than anything else. Remember, when you sell it through your own retail store, you're getting the full retail price, as opposed to the wholesale price that you would sell it to another dispensary for. We just believe that those will be higher quality revenues, and we're willing to wait to be able to realize those higher revenues and higher quality revenues. Additionally, now that we have the Cookies agreement signed, that additionally bolsters our confidence that we're going to be able to sell everything and then some that we can produce. We are actually planning on starting work on a significant capacity increase in New Jersey, in the coming months. Thanks. I apologize, Jason, that's great. I'll get back in the queue. Thank you. Your next question comes from Eric Des Lauriers with Craig-Hallum. Please go ahead. All right. Great. Thanks for taking my questions. I'm not sure if this one is best for Jason or Ryan. The Ilera team was obviously a key area of strength for TerrAscend, and with Greg now moving on, how does that impact the grow teams in the Northeast? Was his departure a factor in those Pennsylvania yield declines, and how does that maybe impact your outlook for New Jersey or Maryland? Sure. I think I'd like to let Ryan answer that question. Yeah. To the question about how does it affect the yield declines, I think that the remaining team that we have in place, specifically our SVP of Operations, Jason Morris, who's already been responsible for the New Jersey location to date, and that's been such a successful production facility. Now his reach has broadened to cover the entire Northeast, so I only expect upside from there having this promotion for Jason and expanded responsibility for the region. Okay, great. Then just focusing on Pennsylvania specifically. Obviously, a key market for many MSOs here, and I understand that the yield decline sort of impacted your participation in the wholesale market for this quarter, but just any commentary on the competitive dynamics unfolding in Pennsylvania, whether you're seeing stiffer competition as it relates to quality or pricing? If you could kind of just give any comments on what you're seeing on the competitive dynamics of the wholesale market in Pennsylvania, that'd be great. Thanks. Yeah, sure. Ryan? Yeah. I got it. From a wholesale perspective, there's really been not too much change at all from a wholesale pricing perspective. On the retail side, we've certainly seen, as in any maturing retail industry or any state that's a little bit further advanced than Pennsylvania, is we've seen some more competition in terms of promotional activity and discounting. Really, not as much as I would've personally expected to see this far into the program. We're very pleased with the continued demand that's out there, and even as this additional capacity comes on from ourselves and others operating within the state, I think there's still plenty of demand to go around. Okay, great. Thank you. Thank you. Your next question comes from Pablo Zuanic with Cantor. Please go ahead. Good morning. Thank you. Can you just give us a reminder in the case of your Pennsylvania business, how much, say, back in the fourth quarter of 2020, first quarter 2021, how much was really coming from greenhouse and how much indoor? Right? Because what we are hearing is that there's significant pressure on the lower-end flower of the market, mainstream, what's coming from greenhouse, and that indoor, of course, is doing well because it's premium. Just give us a reminder of where you were in terms of mix. I understand you're building capacity in indoor, but just a reminder of where to where in terms of mix back in the fourth quarter and first. Thank you. Ryan? Pablo, from a product perspective, the majority of what we have been historically harvesting from the greenhouse has gone towards the extracted product. We've had the indoor expansion included on there, which has been the primary driver of our higher-quality flower sales and flower availability since that first phase of the construction project was complete back in Q1 of 2020. From a square footage perspective, it's more in the range of probably 20% greenhouse to 80% indoor, something along those lines, give or take. Okay. Thank you. That's helpful. Just a second question regarding the Cookies brand. Can you talk about, I don't know if you can comment on the economics, I understand gross margins will be high in New Jersey, but if it a 10-20-point difference, if you're selling your own branded product, about the trade-offs you might have made between licensing from a Canopy Growth, Tokyo Smoke, Tweed, or other of their brands versus Cookies. Also related to Cookies, while it's a brand that we hear a lot about, it targets a very, very specific demographic, right? I understand where your stores are located, but I'm just wondering how that plays into all this. One thing is to build traffic, but I'm just trying to understand how the rationale there with that specific brand. Thank you. Sure. I'll let Keith, maybe you can talk to the margins, and then I can speak to overall in terms of why we chose the Cookies brand and its demographic. Sure. Just really, really quickly, without disclosing, we can't disclose the exact economics, but it's a royalty arrangement. There's a royalty fee. Overall, we feel like the boost that this deal is going to give us in terms of attracting more sales and more interest and everything through our stores, also across New Jersey, the incremental margin dollars are definitely going to be better. Of course, there'll be some percentage that'll be paid, overall, we expect our margins overall in New Jersey to be great. This deal is definitely going to be an add-on positive benefit to us. I think that we don't see the Cookies products sold, definitely in practically every market across the U.S., sold at a premium to other products. We don't see, even after the royalty that we're paying them, we think that it is well worth it because we don't see it impacting our margins to any real extent. In terms of appealing to a specific demographic, first of all, we want all demographics to come in our store. If this appeals to an additional demographic that we wouldn't have, then that's great. My personal belief on Cookies is that it's the top brand across the whole entire United States. I think, to me, they're the best brand, if not sort of the only brand. The opportunity for us to have Cookies in New Jersey is something that we were very excited about. We've developed a really strong relationship with the team over there, with Berner and with Parker and the rest of the team. We think that this is going to be a brand that not only are we going to be able to sell practically everything that we can make, but that it's going to pull people into our stores because we are planning on exclusively selling the Cookies products through our own dispensaries. We think it'll help drive more sales in our dispensaries for other products and drive more customers to our stores overall. By the way, and also on top of that. Yeah, sure. Pablo, just the other thing I was going to add is, on top of that, they do have best-in-class genetics. We will be growing. We've been working with them. We have a great team ourselves in Jersey on the genetic side that's been pheno hunting and popping seeds and really sort of been able to develop excellent genetics of our own. The combination of the Cookies genetics with ours, which we'll be launching some New Jersey specific genetics that we've developed under the Cookies brand. The combination of our genetics and theirs, I think we're just going to be a really strong competitor in New Jersey. Thank you. That is very helpful. Can I just add one more? Sure. I think in the press release you mentioned something about looking at the CBD business and maybe exiting that business. Could you just provide some context? Obviously we've seen a number of other companies buying CBD assets, and here you are exiting. Tell us what you are seeing that maybe others are not seeing? Thanks. Sure. Stauffer, do you want to answer that? Sure. We didn't specifically say we're exiting the business, Pablo, but we did want to just be clear that we're evaluating our path forward for that business. All options are on the table, and we're going to assess that and there'll be further news in due course once we make any kind of final decision. All right. Thank you. Thank you. Your next question comes from Glenn Mattson with Ladenburg. Please go ahead. Yeah. Hi, thanks for taking the question. Just looking past the short-term issues, and you may have commented this, I missed the first few minutes of the call, but Jason, curious about your thought process on M&A. You have a healthy balance sheet still. You have positive free cash flow in the first six months. Thoughts about how pricing looks to you as asset prices have come down a little bit and just your thoughts on how aggressive you'd tend to be in the back half or beyond. Thanks. Sure. Thanks, Glenn. We've definitely been very active on the BD and M&A side. We're working on multiple deals on that front. Valuations, as you mentioned, have definitely come down. I believe that they've come down more than the public stock prices have come down of the public operators. Even though our stock is down substantially over the last several months, and in addition to pretty much the whole sector, it's not like there's not very accretive deals out there to be had. I've used in the past examples of Massachusetts, where multiples continue to go down because the dynamic you have in these limited license states, mostly in the East or the Northeast, is that there are relatively low license caps in terms of the number of dispensaries or the square footage of canopy that's allowed by any one player. If you look at someplace like Massachusetts, I believe all of the top 10 MSOs other than TerrAscend are in Massachusetts, and most of them are already capped in terms of, they can't go out and acquire anything else unless they're willing to divest something that they have. That has just created a dynamic in states like Massachusetts and other places where there are no buyers left. There's just less competitive tension competing for specific deals because there are just less people to bid for them. Not to continue to mention Massachusetts, but as an example, we probably see at least two deals a week of operators in Massachusetts that are, say, what we would call mom and pop, which just means not a public company, that are doing typically, they're doing $20-ish million in EBITDA this year. They're going through some expansion. They think they'll do $40 or $50 million in EBITDA next year. Those assets, based upon the most recent deals that we've seen out there, those assets can be bought for five or six-ish times EBITDA because of the simple fact that there are very few companies out there that can pull off $100 million deals. That's the dynamic that we're seeing in Massachusetts, and seeing in other states as well. If it was just a matter of doing accretive deals, we could get a whole lot of those deals done in multiple states. Pretty much for the last several years, ever since we entered the U.S., we've chosen to only enter a state if we think that we can be a dominant player in that state over the next 12 to 24 months or so. We're waiting. It served us well up until this point to sort of wait and pick our spots and be picky because, in the meantime, prices have gone down. We don't have any FOMO. This is not an ego-driven strategy. Where I guess it's almost the opposite of an ego-driven strategy for us because we don't measure ourselves by how many states we're in. We measure ourselves by our profitability and our ability to win in any given market. We just feel that if we stay more focused, and we really set the bar very high, other than just finding deals that are accretive. If we set the bar really high, then it's going to give us the best chance to win in the markets where we are, because we're not going to be too scattered. Great. That's an extensive answer, and you covered my potential follow-up. Thanks for the color, Jason. Awesome. Thank you. Your next question comes from Andrew Partheniou with Stifel. Please go ahead. Hi, Andrew. Hi. Good morning. Thank you for taking my questions. Good morning. Maybe expanding on your Cookies deal. I was curious if you give a little bit more color on why did Cookies decide to partner with you? I mean, the deal that you got seems to be extremely attractive and not necessarily the same that we've heard from other operators. You guys are going to be the exclusive manufacturer and producer of Cookies. You mentioned today that Cookies will only be sold in your stores. You don't expect to wholesale it out, so you're going to get that full vertical integration margin there. On top of that, on top of the store-in-store as well, on top of that, you might even get some unique genetics that are only sold in New Jersey. To me, this looks like an outstanding deal for you, and I'm just wondering, what was it, from the part of TerrAscend, that Berner and the team decided to partner with you in such an exclusive fashion? Well, thank you for that. I appreciate that you see the merit in the deal and see that it's a good deal for TerrAscend. I think it's also the fact is, the best deals are the ones that are win-wins. I think it's an excellent deal for Cookies as well. I think what attracted Berner and Parker from Cookies to TerrAscend, and is just the fact that they were out at our facility and saw it in New Jersey, as Ryan mentioned earlier. Jason Morris, who runs that facility, has just built an amazing facility and an amazing workplace. That place is spotless. You walk down the halls and at least, we get comments every week from people who took tours that say that it's the cleanest and one of the best-run facilities that they've ever seen. The fact that, and what I alluded to earlier about Cookies is, I believe that Cookies is the strongest brand in the U.S., largely because their branding and marketing is, I don't know, in my view head and shoulders above almost everybody else. Not only that, it's because their products and their genetics are the best in the market. They really do value quality. They've made multiple visits to our facility, and just really, I believe grew to trust that we were going to take the same care with their product that they would if they were growing it themselves. Not to try to pump ourselves up too much, but I really believe that that is a reason that they signed such an extensive deal with us, because they know that they're not going to need to worry about the quality of the product that goes out in these Cookies bags at retail. It's going to reflect well on their brand and help further their brand and sort of the recognition out there on the market that their products and their genetics are best in class. Hey, Jason, if I could just add 1 point on top of that, which is also just the scale and the capability that we have in New Jersey and also our plans to increase that scale so that's another major factor. Absolutely. You're right. Thank you for pointing that out. They are, I will tell you that Berner specifically is off the charts excited about our Lodi location. As we mentioned, I believe, earlier, it pretty much shares the parking lot with the Bada Bing, which practically everybody knows from The Sopranos. It is one of the highest, I believe one of the highest trafficked areas in the country with 107,000 vehicles per day driving right by our front door. If you're driving on Route 17, you don't even need to get off on an exit and make any turns. You pull directly off of Route 17 into our parking lot. Berner was so excited that he started texting in the middle of the night a few weeks ago, talking about all of the amazing things that we could do there, and whether it's Sopranos-specific strains. The other thing that's great about Cookies is it's not just about the flower and the other branded cannabis products. They have a full line of merchandise and clothing that does extremely well, and we've even talked about some Sopranos-specific clothing lines and things like that. I believe that store is going to be one of the best dispensaries in terms of sales in the whole entire country. That's something that the Cookies folks are really excited about as well. Really appreciate that, Color. Thanks for taking my questions. I'll get back in the queue. Thank you. Your next question comes from Andrew Semple with Echelon Capital Markets. Please go ahead. Hi there. Hi. Sorry, I got a little fire alarm going off in the background. There we go. Could you perhaps speak to the intra-quarter dynamics at play in Q2 2021? When we last had the Q1 update in mid-May, the business was on a stronger growth trajectory than what was achieved. Were there any changes in the back half of the quarter? Keith, do you want to- Yeah, sure. Address that? Yeah, sure. Hi, Andrew. That's squarely the issue that we were referring to here, where that's where the yield impacts in Pennsylvania started to impact us in the back half of Q2. It sort of lined up almost in parallel with the update that we were giving in mid-May. Then again, also, we started to see the dynamics in New Jersey and sense kind of where the market was headed and adult use timing and all those things, and also started to shift our approach there like we talked about. Those are the two key dynamics in the back half of Q2. Got you. Just switching gears to New Jersey, just trying to still understand the narrative here. You're signaling that medical patient growth on the retail side was a bit slower than expected, which should have naturally given you some incremental capacity for the wholesale market. You're also signaling that you kind of had to dial back on the wholesale side to make sure the stores are adequately supplied. It sounds like you're moderating both the retail and the wholesale side for 2021. Is the underlying strategy behind that, to put it simply, is that you want to build inventory for the adult use market, so you're ready for day one of that program? Yes, I would say that that's the strategy. We believe that based upon the location of our stores and the size of them and the throughput ability, because two out of three of them are large stores with a high number of point-of-sale systems, and we think that we'd like for the only thing to limit the sales at those stores to be how much throughput we can get there, how many people we can get through the doors. We'd much prefer that than having our sales there be limited by the fact that we don't have enough product, especially now that we have the exclusive on the Cookies brand. That's really the reason and the decision that we've made. If we wanted to drive a whole lot of wholesale revenue in the second half of this year in New Jersey, we think that would be there for the taking, especially as we get closer to adult use implementation and the other dispensaries out in the state starting to stockpile product in anticipation of that. We've made a conscious decision to forego that because I would much rather have $2 worth of sales in January or February at retail than $1 worth of sales in November or December because we sold it wholesale. That's really part of the reason that we decided to withdraw the guidance is I don't even want anybody internally to be focused on trying to grab a dollar of sales in November or December, when those dollars will be higher and of higher quality because they came through our dispensaries if we wait for those sales to be pulled through by the customers early next year. Great. Thank you so much. Just the only other thing to add to that is we do believe that the market will be severely undersupplied once adult use kicks in. We're not sure that in terms of the way that the state is going to implement the adult use program. We're not sure that it's just going to be a blanket approval for everybody to just turn over from medical to adult use. We think there's a chance that the state will choose which companies have enough supply to meet their own medical patients' demands. The ones that do, they will essentially upgrade them to adult use licenses. We think that since we have some of the largest capacity in the state, and we have high-quality inventory of product waiting and ready to go, we think that that's going to position us really well in an environment where not all of the 10 cultivators in the state are necessarily going to be allowed to sell into the adult use market for the first several months. Appreciate the color. Thank you. Thank you. Your next question comes from Noel Atkinson with Clarus Securities. Please go ahead. Hi. Good morning. Thanks for taking our questions. First off, just in New Jersey on your production expansion here, can you give us a sense of the scale of how much you're expanding the canopy and the timeline to completion? In New Jersey, it's still at the earlier stages. We have not yet started the expansion. Figure, New Jersey allows up to 150,000 sq ft of canopy. That is a whole lot of canopy. There's very few cultivators that I know anywhere that are at that size in any one state. We plan on getting there over time. I would say that the expansion that we are currently contemplating and should start work on in the next several months would be somewhere around a doubling of our current capacity right now in the state. That's substantial. We have, I believe, the largest capacity, if not right near the largest capacity in New Jersey right now. Obviously, if we double it, we should be in an even stronger position. We're going to do it over time, in terms of getting to the full 150. We're going to do that over time because, as you all can see, there are complications that sometimes arise when you try to take on very large capacity increases at your facilities in a short period of time. I'm alluding to, obviously, to Pennsylvania. Even there, I think that this short-term pain that we're going through is going to really reward us well come next year. In the meantime, like we did in Q4 of 2019, we're dealing with sort of some of the headaches that come along with taking your capacity up by 50%+. Okay. Then, thanks. On my follow-up, just following up on the prepared remarks that you guys provided, are you expecting to achieve quarter-over-quarter growth in total revenue and adjusted EBITDA in Q3 from Q2? Keith, do you want to, or what do you think, Keith? Yeah. I can take that. Again, we withdrew our guidance, I'll note. Just directionally, what we see is that Q2 revenue, sorry, Q3 revenue will be similar levels to Q2. There's some headwinds and some tailwinds that we've kind of talked through before picking back up into Q4 as we cycle through the yield situation in Pennsylvania. On the margin side, due to those factors, we expect margins to compress in Q3 because, again, we're continuing to deal with this in this quarter. They'll begin to recover back to near recent quarter levels towards the end of the year. That's kind of broad brush maybe to help you kind of through what to expect through the rest of this year. Again, we just want to reemphasize, like we said, that overall this year is still a great year, and the back half of the year will continue to grow revenue and EBITDA on a year-over-year basis. We're really focused on getting ourselves set up well as we've talked here for this whole call and positioning us really well and in a strong way for 2022. Okay, great. Just for those of us that have covered you guys for quite a while, it's nice to see California and Canada coming back strong, so well done there. Thank you. The only thing I would add to Keith's comments on Q3 in terms of that we're going to see some margin compression there, that really mainly has to do with mix shift because the fact is that Pennsylvania wholesale is the highest margin part of our business. With the yield issues that we've had, and that's certainly going to show up in Q3 because even though we've had improvements, the revenue shows up on a lag. The percentage of revenue made up by Pennsylvania wholesale will be smaller in Q3, therefore, that's why the margins will be lower. Yeah. Thanks, Jason. Thank you. There are no further questions at this time. Mr. Wild, you may proceed. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.