NEW YORK – TerrAscend Corp., a prominent multi-state operator in the rapidly evolving cannabis industry, has announced its complete withdrawal from the Michigan market. The strategic decision will result in the closure of all 20 of the company’s dispensaries across the state, along with its four cultivation and processing facilities.
The move impacts several well-known cannabis retail brands operating under the TerrAscend umbrella in Michigan, including Gage Cannabis, Pinnacle Emporium, Cookies, and Lemonnade. The closures signal a significant shift in the company’s operational footprint and highlight ongoing challenges within the state’s competitive cannabis landscape.
Scale of the Exit
The withdrawal represents a substantial contraction for TerrAscend, specifically within the Michigan state lines. The closure of 20 dispensaries eliminates a considerable retail presence built through acquisitions and organic growth. Simultaneously, the shuttering of four cultivation and processing facilities means TerrAscend will cease all production activities in the state.
The human impact of this strategic realignment is significant. Approximately 250 Michigan employees will lose their jobs as a direct consequence of the closures. This workforce reduction constitutes about 21% of TerrAscend’s overall employee base across all its operational states.
Rationale Behind the Decision
TerrAscend cited “strategic realignment” and “resource optimization” as the primary drivers behind the Michigan exit. In a statement outlining the rationale, Executive Chairman Jason Wild was quoted directly, describing Michigan as an “extremely difficult market.”
Wild further elaborated that the company believes its resources could be “better utilized elsewhere.” This suggests that despite initial investments and operational efforts, TerrAscend determined that the return on investment and growth prospects in Michigan did not align with the company’s broader strategic objectives compared to opportunities in other markets.
Background of Investment
The decision to exit Michigan comes after significant capital expenditure in the state. Notably, TerrAscend completed the acquisition of Gage Growth Corp., a Michigan-based cannabis operator, for a reported $545 million in 2022. At the time, this acquisition was viewed as a major step for TerrAscend, providing a strong foothold in a key adult-use market.
The subsequent withdrawal less than two years later underscores the volatility and unpredictable nature of the cannabis industry, particularly in markets facing intense competition and potential oversupply issues.
Symptom of Market Challenges
TerrAscend’s departure is being interpreted by many industry observers as symptomatic of broader systemic challenges within the Michigan cannabis market. While Michigan boasts a large and relatively mature adult-use market, it has also faced headwinds, including price compression, high operational costs, and intense competition among licensed operators.
The state’s “green graveyard” nickname, referenced in local reporting like City Pulse in Lansing, reflects the difficult operating environment that has led to the failure or exit of numerous cannabis businesses despite the market’s overall size. TerrAscend’s status as a multi-state operator choosing complete withdrawal adds weight to concerns about the long-term sustainability and profitability for many players in the Michigan landscape.
Looking Ahead
TerrAscend has indicated it will focus its resources on other markets where it believes it can achieve better growth and profitability. The exit leaves a void in the Michigan market, particularly impacting the communities where the 20 dispensaries and four facilities were located.
The situation highlights the complexities faced by cannabis companies navigating differing state regulations, market dynamics, and competitive pressures. As the industry matures, consolidation and strategic exits like TerrAscend’s are likely to continue as operators seek to optimize their portfolios and concentrate efforts on the most promising opportunities.
