Short-term the market is a voting machine, long-term it a weighing machine. Jason Wild's gamble to move his Cannabis investments from Canada to the United States has really paid off. As the founder and CEO of JW Asset Management and Chairman of TerrAscend one of the largest MSO's he joins Dan Humiston to talk about his over 2 billion dollar portfolio. He talks about their growth strategy of building out their states before moving to a new state and his recent acquisition of Gage in Michigan. He also discusses how investors can participate in their funds including his new impact fund. Produced by PodCONX Raising Cannabis Capital - https://podconx.com/podcasts/raising-cannabis-capital Dan Humiston - https://podconx.com/guests/dan-humiston Jason Wild - https://podconx.com/guests/jason-wild Terrascend - https://terrascend.com/ JW Asset Mamagement - https://jwfunds.com/
Short-term the market is a voting machine, long-term it a weighing machine.
Jason Wild's gamble to move his Cannabis investments from Canada to the United States has really paid off. As the founder and CEO of JW Asset Management and Chairman of TerrAscend one of the largest MSO's he joins Dan Humiston to talk about his over 2 billion dollar portfolio. He talks about their growth strategy of building out their states before moving to a new state and his recent acquisition of Gage in Michigan. He also discusses how investors can participate in their funds including his new impact fund.
Raising Cannabis Capital - https://podconx.com/podcasts/raising-cannabis-capital
Dan Humiston - https://podconx.com/guests/dan-humiston
Jason Wild - https://podconx.com/guests/jason-wild
Terrascend - https://terrascend.com/
JW Asset Mamagement - https://jwfunds.com/
MJ Jason Wild 3
Dan Humiston: [00:00:00] Today and MJ bulls. We are joined by Jason Wilde, founder and chief investment officer at JW asset management and the chairman of Tara scent. Jason, welcome to the show.
Jason Wild: Thank you. Thanks for having me.
Dan Humiston: I appreciate you being with us today, for anybody that doesn't know this former pharmacist story, hang onto your hats because there's way more to tell than we have time.
So, Jason, if you don't mind, I'm going to skip from when you started your first hedge fund with just $80,000 to the gamble you took on the Canadian cannabis market to where I want to start, you are killing it in Canada. How did you know it was time to risk it all and to start investing in the U S cannabis?
Jason Wild: that's a good question. My view when I started investing in Canada. This is going to be a huge trend. Canada was ahead of the U S in terms of legalization. It was legalized medically, I think sometime around 2013. And that was where I first started looking and investing.
And I stayed out of the U S because honestly, I was worried about getting arrested. I run my pond that I live in New York, [00:01:00] and I was actually worried about that. , and my view was the Canadian stocks were going to be the one. We're able to attract the most capital because there were going to be a lot of investors and especially institutional investors that had the same level of comfort, not investing in the U S and only invest in Canada.
And I felt like it wasn't a big gift for me because , those companies were going to attract the most capital. And from 2014 to 28. That ended up working out really Well, The Canadian companies went up much, much more value than the U S wants.
But what changed all of that was when they asked a jump in or was going on the board of acreage and that flipped the switch where I said, screw it. They're not arresting anybody. There's too many rich and powerful people involved in the industry. And that was what made me ready to make the move.
And also, the fact is the market in the U S is much, much bigger than it is in Canada. Canada is , like the size of California in terms of its economy. , so smaller than the whole. And especially in terms of where all the profits were being generated, even back in 18, when we made the switch, it was almost exclusively in the U S [00:02:00] and not in Canada.
, that's what made us decide to do that, but we knew that we'd be giving up our ability to list on a us exchange versus the Canadian only ones that were not in the U S were able to be on the NASDAQ or the New York. But to me, it always came back to a quote that I annoyingly repeat often, which is short term.
The market is a voting machine and longterm. It's a way. Meaning, we need to build a company that qualifies on the weighing machine that has real profits and is sustainable over the long term. And I felt like the only way to do that was to be in the U S even if we were giving up the, the voting machine, which meant being on a us market I felt like it was much more important to be able to have the chance to build a substantial sustainable.
Dan Humiston: Well, your instincts were spot on the U S market's doing great. And you went from managing $80,000 in assets to now you're managing over $2 billion in assets. Can you give us a quick overview of your cannabis portfolio along with the states that you operate on?
Jason Wild: [00:03:00] So our portfolio of terrorists, as I mentioned, is a very large position. We invested $52 million in terrorists and at the end of 17, actually I led my $52 million placement canopy growth. Co-invested in that deal with me. But that's a very large position for us. And we have subsequently invested, I believe over a hundred million dollars to 10% over the last two years. . We are one of the top operators in Pennsylvania. We just built a 140,000 square foot cultivation manufacturing facility , in Jersey.
We own a facility grow in in Maryland and we own are also cultivating. And a manufacturing in California. And we own the apothecary and dispensary chain in Northern California, which is a higher market share or San Francisco operators. So that's where a terrorist zone is.
We're invested in a cannabis tech company called. Clearly our biggest position is in terrorists and, since I'm the executive chairman there, I have [00:04:00] a very active role in spent a big chunk of my day doing that.
But I sort of feel like I can act a little bit more like Switzerland in terms. These other operators in the space because we've been investors in many of their companies for years. And we built a good relationship. I've , held onto my investments in some of these other companies and we've actually made new significant investments in a lot of these companies include engaged one of the leading operators in Michigan.
And it's, I would say it's one of the more aspirational brands in Michigan. The state doesn't give out a full details on writing. So I'm not sure if gauges, number one, two or three, but what I can tell you is that when you speak to people in the Michigan market, I believe that almost all of them think that they are the top one or one of the top ones from the perspective of having some of the coolest stores and the coolest brands in the state. So we we, we had asked uh, two months ago that we are acquiring the company. They're going to add a whole lot of growth to our company, to the combined . Footprint, but what's really exciting is that [00:05:00] gage has proven themselves in a relatively competitive market.
Michigan is not like a lot of these other operations that are east of the Mississippi that are limited license states in Michigan. , as long as you , qualify for a license, you can get one. And what ends up making that play out is that. In those states, the companies that do the best are actually some of the best operators.
, when you have operators in limited licensed states, like say along the east coast, many of those operators are the top operators because they built the most scale, the quickest, and they can make the most. But it doesn't necessarily mean that all of the patients or the customers that are out there would be choosing their products if they had more choice in Michigan, since it's an unlimited license state and since engaged us so well there in my view, it means because people are.
Choosing that products because people just have so many more choices. So we're really excited about the ability to grow gage in Michigan. Michigan is a huge market. I believe it's the third or fourth largest market [00:06:00] in the country Right.
now. But also we are going to take the gauge brands and launch them in our other markets as well.
And we think that when you take. Companies that have proven themselves in tougher places. And you bring them to limited licensed states like Pennsylvania, New Jersey, Maryland, we think that we're gonna enjoy a whole lot of success in those states as well.
Dan Humiston: Oh, I agree. gauge has a lot of cache and they were able to leverage that with some licensing agreements. And I know for instance, the cookies agreement was huge. Are you going to be able to expand on that relationship?
Jason Wild: Absolutely. So terrace had already announced back in August that we got the exclusive license from cookies for New Jersey. So we will have three cookies corners within our dispensers. , we'll have three dispensaries in Jersey and we also are the exclusive produce cultivate or a manufacturer of cookies.
Read the products for the whole. we are already cultivated cookies products and our facilities. And we will most likely only sell the cookies, bread, the products [00:07:00] through our own dispensary's and we learned this from gauges success in Michigan.
, if you carry the products exclusively in yard dispensary's then you draw people from not just across the state, but from others. As well, once a record in New Jersey. So we're very excited about launching cookies in New Jersey. And I would say that we would hope to be able to announce further agreements with cookies , in the future.
, those guys. We're thrilled when the found out that we were acquiring engaged because gage is one of Cookie's top if not their top partner in the country, they just trust them from the perspective of that. The judge folks, they're not going to put any product in the bag and sell it to customers unless it meets their high standards, which are very similar to the cookie standards.
Dan Humiston: Yeah, and very similar to terrace and Sanders out. So that's, I think that makes a big difference. Now I knew Harrison, once you own those outright, or are you partners are majority owners , in those assets?
Jason Wild: And the different [00:08:00] states where terror centers we, aren't a hundred percent of our Pennsylvania asset and , I think we have the largest capacity in Pennsylvania. So the majority of our business is wholesale, but we also own six dispense. NPA and looking for more work, as you can get up to 18 in Pennsylvania, in Jersey.
. We just bought another what was it to a 12 and a half percent. So we're at an 87 and a half percent right now. And we have a call option that we could exercise by the beginning of. To roll in another six and a quarter percent. So we'll over 90% of that, and it was worth having a partner on that one because our two partners there have brought tremendous value and have helped us navigate the New Jersey.
I don't feel like , we would have been as effective ourselves. So that was a Jersey, Maryland. We own a hundred percent of and the California assets. We on a hundred percent and we also still own a licensed producer and Toronto. .
Dan Humiston: You know, I had a lot of friends that were in the video industry who got bowed out by blockbuster or a movie gallery. Is that the goal to build a national brand through acquisition?
Jason Wild: I think it's to [00:09:00] build a national footprint I'm not sure whether it would be needed to be the same brand in every state, I guess, in cannabis there are very few brands that have a national recognition.
For terrorism. . We took the approach of going. And not wide meaning, we're only operating Right. now in four states up until a year ago, we were in two states really wanted to be in a state.
If we can be , one of the top players in the state, in my view, if you're spread thinner and you got a lot of flags on the map, then I have to drive , a lesser chance of actually winning, just because you're less focused. And , if you are focused, you're going to build more scale in those specific states and have some of the pest margins as well.
I would much rather be say in Pennsylvania, our facility is 200,000 square feet. I'd much rather have. Facility that was 200,000 square feet. Then five facilities in five different states that have, 40,000 square feet because the margins are going to be so much better. And again, since we're focused, [00:10:00] we're going to have a better chance of actually winning in that market.
So that's for the near term. And then over the longterm, as things get more competitive in all of these limited licenses. I feel like having that scale still helps you because there could be a price at which a pound of cannabis goes down to where a 200,000 square foot facility can still make a nice margin.
And a 40,000 square foot facility will not be able to turn a profit. So I feel like it helps us to be focused in the near term and in the longterm. And in terms of building out a national. My view is we're just going to do it sort of slow and steady and take on more states as we feel like we have the capacity, which is what we've done in the last a year or so.
And the amazing thing is the prices for assets has in terms of if we want to acquire them, they've been going down because in so many of these limited licenses, There's caps on how many dispensers you can have and how many square feet of cultivation you can have. Like, as an example is Massachusetts.
The other top 10 MSOE in Massachusetts, most of them are already maxed [00:11:00] out. So there's just less buyers and there's less competitive tension when if we want to go in and buy one of these assets, my view is where you can come as a second mover to a lot of those states because nobody can be dominant,
and that's why there were so many what I call mom and pop operators in many of these limited licensed states that are available for sale is because they didn't get blown out of the water by these big MSOE. And the thing is a lot of them want to sell and there's no buyers.
As an example in Massachusetts, every week we see multiple uh, deals where a mom and pop is doing 20 million in EBITDA or pre-tax profits.
And they said they're gonna do 30 or 40 million next year. And we can buy those things for like five times EBITDA . Because there's nobody else that can pull off a hundred million dollar deal. There's no buyers left. that's another reason that I feel like we can wait for our pitch, which we have been doing, for the last couple of years, because prices are not going to run away from us.
I don't have any foam all about me missing out. I actually think they're going to continue to become more attract.[00:12:00]
Dan Humiston: that's an interesting point and you're the first person that's brought that up and it makes perfect sense. So you're in a capper seat, sitting there with sort of motor around pencil. You're going to dominate that state. It'll be your cash cow, the other New Jersey.
They, there's not a lot of licenses. There that'll be a cash cow. Use that revenue to buy up. You're in a good spot. You recently released your 20, 21 Q3 results. You want to touch on those?
Jason Wild: Sure. we reported revenues that were up about 39% year over year. They were down sequentially, but as we had announced in August of this year, we had. And pains that we went through with our Pennsylvania expansion, we took on a very large scale expansion of what.
That's sometimes is you have construction work going on in a facility that has live plants. And these plants are very finicky, especially when you're trying to grow the best possible stuff that you can. And it caused us some issues. We needed to do some things in the near term, sacrificed revenue, but for the long-term [00:13:00] we know that it was absolutely the right move make.
And what we announced on the conference call last week was. The flour that we are now producing in Pennsylvania is the best flower that we've ever grown in the state. Not just the best since we started the expansion, the best since we've owned the license for about three and a half or four years.
And when I say the best, that's not something that's subjective. Our last two harvest that we took that. We're at the highest THC levels that we've ever achieved. , one batch was 31% and one bachelor's 35% THC. And we've also had amongst the highest levels of terpene concentrations as well.
So I'm just super excited about where the quality is coming to in a short period of time overall, in terms of the company and Q3.
Some of the other things we discussed is we are ready for a rep to tick in a neutral. It's been delayed a little bit, , versus when people originally expected it to start, but it looks like it's going to start in the first quarter, probably by the middle of February, we [00:14:00] will have three of the best locations for our dispensary's in the state.
We think our dispensary's have the ability to do. to do 40 plus million dollars in run rate revenue within the first few quarters, which , pretty crazy to think up. And we've got , this beautiful facility that has been producing high quality flour now for about a year and we're ready.
And add onto that cookies say within the first quarter, we think we've got some amazing opportunities in Jersey. One of the things that I would add in terms of our announcements for the this past quarter, we announced that we bought a 158,000 square foot facility, a warehouse in Melbourne.
And that we will be moving our small scale cultivation from our current facility to that facility in the first half of this coming year, the work has already started our lab will be making all the extracted products we'll open a Q1 and our cultivation will open into. And as many of your listeners may know, Maryland is looked at as one of the next states to go [00:15:00] rack.
Hopefully that will be implemented in 2023. And we'll be ready to go with one of the largest facilities in the state.
Dan Humiston: Before I let you go. I, know our listeners would kill me if I didn't ask you about your different funds and how investors can get involved.
Jason Wild: Sure. So the main flagship funds our JW partners and JW opportunities fund. JW opportunities fund is open to new investors. , . , we also we're in the process of launching a impact fund to fund black owned businesses in the cannabis space. And I partnered with Chris Weber, NBA basketball player. We were just launching that right now and we're targeting a hundred million dollars for that.
That's a capital commitment fund, more like a private equity fund and our other existing funds that we've been running forever. Those are more regular, like hedge funds structured where people can come in the first of any month and they could, they did a withdrawal money quarterly with 30 days.
So we have two different structures and some different strategies. And we're really excited about the sort of the future for both of them.
Dan Humiston: Talk about [00:16:00] exciting. I think everybody's excited about the future of cannabis right now. And especially for somebody that's got the instincts and the entrepreneurial spirit that you seem to possess. I think this is the right place. If you need somebody to, to partner up with, and I can mention I'll have Jason's and JW holdings information.
In the show notes. I'm sure there'll be somebody over there. We'll be happy to talk to you about you acquisitions or partnering. And, Jason, it's been great to get to know you. Thanks for being on the show today.
Jason Wild: Thank you so much for having me. This was great.