August 6, 2026 - 10-Q: Quarterly report [Sections 13 or 15(d)]

ROC

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended June 30, 2026


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

For the transition period from to

Commission File Number: 000-56363

TERRASCEND CORP.

(Exact Name of Registrant as Specified in its Charter)


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)

Registrant’s telephone number, including area code: (844) 628-3100

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class

     Trading
Symbol(s)

     Name of each exchange on which registered

     None

     N/A

     N/A

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.


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

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 ☒

As of August 5, 2026, the registrant had 309,175,647 common shares, no par value, outstanding.

Table of Contents


		Page

PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements (Unaudited)	1
	Unaudited Interim Condensed Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025	1
	Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2026 and 2025	2
	Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders' Equity for the three and six months ended June 30, 2026 and 2025	3
	Unaudited Interim Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025	5
	Notes to Unaudited Interim Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40

PART II.	OTHER INFORMATION	40

Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42
Signatures		44

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains statements that TerrAscend Corp. (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 the industry in which the Issuer, its subsidiaries, including TerrAscend Growth Corp. ("TerrAscend") and its subsidiaries (collectively, the "Company") operate or 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:

•

the projected performance of the Company’s business and operations;

•

the Company’s estimates and expectations regarding revenues, expenses and need for substantial additional financing, and its ability to obtain additional financing;

•

the Internal Revenue Service's (the "IRS") review of the Company's tax positions, including heightened risk of added scrutiny or increased frequency or depth of reviews or audits by the IRS;

•

the Company's strategic alliance or acquisition interests, including, as applicable, required regulatory approvals and licensing, anticipated costs and timing, expected impact thereof, and the ability to enter into future strategic alliances or acquisitions;

•

the Company's ability to source investment opportunities and complete future acquisitions, including in respect of entities in the United States, the ability to finance such acquisitions or operations in the United States, and the expected impact thereof, including potential issuances of common shares in the capital of the Company ("Common Shares");

•

the Company's ability to market itself to the capital markets, including its ability to raise equity as a result of its corporate ownership structure;

•

the expected growth in the number of customers and patients using the Company's adult-use and medical cannabis, respectively;

•

the expected growth in cultivation and production capacities of the Company;

•

expectations with respect to future production costs;

•

the expected impact of taxation on the Company's profitability and the uncertainty around timing of any legislative changes that may result in unfavorable tax treatment;

•

the expected methods to be used by the Company to distribute cannabis;

•

the expected growth in the number of the Company's dispensaries and changes to the jurisdictions in which the Company operates;

•

the competitive conditions of the industry in which the Company operates;

•

the impact of the Company’s exit from the Michigan market on its operations and financial results;

•

federal, state, provincial, territorial, local and foreign government laws, rules and regulations, including federal and state laws in the United States relating to cannabis operations in the United States;

•

the potential legalization of the regulated use of cannabis for medical and/or adult-use in the United States and the related timing and impact thereof, including the impact of the final rule rescheduling marijuana contained in United States Food and Drug Administration-approved drug products and marijuana subject to a state medical marijuana license from Schedule I to Schedule III of the Controlled Substances Act (the “CSA”), and the timing and outcome of the hearing held from June 29, 2026, to July 15, 2026 to consider broader rescheduling of all marijuana from Schedule I to Schedule III of the CSA;

•

laws and regulations and any amendments thereto applicable to the business and the impact thereof;

•

the possibility of actions by individuals, or United States federal government enforcement actions, against the Company and the potential impact of such actions on the Company;

•

the competitive advantages and business strategies of the Company;

•

the grant, renewal and impact of any license or supplemental license to conduct activities with or without cannabis or any amendments thereof;

•

the medical benefits, viability, safety, efficacy, dosing and social acceptance of cannabis;

•

the Company's future product offerings;

•

the Company's ability to source and operate facilities in the United States;

•

the Company’s ability to integrate and operate the assets it acquires or may acquire in the future;

•

the Company's ability to protect its intellectual property;

•

the possibility that the Company's products may be subject to recalls and returns;

•

expectations regarding the Company's liquidity;

•

expectations regarding the Company's Share Repurchase Program (as defined below);

•

the future occurrence of any events of default under the Company’s debt instruments; and

•

other risks and uncertainties, including those referenced under the section titled “Risk Factors” in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Certain of the forward-looking statements contained herein concerning the cannabis industry and the general expectations of the Company concerning the cannabis industry are based on estimates prepared by the Company using data from 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 are described below.

With respect to the forward-looking statements contained in this Quarterly Report on Form 10-Q, 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 the Company operates; (iii) the output from the Company’s operations; (iv) consumer interest in the Company’s products; (v) competition in the cannabis industry; (vi) anticipated and unanticipated costs; (vii) government regulation of the Company’s activities and products; (viii) government regulation of licensing, taxation and environmental protection; (ix) the timely receipt of any required regulatory approvals; (x) the Company’s ability to obtain qualified staff, equipment and services in a timely and cost efficient manner; (xi) the Company’s ability to conduct operations in a safe, efficient and effective manner; and (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 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 relating to cannabis operations in the United States; and those discussed under Item 1A – “Risk Factors” in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on March 12, 2026. 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. 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. 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.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

TerrAscend Corp.

Unaudited Interim Condensed Consolidated Balance Sheets

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


	At			At
	June 30, 2026			December 31, 2025
Assets
Current assets
Cash and cash equivalents	$	42,026		$	37,414
Restricted cash		—			110
Accounts receivable, net		16,323			16,898
Investments		91			362
Inventory		39,179			34,054
Prepaid expenses and other current assets		15,844			8,557
Assets from discontinued operations, current		—			12,713
Total current assets		113,463			110,108
Non-current assets
Property and equipment, net		123,763			129,932
Deposits		—			60
Operating lease right of use assets		26,517			26,691
Intangible assets, net		175,337			167,310
Goodwill		113,892			109,770
Other non-current assets		733			13,508
Total non-current assets		440,242			447,271
Total assets	$	553,705		$	557,379

Liabilities and shareholders' equity
Current liabilities
Accounts payable and accrued liabilities	$	40,133		$	39,807
Deferred revenue		4,406			3,993
Convertible debt		—			10,355
Loans payable		14,049			5,322
Operating lease liability		1,119			1,511
Derivative liability		—			967
Corporate income tax payable		2,290			5,360
Liabilities from discontinued operations		—			12,616
Total current liabilities		61,997			79,931
Non-current liabilities
Loans payable		183,226			203,846
Operating lease liability		28,948			28,555
Derivative liability		14,688			2,221
Convertible debt		16,271			6,896
Deferred income tax liability		11,900			8,025
Liability on uncertain tax position		152,547			128,798
Other long-term liabilities		86			86
Total non-current liabilities		407,666			378,427
Total liabilities		469,663			458,358
Commitments and contingencies
Shareholders' equity
Share capital
Series A, convertible preferred stock, no par value, unlimited shares authorized; 10,725 and 10,725 shares outstanding as of June 30, 2026 and December 31, 2025, respectively		—			—
Series B, convertible preferred stock, no par value, unlimited shares authorized; 600 and 600 shares outstanding as of June 30, 2026 and December 31, 2025, respectively		—			—
Exchangeable shares, no par value, unlimited shares authorized; 63,492,038 and 63,492,038 shares outstanding as of June 30, 2026 and December 31, 2025, respectively		—			—
Common shares, no par value, unlimited shares authorized; 309,175,647 and 308,532,518 shares outstanding as of June 30, 2026 and December 31, 2025, respectively		—			—
Treasury stock, no par value; nil and nil shares outstanding as of June 30, 2026 and December 31, 2025, respectively		—			—
Additional paid in capital		959,974			960,241
Accumulated other comprehensive income		2,605			1,986
Accumulated deficit		(882,963	)		(864,742	)
Non-controlling interest		4,426			1,536
Total shareholders' equity		84,042			99,021
Total liabilities and shareholders' equity	$	553,705		$	557,379

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

TerrAscend Corp.

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 Six Months Ended
	June 30, 2026			June 30, 2025				June 30, 2026			June 30, 2025
Revenue, net	$	67,119		$	65,006			$	132,658		$	129,309

Cost of sales		30,869			31,771				61,806			61,393

Gross profit		36,250			33,235				70,852			67,916

Operating expenses:
General and administrative		22,852			20,980				44,349			42,129
Amortization and depreciation		1,285			1,284				2,833			2,573
Other operating expense		—			—				36			—
Total operating expenses		24,137			22,264				47,218			44,702

Income from operations		12,113			10,971				23,634			23,214

Other expense (income)
Finance and other expenses		8,810			8,747				18,135			17,082
Unrealized and realized loss (gain) on investments		271			(7	)			271			735
Loss (gain) on fair value of derivative liabilities		1,171			(279	)			(232	)		(376	)
(Gain) loss from revaluation of contingent consideration		—			(34	)			—			346
Unrealized and realized foreign exchange loss (gain)		333			(648	)			511			(607	)
Income from continuing operations before provision for income taxes		1,528			3,192				4,949			6,034
Provision for income taxes		11,587			9,598				21,837			20,105
Net loss from continuing operations	$	(10,059	)	$	(6,406	)		$	(16,888	)	$	(14,071	)

Discontinued operations:
Income (loss) from discontinued operations, net of tax	$	2,004		$	(41,701	)		$	828		$	(46,305	)
Net loss	$	(8,055	)	$	(48,107	)		$	(16,060	)	$	(60,376	)

Foreign currency translation adjustment		(317	)		854				(619	)		840
Comprehensive loss	$	(7,738	)	$	(48,961	)		$	(15,441	)	$	(61,216	)

Net loss from continuing operations attributable to:
Common and proportionate Shareholders of the Company	$	(11,165	)	$	(7,684	)		$	(19,050	)	$	(16,651	)
Non-controlling interests	$	1,106		$	1,278			$	2,162		$	2,580

Comprehensive loss attributable to:
Common and proportionate Shareholders of the Company	$	(8,844	)	$	(50,239	)		$	(17,603	)	$	(63,796	)
Non-controlling interests	$	1,106		$	1,278			$	2,162		$	2,580

Net (loss) income per share - basic & diluted:
Continuing operations	$	(0.04	)	$	(0.03	)		$	(0.06	)	$	(0.06	)
Discontinued operations		0.01			(0.14	)			—			(0.16	)
Net loss per share - basic & diluted	$	(0.03	)	$	(0.17	)		$	(0.06	)	$	(0.22	)
Weighted average number of outstanding common shares - basic & diluted		309,364,563			299,087,022				308,950,479			296,137,440

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

TerrAscend Corp.

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)


	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, 2025		308,532,518			63,492,038		10,725		600		384,974,760		$	960,241		$	1,986	$	(864,742	)	$	1,536		$	99,021
Shares issued - stock options, warrant and RSU exercises		7,116			—		—		—		7,116			—			—		—			—			—
Share-based compensation expense		—			—		—		—		—			885			—		—			—			885
Capital distributions		—			—		—		—		—			—			—		—			(1,188	)		(1,188	)
Repurchase of common stock, including excise tax		(115,000	)		—		—		—		(115,000	)		(77	)		—		—			—			(77	)
Derecognition of non-controlling interest		—			—		—		—		—			(1,610	)		—		—			1,610			—
Net (loss) income for the period		—			—		—		—		—			—			—		(9,060	)		1,056			(8,004	)
Foreign currency translation adjustment		—			—		—		—		—			—			302		—			—			302
Balance at March 31, 2026		308,424,634			63,492,038		10,725		600		384,866,876		$	959,439		$	2,288	$	(873,802	)	$	3,014		$	90,939
Shares issued - stock options, warrant and RSU exercises		1,214,513			—		—		—		1,214,513			20			—		—			—			20
Capital distributions		—			—		—		—		—			—			—		—			(1,375	)		(1,375	)
Capital contribution		—			—		—		—		—			—			—		—			1,681			1,681
Repurchase of common stock, including excise tax		(463,500	)		—		—		—		(463,500	)		(314	)		—		—			—			(314	)
Share-based compensation expense		—			—		—		—		—			829			—		—			—			829
Net (loss) income for the period		—			—		—		—		—			—			—		(9,161	)		1,106			(8,055	)
Foreign currency translation adjustment		—			—		—		—		—			—			317		—			—			317
Balance at June 30, 2026		309,175,647			63,492,038		10,725		600		385,617,889		$	959,974		$	2,605	$	(882,963	)	$	4,426		$	84,042


	Number of Shares
						Convertible Preferred Stock
	Common Shares			Exchangeable Shares		Series A			Series B		Common Shares Equivalent			Treasury Stock			Additional paid in capital			Accumulated other comprehensive income			Accumulated deficit			Non-controlling interest			Total
Balance at December 31, 2024		293,232,131			63,492,038		12,350			600		369,674,373			(129,500	)	$	952,463		$	3,011		$	(778,514	)	$	(144	)	$	176,816
Shares issued - stock options, warrant and RSU exercises		54,350			—		—			—		54,350			—			—			—			—			—			—
Share-based compensation expense		—			—		—			—		—			—			1,514			—			—			—			1,514
Capital distributions		—			—		—			—		—			—			—			—			—			(738	)		(738	)
Repurchase of common stock, including excise tax		(637,000	)		—		—			—		(637,000	)		129,500			(231	)		—			—			—			(231	)
Net (loss) income for the period		—			—		—			—		—			—			—			—			(13,571	)		1,302			(12,269	)
Foreign currency translation adjustment		—			—		—			—		—			—			—			14			—			—			14
Balance at March 31, 2025		292,649,481			63,492,038		12,350			600		369,091,723			—		$	953,746		$	3,025		$	(792,085	)	$	420		$	165,106
Shares issued - stock options, warrant and RSU exercises		354,950			—		—			—		354,950			—			—			—			—			—			—
Shares issued - acquisitions		4,570,637			—		—			—		4,570,637			—			1,278			—			—			—			1,278
Shares issued - conversion		1,500,000			—		(1,500	)		—		1,500,000			—			—			—			—			—			—
Shares issued - price protection adjustment		7,577,349			—		—			—		7,577,349			—			1,581			—			—			—			1,581
Repurchase of common stock, including excise tax		(535,000	)		—		—			—		(535,000	)		—			(146	)		—			—			—			(146	)
Share-based compensation expense		—			—		—			—		—			—			779			—			—			—			779
Capital distributions		—			—		—			—		—			—			—			—			—			(1,250	)		(1,250	)
Net loss for the period		—			—		—			—		—			—			—			—			(49,385	)		1,278			(48,107	)
Foreign currency translation adjustment		—			—		—			—		—			—			—			(854	)		—			—			(854	)
Balance at June 30, 2025		306,117,417			63,492,038		10,850			600		382,559,659			—		$	957,238		$	2,171		$	(841,470	)	$	448		$	118,387

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

TerrAscend Corp.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

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


	For the Six Months Ended
	June 30, 2026			June 30, 2025
Operating activities
Net loss from continuing operations	$	(16,888	)	$	(14,071	)
Adjustments to reconcile net loss to net cash provided by operating activities
Accretion and accrued interest		4,946			4,306
Depreciation of property and equipment and amortization of intangible assets		8,021			7,729
Amortization of operating right-of-use assets		730			805
Share-based compensation		1,714			2,293
Deferred income tax expense		484			597
Gain on fair value of derivative liabilities		(232	)		(376	)
Unrealized and realized loss on investments		271			735
Loss from revaluation of contingent consideration		—			346
Provision for expected credit loss		826			673
Unrealized and realized foreign exchange loss (gain)		511			(607	)
Impairment and other		36			(5	)
Changes in operating assets and liabilities
Receivables		(262	)		(511	)
Inventory		(5,128	)		4,580
Accounts payable and accrued liabilities		2,218			(5,046	)
Income taxes paid and tax related liabilities		20,439			16,862
Prepaid expense and other current assets		(1,322	)		79
Other assets and liabilities		(327	)		90
Net cash provided by operating activities - continuing operations		16,037			18,479
Net cash used in operating activities - discontinued operations		(971	)		(7,658	)
Net cash provided by operating activities		15,066			10,821

Investing activities
Investment in property and equipment		(2,504	)		(4,650	)
Investment in note receivable, net of interest received		103			123
Investment in intangible assets		(44	)		(726	)
Cash portion of consideration paid in acquisition, net of cash received		(3,722	)		(5,128	)
Refund of deposit for business acquisition		3,400			—
Deposit for business acquisition		(250	)		—
Net cash used in investing activities - continuing operations		(3,017	)		(10,381	)
Net cash provided by (used in) investing activities - discontinued operations		1,293			(737	)
Net cash used in investing activities		(1,724	)		(11,118	)

Financing activities
Proceeds from loan payable, net of transaction costs		—			5,000
Loan principal paid, including exit fees		(16,236	)		(1,966	)
Capital distributions paid to non-controlling interests		(2,563	)		(1,988	)
Payment for contingent consideration		—			(386	)
Proceeds from convertible debentures, net of issuance costs		18,967			—
Convertible debentures principal paid		(8,630	)		—
Proceeds from exercise of stock options		20			—
Repurchases of common shares		(391	)		(377	)
Net cash (used in) provided by financing activities - continuing operations		(8,833	)		283
Net cash used in financing activities - discontinued operations		(200	)		—
Net cash (used in) provided by financing activities		(9,033	)		283

Net increase (decrease) in cash and cash equivalents and restricted cash during the period		4,309			(14	)
Net effects of foreign exchange		193			(191	)
Cash and cash equivalents and restricted cash, beginning of the period		37,524			26,987
Cash and cash equivalents and restricted cash, end of the period	$	42,026		$	26,782

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

TerrAscend Corp.

Unaudited Interim Condensed Consolidated Statements of Cash Flows (Continued)

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


	For the Six Months Ended
	June 30, 2026			June 30, 2025
Supplemental disclosure with respect to cash flows
Cash (received) paid for Federal income tax, net	$	(3,790	)	$	2,794
Cash paid for State income tax, net
New Jersey		1,521			1,606
Maryland		2,132			61
Pennsylvania		—			—
Other		34			40
Total cash (received) paid for income tax, net	$	(103	)	$	4,501

Interest paid	$	17,081		$	13,266

Non-cash transactions
Note receivable issued as a noncontrolling interest contribution	$	1,681		$	—
Change in accrued capital expenditures	$	1,869		$	2,115

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

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)

1. Nature of operations

TerrAscend Corp. (the "Issuer") was incorporated under the Business Corporations Act (Ontario) on March 7, 2017. The Issuer, through its subsidiaries, including TerrAscend Growth Corp. (“TerrAscend”) and its subsidiaries (collectively, "the Company”), is a leading North American cannabis company. TerrAscend has vertically-integrated licensed operations in Pennsylvania, New Jersey, Maryland and California. In addition, the Company has retail operations in Ohio and Ontario, Canada with a majority-owned dispensary in Toronto, Ontario, Canada. In the United States, TerrAscend’s cultivation and manufacturing provide product selection to both the medical and legal adult-use markets. Notwithstanding the fact that various states in the United States have implemented medical marijuana laws or have otherwise legalized the use of cannabis, the use of cannabis remains illegal under United States ("United States" or "U.S.") federal law for any purpose, by way of the Controlled Substances Act of 1970.

The Company operates under three state-level reportable segments consisting of New Jersey, Maryland and Pennsylvania, focused on the production and sale of cannabis products. Operations in other states are presented within All other segments.

The Company owns a portfolio of operating businesses, including:

•

TerrAscend New Jersey (“TerrAscend NJ”), a majority-owned operation with four dispensaries, and a cultivation/processing facility;

•

TerrAscend Maryland (“TerrAscend MD”), a wholly-owned operation with four dispensaries, and a cultivation/processing facility;

•

TerrAscend Pennsylvania (“TerrAscend PA”), a wholly-owned operation with six dispensaries, and a cultivation/processing facility;

•

TerrAscend California (“TerrAscend CA”), a wholly-owned operation with four dispensaries, and a cultivation facility;

•

TerrAscend Ohio ("TerrAscend OH"), a cannabis retailer in New Philadelphia, Ohio with one wholly-owned dispensary; and

•

TerrAscend Canada Inc. (“TerrAscend Canada”), a cannabis retailer in Toronto, Ontario, Canada with a majority-owned dispensary.

The common shares in the capital of the Company ("Common Shares") commenced trading on the Canadian Securities Exchange on May 3, 2017 under the ticker symbol "TER" and continued trading on the CSE until the listing of the Common Shares on the Toronto Stock Exchange (the "TSX"). Effective July 4, 2023, the Common Shares commenced trading on the TSX under the ticker symbol "TSND". The Common Shares commenced trading on the OTCQX in the United States on October 22, 2018 under the ticker symbol "TRSSF", which was subsequently changed to "TSNDF", effective July 6, 2023. The Company’s registered office is located at 77 City Centre Drive, Suite 501, Mississauga, Ontario, L5B 1M5, Canada.

Summary of significant accounting policies

(a)

Basis of presentation

These unaudited interim condensed consolidated financial statements included herein (the “Consolidated Financial Statements”) of the Company and its subsidiaries were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

The accompanying Consolidated Financial Statements contained in this report are unaudited. In the opinion of management, these Consolidated Financial Statements have been prepared on the same basis as the annual consolidated financial statements and notes thereto of the Company and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of the Company’s financial position and operating results. The results for the three and six months ended June 30, 2026 are not necessarily indicative of the operating results for the year ended December 31, 2026, or any other interim or future periods.

The accompanying Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and notes thereto of the Company for the year ended December 31, 2025 contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the Securities and Exchange Commission (the "SEC") on March 12, 2026 (the "Annual Report").

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)

Certain prior period amounts, primarily related to discontinued operations, have been reclassified in the Consolidated Financial Statements and accompanying notes to conform to the current period presentation. Unless otherwise noted, amounts and disclosures throughout these notes to the Consolidated Financial Statements relate solely to continuing operations and exclude all discontinued operations. See Note 7 for additional information.

There were no significant changes to the policies disclosed in Note 2 of the summary of significant accounting policies of the Company’s audited consolidated financial statements for the year ended December 31, 2025 in the Company's Annual Report.

Consolidation

The Company consolidates entities in which it has a controlling financial interest by evaluating whether the entity is a voting interest entity (“VOE”) or a variable interest entity (“VIE”).

In connection with the listing of its Common Shares on the TSX, the Company undertook a strategic reorganization of its ownership structure (the “2023 Reorganization”) to align with TSX regulatory requirements regarding U.S. based operations, in accordance with the TSX's Staff Notice 2017-0009. Specifically, the 2023 Reorganization was designed to separate the Company’s Canadian retail operations from its U.S. cultivation and manufacturing businesses in a manner that supports compliance with applicable listing standards while preserving the Company’s ability to consolidate the financial results of its U.S. operations under U.S. GAAP. Following the completion of the 2023 Reorganization, the Company holds a 95% equity interest in its Canadian retail business and maintains a variable interest in its U.S. operations, which are consolidated through a VIE model. The Company continues to consolidate both operations under two distinct consolidation models in accordance with ASC 810, Consolidation ("ASC 810").

Subsequent to the 2023 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").

Voting Interest Entities

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.

The Company’s Canadian retail operations are conducted through a subsidiary that is 95% owned by TerrAscend Canada, a wholly owned subsidiary of the Issuer. These operations are consolidated under the VOE model based on the controlling financial interest obtained through Common Shares with substantive voting rights. The remaining Canadian subsidiaries are either wholly owned or majority owned, and are not currently engaged in active operations.

Variable Interest Entities

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 2023 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

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)

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 of TerrAscend in accordance with ASC 810. Although the Company does not currently hold Class A Shares, the Non-Voting Shares are exchangeable at the Company’s discretion and represent substantially all of the economic interest in the VIE. The investor’s Class A Shares provide only a fixed annual return and do not participate in the residual economics of the VIE, in accordance with the Protection Agreement, which supports the Company’s conclusion that it is the primary beneficiary of TerrAscend.

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.

Accounts receivable, net

The Company's accounts receivable, net consisted of the following:


	June 30, 2026			December 31, 2025
	(In thousands)
Trade receivables	$	17,844		$	16,962
Sales tax receivable		54			1,156
Other receivables		1,023			599
Provision for current expected credit losses		(2,598	)		(1,819	)
Total receivables, net	$	16,323		$	16,898

The following table presents the aging of trade receivables:


	June 30, 2026			December 31, 2025
	(In thousands)
Trade receivables	$	17,844		$	16,962
Less: provision for current expected credit losses		(2,598	)		(1,819	)
Total trade receivables, net	$	15,246		$	15,143

Of which
Current		11,335			12,214
31-90 days		2,338			1,761
Over 90 days		4,171			2,987
Less: current expected credit losses		(2,598	)		(1,819	)
Total trade receivables, net	$	15,246		$	15,143

Acquisitions

2026 Acquisitions

Union Chill

On January 2, 2026 (the "Union Chill Acquisition Date"), the Company acquired a 35% interest in Union Chill Cannabis Company LLC ("Union Chill"), a licensed cannabis operator, expanding its operational footprint in New Jersey. The Company obtained a transferable option to acquire the remaining 65% interest in Union Chill at a nominal exercise price and entered into a series of agreements granting the Company certain protective rights. As a result, the Company determined that it became the primary beneficiary of Union Chill under ASC 810 and began consolidating Union Chill as a VIE as at January 2, 2026. The fair value of the non‑controlling interest of the prior owners was determined to be nominal, as all economics flow to the Company through contractual arrangements, leaving no residual economic interest with the prior owners. Subsequent to the acquisition, substantially all earnings are attributed to the Company. The total fair value consideration transferred in connection with the acquisition was $13,451. The fair value consideration was comprised of: (i) $4,000 in cash with a working capital adjustment of $451 and (ii) $9,000 of convertible promissory

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)

notes bearing interest at a rate of 6.5% per annum and maturing on December 26, 2029. For additional information regarding the convertible notes, see Note 12.

The following table represents the fair value of assets acquired and liabilities assumed as of the Union Chill Acquisition Date and allocation of the consideration to net assets acquired:


	(In thousands)
Cash and cash equivalents	$	780
Accounts receivable, net		169
Inventory		339
Prepaid expenses and other current assets		201
Operating right of use asset		991
Property and equipment		684
Intangible assets		11,300
Goodwill		4,122
Accounts payable and accrued liabilities		(580	)
Deferred revenue		(174	)
Operating lease liability		(991	)
Deferred tax liability		(3,390	)
Net assets acquired	$	13,451

Consideration paid in cash	$	4,000
Convertible debt		9,000
Working capital adjustment		451
Total consideration	$	13,451

The acquired intangible assets include a license, which is treated as a definite lived intangible asset and amortized over a 30-year period.

The consideration paid reflected the synergies, economies of scale, and workforce. These benefits were not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets. None of the goodwill recognized is expected to be deductible for income tax purposes.

The accounting for this acquisition has been provisionally determined at June 30, 2026. The fair value of net assets acquired, specifically with respect to intangible assets, goodwill, property and equipment, and deferred tax liabilities have been determined provisionally and are subject to adjustment. Upon completion of a comprehensive valuation and finalization of the purchase price allocation, the amounts above may be adjusted retrospectively to the acquisition date during the measurement period.

During the three months ended June 30, 2026, the Company recorded the following measurement period adjustments to the provisional purchase price allocation based on additional information obtained about facts and circumstances that existed as of the acquisition date. The more significant adjustments, which resulted in a corresponding change to goodwill, were as follows:

•

An increase to property and equipment in the amount of $670.

•

A decrease to intangible assets in the amount of $400.

•

An increase to deferred tax liability in the amount of $3,390.

•

An increase to the working capital adjustment in the amount of $451, which increased the total fair value consideration transferred.

Costs related to this transaction were $222, including legal, accounting, due diligence, and other transaction-related expenses. There were no transaction costs recognized during the three months ended June 30, 2026. The Company recognized $39 of transaction costs during the six months ended June 30, 2026, and the remaining costs were recognized during 2025.

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 transaction was completed on the first business day of the fiscal year; therefore, the unaudited pro forma information is not materially different from the reported amounts. Total sales and net income since the Union Chill Acquisition Date are $5,922 and $802, respectively.

Inventory

The Company’s inventory of cannabis and cannabis derived products includes both purchased and internally produced inventory and is comprised of the following items:


	June 30, 2026		December 31, 2025
	(In thousands)
Raw materials	$	713	$	753
Finished goods		20,270		15,514
Work in process		15,014		15,535
Accessories, supplies and consumables		3,182		2,252
Total inventory	$	39,179	$	34,054

Discontinued operations

TerrAscend Michigan

In June 2025, the Company committed to a plan to exit the Michigan market (the "Michigan Exit"). The Company determined that its decision to exit the Michigan market was considered a strategic shift that would have a major effect on the Company’s operations and financial results and met the criteria for classification as discontinued operations as of June 30, 2025.

In connection with the above, on May 5, 2026, the FG Agency Lending LLC, as the administrative agent under the FG Loan Agreement (as defined below), filed an application for receivership under the laws of the State of Michigan in the Oakland County Circuit Court (the “Court”), and each of the following entities related to the Michigan business: WDB Holding MI, Inc., AEY Capital LLC, AEY Holdings, LLC, Thrive Enterprises LLC, Spartan Partners Corporation, Spartan Partners Services LLC, Spartan Partners Licensing LLC, Spartan Partners Holdings, LLC and Spartan Partners Properties LLC (the “Michigan Receivership Entities”) have stipulated to the appointment of a receiver (“Receiver”) which was approved by the Court on May 6, 2026 (the “Michigan Receivership”).

As a result of the Receiver’s authority, in accordance with ASC 810, the Company concluded that it lost control of the Michigan Receivership Entities on May 6, 2026 and deconsolidated such entities as of that date. Upon deconsolidation, the Company derecognized the assets and liabilities of the Michigan Receivership Entities and recognized a gain on deconsolidation of $2,377, which is included in income from discontinued operations, net of tax for the three and six months ended June 30, 2026.

In connection with the deconsolidation and in accordance with ASC 810, the Company recognized a retained economic interest of $7,787. The retained economic interest was recognized at fair value in accordance with ASC 825, Financial Instruments, representing the estimated net proceeds from certain Michigan property disposals expected to be remitted to FG Agency Lending LLC, as administrative agent and applied as a prepayment of the FG Loan (as defined below in Note 10). Although the Company will not receive the proceeds directly in cash, the required application of such proceeds will reduce the Company’s outstanding obligation under the FG Loan Agreement (as defined below in Note 10). The FG Loan principal will be reduced when proceeds are remitted to the Agent (as defined below in Note 10) and applied as a prepayment. The retained economic interest is included in other assets on the Company's unaudited interim condensed consolidated balance sheets (the "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)

The following table summarizes the major classes of assets and liabilities of TerrAscend MI as of June 30, 2026 and December 31, 2025:


	June 30, 2026		December 31, 2025
	(In thousands)
Current assets from discontinued operations
Accounts receivable, net	$	—	$	39
Prepaid expenses and other current assets		—		454
Property and equipment, net		—		6,222
Operating lease right of use assets		—		5,998
Total current assets from discontinued operations	$	—	$	12,713

Current liabilities from discontinued operations
Accounts payable and accrued liabilities	$	—	$	3,636
Operating lease liability		—		6,342
Finance lease liability		—		1,923
Other liabilities		—		715
Total current liabilities from discontinued operations	$	—	$	12,616

The following table presents the results of operations of TerrAscend MI for the three and six months ended June 30 2026 and 2025:


	For the Three Months Ended						For the Six Months Ended
	June 30, 2026			June 30, 2025			June 30, 2026			June 30, 2025
	(In thousands)						(In thousands)
Revenue, net	$	—		$	6,190		$	—		$	12,883

Cost of Sales		—			4,307			—			8,878

Gross profit		—			1,883			—			4,005

Operating expenses:
General and administrative		274			7,089			901			12,320
Amortization and depreciation		—			566			—			1,040
Impairment of property and equipment		—			34,959			72			34,959
Other operating expense (income)		89			57			284			57
Total operating expenses		363			42,671			1,257			48,376

Other expense (income)
Finance and other expenses		10			46			52			127
Gain on deconsolidation		(2,377	)		—			(2,377	)		—
Income (loss) from discontinued operations before provision for income taxes		2,004			(40,834	)		1,068			(44,498	)
Provision for income taxes		—			867			240			1,807
Net income (loss) from discontinued operations, net of tax	$	2,004		$	(41,701	)	$	828		$	(46,305	)

During the three and six months ended June 30, 2026, the Company incurred $66 and $114, respectively, of restructuring costs. Total cumulative restructuring costs incurred in connection with the Michigan Exit were $720 as of June 30, 2026, consisting of costs related to employee transition, notice period and severance payments, and employee benefits. The Company does not expect to incur additional restructuring costs related to the Michigan Exit.

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)

Property and equipment

Property and equipment consisted of:


	June 30, 2026			December 31, 2025
	(In thousands)
Land	$	3,235		$	3,580
Assets in process		3,238			289
Buildings & improvements		133,100			138,443
Machinery & equipment		26,490			25,338
Office furniture & equipment		4,717			4,710
Total cost		170,780			172,360
Less: accumulated depreciation		(47,017	)		(42,428	)
Property and equipment, net	$	123,763		$	129,932

Assets in process primarily represent construction in progress related to both cultivation and dispensary facilities not yet completed, or otherwise not placed in service.

Depreciation expense was $2,338 and $4,702 for the three and six months ended June 30, 2026, respectively, ($1,933 and $3,863 included in cost of sales) and $2,239 and $4,638 for the three and six months ended June 30, 2025, respectively, ($1,840 and $3,837 included in cost of sales).

Intangible assets and goodwill

Intangible assets consisted of the following:


At June 30, 2026	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(In thousands)
Definite lived intangible assets
Software	$	2,796	$	(2,344	)	$	452
Licenses		184,247		(32,784	)		151,463
Non-compete agreements		280		(280	)		—
Total definite lived intangible assets		187,323		(35,408	)		151,915
Indefinite lived intangible assets
Brand intangibles		23,422		—			23,422
Total indefinite lived intangible assets		23,422		—			23,422
Intangible assets, net	$	210,745	$	(35,408	)	$	175,337


At December 31, 2025	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(In thousands)
Definite lived intangible assets
Software	$	2,797	$	(1,730	)	$	1,067
Licenses		172,906		(30,085	)		142,821
Non-compete agreements		280		(280	)		—
Total definite lived intangible assets		175,983		(32,095	)		143,888
Indefinite lived intangible assets
Brand intangibles		23,422		—			23,422
Total indefinite lived intangible assets		23,422		—			23,422
Intangible assets, net	$	199,405	$	(32,095	)	$	167,310

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)

Amortization expense was $1,543 and $3,319 for the three and six months ended June 30, 2026, respectively, ($661 and $1,323 included in cost of sales) and $1,545 and $3,085 for the three and six months ended June 30, 2025, respectively, ($660 and $1,319 included in cost of sales)

Estimated future amortization expense for finite lived intangible assets for the next five years is as follows:


	(In thousands)
2026	$	3,560
2027		6,980
2028		6,930
2029		6,816
2030		6,621
Thereafter		121,008
Total	$	151,915

As of June 30, 2026, the weighted average amortization period remaining on intangible assets was 22.4 years.

The following table summarizes the activity in the Company’s goodwill balance:


	(In thousands)
Balance at December 31, 2025	$	109,770
Additions at acquisition date		4,122
Balance at June 30, 2026	$	113,892

10.

Loans payable

The Company's loans payable consisted of the following:


	June 30, 2026			December 31, 2025
	(In thousands)
Ratio promissory note due May 2027
Principal amount	$	3,980		$	3,980
Deferred financing cost		(175	)		(279	)
Net carrying amount	$	3,805		$	3,701

Blue Ridge promissory note due June 2027
Principal amount	$	2,583		$	2,758
Unamortized discount		(131	)		(208	)
Net carrying amount	$	2,452		$	2,550

FocusGrowth loan due August 2028
Principal amount	$	202,092		$	217,682
Unamortized discount and deferred financing cost		(14,637	)		(17,621	)
Exit fee accretion		2,536			1,824
Net carrying amount	$	189,991		$	201,885

Other loans	$	1,027		$	1,032
Total debt, net	$	197,275		$	209,168

Loans payable, current		14,049			5,322
Loans payable, non-current		183,226			203,846

Total principal	$	209,682		$	225,452

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 had accrued interest on loans payable of $2,364 and $2,365 as of June 30, 2026 and December 31, 2025, respectively, included in accounts payable and accrued liabilities on the Consolidated Balance Sheets.

FocusGrowth Term Loan

On August 1, 2024, the Company, as guarantor, TerrAscend USA, Inc. and certain subsidiaries and affiliates of the Company, as borrowers, the lenders party thereto and FG Agency Lending LLC, as administrative agent for the lenders, entered into a Loan Agreement, dated as of August 1, 2024, which provided for a four-year $140,000 senior secured term loan that was upsized on July 8, 2025 by $79,000 to $219,000 (the “FG Loan” and, such Loan Agreement, as previously amended, the “FG Loan Agreement”). The FG Loan bears interest at 12.75% per annum with a maturity date of August 1, 2028 (the "FG Loan Maturity Date"). The FG Loan is guaranteed by the Issuer and is secured by substantially all of the assets of the Borrowers. Depending on the timing of repayment, an exit fee of between 2.0% and 4.0% of the FG Loan (the "Exit Fee") will be due upon either the prepayment, in part or in full, of the FG Loan or the FG Loan Maturity Date.

The FG Loan Agreement also provides for an uncommitted term loan facility of up to $35,000 (the "Uncommitted Term Loan Facility"). The terms of the Uncommitted Term Loan Facility are consistent with the FG Loan. As of June 30, 2026, the Company has drawn $3,105 of the Uncommitted Term Loan Facility with a remaining availability of $31,895.

During the six months ended June 30, 2026, the Company made aggregate prepayments of $15,590 on the FG Loan, including applicable 3% prepayment fees.

Blue Ridge Promissory Note

In connection with the acquisition of Hempaid, LLC on June 30, 2023 ("Blue Ridge") the Company entered into a promissory note with Blue Ridge bearing interest at 7.0% with a maturity date of June 30, 2027.

Ratio Promissory Note

In connection with the acquisition of the assets of Ratio Cannabis, LLC on May 7, 2025 ("Ratio") the Company entered into a promissory note with Ratio bearing interest at 6.0% with a maturity date of May 7, 2027.

Other Loans

Class A Shares of TerrAscend Growth

In connection with the 2023 Reorganization (see Note 3), 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 repurchase right. In addition, the Investor holds a put right that is exercisable at any time after four months’ advanced written notice following June 28, 2028 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.

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)

Maturities of loans payable

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


	June 30, 2026
	(In thousands)
2026	$	548
2027		6,024
2028 (1)		203,099
2029		7
2030		4
Thereafter		—
Total principal payments	$	209,682

(1) Balance excludes the Exit Fee, as described above within this note.

The Company is subject to a financial covenant as a result of its loan payable with its primary lender. The Company was in compliance with its financial covenant as of June 30, 2026. In the event that, in future periods, the Company’s financial results are below levels required to maintain compliance with any of its covenant, the Company will assess and undertake appropriate corrective initiatives with a view to allowing it to continue to comply with its covenant.

11.

Leases

The majority of the Company’s leases are operating leases used primarily for corporate offices and retail. The operating lease periods generally range from 1 to 24 years. The Company had no finance leases at June 30, 2026 and December 31, 2025.

Amounts recognized in the Consolidated Balance Sheets were as follows:


	June 30, 2026		December 31, 2025
	(In thousands)
Operating leases:
Operating lease right-of-use assets	$	26,517	$	26,691

Operating lease liability classified as current		1,119		1,511
Operating lease liability classified as non-current		28,948		28,555
Total operating lease liabilities	$	30,067	$	30,066

The Company recognized operating lease expense of $1,194 and $2,401 for the three and six months ended June 30, 2026, respectively, and $1,254 and $2,478 for the three and six months ended June 30, 2025, respectively.

Other information related to operating leases at June 30, 2026 and December 31, 2025 consisted of the following:


	June 30, 2026			December 31, 2025
Weighted-average remaining lease term (years)
Operating leases		12.6			13.0

Weighted-average discount rate
Operating leases		11.35	%		11.32	%

Supplemental cash flow information related to leases are as follows:


	June 30, 2026		December 31, 2025
	(In thousands)
Cash paid for amounts included in measurement of operating lease liabilities	$	2,250	$	4,823
Right-of-use assets obtained in exchange for operating lease obligations		1,010		2,790

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:


	June 30, 2026
	(In thousands)
2026	$	2,173
2027		4,433
2028		4,510
2029		4,614
2030		4,285
Thereafter		38,688
Total lease payments		58,703
Less: interest		(28,636	)
Total lease liabilities	$	30,067

12.

Convertible Debt

The Company’s existing senior unsecured convertible debentures had an aggregate principal balance of $10,355, of which $10,105 matured on June 23, 2026 with $334 of principal and accrued interest maturing in August 2026. Of the principal that matured on June 23, 2026, certain holders elected to roll over $1,475 into the 2026 Private Placement Convertible Debentures. The $11,124 paid consisted of $8,630 of principal and $2,494 of accrued interest.

The 2026 Private Placement Convertible Debentures mature on September 30, 2031 (the “Maturity Date”) and bear interest at a rate of 8.00% per annum, payable quarterly in arrears in cash, beginning on September 30, 2026. The Company may elect to pay all or any portion of such interest in kind by capitalizing the interest as additional principal (“PIK Interest”). Any PIK Interest will accrue at a rate of 9.00% per annum for the first four interest periods in which PIK Interest is paid and at 10.00% per annum for each additional interest period in which PIK Interest is paid; provided that any Common Shares that are issuable upon conversion of any PIK Interest added to the principal pursuant to the terms of the 2026 Private Placement Convertible Debentures will be subject to TSX approval. The 2026 Private Placement Convertible Debentures are convertible, in whole or in part, into Common Shares, at the option of the holder, at any time prior to the close of business on the last business day immediately preceding the Maturity Date, at a conversion price of $0.87 per Common Share. The 2026 Private Placement Convertible Debentures are secured by a second lien on certain assets of the U.S. business and also secured by certain personal property assets of TerrAscend USA, Inc. under a subordinated guaranty and security agreement.

In accordance with ASC 815, Derivatives and Hedging, the conversion option was bifurcated from the host instrument as the instrument's strike price is denominated in a currency other than the functional currency of the Issuer. It was recorded at fair value, using the Black-Scholes Option Pricing Model (the "Black-Scholes Model") (see Note 22). The proceeds are allocated first to the conversion option based on its fair value of $11,737, and the residual was allocated to the host instrument and recorded as convertible debt at a residual value of $8,815, net of transaction costs.

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 following table summarizes the Company’s 2026 Private Placement Convertible Debentures activity for the period ended June 30, 2026:


	June 30, 2026			December 31, 2025
	(In thousands)
Convertible debt issued in private placement - Maturing September 30, 2031	$	21,835		$	—
Transaction costs		(1,283	)		—
Allocation to conversion option		11,737			—
Allocation to debt		8,815			—
Interest and accretion		18			—
Net carrying amount	$	8,833		$	—

The following table summarizes the Company's convertible promissory note in connection with the acquisition of Union Chill ("Union Chill Convertible Promissory Note") activity for the period ended June 30, 2026:


	June 30, 2026		December 31, 2025
	(In thousands)
Convertible debt issued as acquisition consideration - Maturing December 2029	$	9,000	$	9,000
Allocation to conversion option		2,104		2,104
Allocation to debt		6,896		6,896
Interest and accretion		208		—
Net carrying amount	$	7,104	$	6,896

The Company had accrued interest on convertible debt of $182 and $2,171 as of June 30, 2026 and December 31, 2025, respectively, included in accounts payable and accrued liabilities on the Consolidated Balance Sheets.

13.

Shareholders' equity

Share Repurchase Authorization

On August 20, 2025, the Board approved a program to repurchase up to $10,000 of Common Shares (the "Share Repurchase Program"), which replaced the Company's share repurchase program previously in place (the "Original Program"). The Share Repurchase Program authorizes the Company to repurchase up to 10,000,000 Common Shares of the Company at any time, or from time to time, from August 22, 2025 until August 21, 2026. The Share Repurchase Program authorizes the Company to repurchase up to 60,255 Common Shares daily, which represents 25% of the Company’s average daily trading volume on the TSX of 241,023 Common Shares. Any repurchases under the program may be made by means of open market transactions, negotiated block transactions, or otherwise, including pursuant to a repurchase plan administered in accordance with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended. The size and timing of any repurchases will depend on price, market and business conditions, and other factors.

As of June 30, 2026, the Company had a total of 9,346,500 Common Shares authorized for repurchase under the Share Repurchase Program. The following is a summary of the Common Shares that were repurchased for the three and six months ended June 30, 2026 and 2025 under the Share Repurchase Program and the Original Program:


	For the Three Months Ended				For the Six Months Ended
	June 30, 2026		June 30, 2025		June 30, 2026		June 30, 2025
	(In thousands, except per share data)
Total Common Shares repurchased		463,500		535,000		578,500		1,042,500
Common Shares canceled		463,500		535,000		578,500		1,172,000
Weighted average price per share	$	0.67	$	0.29	$	0.67	$	0.37
Total cost	$	315	$	139	$	391	$	360
Excise tax (1)	$	3	$	7	$	4	$	17

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)

(1) The excise tax accrued in connection with the share repurchases was recorded as an adjustment to the cost basis of repurchased shares in treasury stock and within accrued expenses on the Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025, as applicable.

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, 2025		23,253,480		779,352	$	4.34		6.80
Granted		—		—		—		—
Expired		—		—		—		—
Outstanding, June 30, 2026		23,253,480		779,352	$	4.18		6.31

14.

Share-based compensation plans

Share-based payments expense

Total share-based payments expense was as follows:


	For the Three Months Ended					For the Six Months Ended
		June 30, 2026		June 30, 2025			June 30, 2026		June 30, 2025
		(In thousands)
Stock options		$	440	$	746		$	1,100	$	1,586
Restricted share units			389		33		$	614		707
Total share-based payments		$	829	$	779		$	1,714	$	2,293

Stock Options

The following table summarizes the stock option activity for the six months ended June 30, 2026:


	Number of Stock Options			Weighted average remaining contractual life (in years)		Weighted Average Exercise Price (per share) $		Aggregate intrinsic value
Outstanding, December 31, 2025		13,903,573			5.32	$	2.86	$	368
Granted (1)		9,087,403			—		0.34		—
Exercised		(77,860	)		—		0.26		—
Forfeited (1)		(7,675,999	)		—		3.09		—
Expired		(1,099,391	)		—		5.15		—
Outstanding, June 30, 2026		14,137,726			5.70	$	0.95	$	3,368

Exercisable, June 30, 2026		10,092,220			4.46	$	1.14	$	2,438

(1) Includes options that were canceled and re-granted as part of the repricing of stock options, as further discussed below.

Repricing of Stock Options

On June 24, 2025, the Board approved a repricing of certain outstanding stock options, subject to the holders satisfying a twelve-month service condition. The modification affected 8,279,003 vested and unvested stock options and, in accordance with ASC 718, Stock-Based Compensation, resulted in incremental compensation cost of $868. Upon satisfaction of the service condition, the repricing became effective on June 24, 2026, and the exercise price of the modified stock options was reduced to $0.26 per Common

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)

Share. The incremental compensation cost was recognized over the requisite service period, and as of June 30, 2026, the Company had fully recognized the incremental compensation cost associated with the option modification.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between Company’s closing stock price on June 30, 2026 and December 31, 2025, respectively, and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they exercised their in-the-money options on June 30, 2026 and December 31, 2025, respectively.

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


	June 30, 2026			June 30, 2025
Volatility	93.26% - 101.89%			75.76% - 79.89%
Risk-free interest rate	3.73% - 4.25%			3.86% - 4.12%
Expected life (years)	5.32 - 6.25			4.87 - 6.25
Dividend yield		0.00	%		0.00	%

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 U.S. treasury bond issues with a remaining term approximately equal to the expected life of the options. Dividend yield reflects 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 six months ended June 30, 2026 and 2025 was $1,482 and $2,837, respectively. As of June 30, 2026, total unrecognized compensation cost related to unvested options was $2,210, which is expected to be recognized over a weighted-average period of 2.65 years.

Restricted Share Units

The following table summarizes the activities for the RSUs for the six months ended June 30, 2026:


	Number of RSUs
Outstanding, December 31, 2025		5,029,315
Granted		4,593,006
Vested		(1,347,744	)
Forfeited		(192,794	)
Outstanding, June 30, 2026		8,081,783

As of June 30, 2026, total unrecognized compensation cost related to unvested RSUs was $4,538, which is expected to be recognized over a weighted-average period of 3.20 years.

15.

Non-controlling interest

Non-controlling interest consists mainly of a 12.5% minority ownership interest in TerrAscend NJ. During the six months ended, June 30, 2026, in connection with the acquisition of Union Chill (see Note 5), there was a $1,681 capital contribution in the form of a note receivable in relation to minority ownership interest in TerrAscend NJ.

The following table summarizes the non-controlling interest activity for the six months ended June 30, 2026:


	June 30, 2026			December 31, 2025
	(In thousands)
Opening carrying amount	$	1,536		$	(144	)
Capital contribution		1,681			—
Capital distributions		(2,563	)		(3,237	)
Derecognition of non-controlling interest		1,610			20
Net income attributable to non-controlling interest		2,162			4,897
Ending carrying amount	$	4,426		$	1,536

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)

16.

Related parties

Parties are related if one party has the ability, directly or indirectly, to control or exercise significant influence over the other party in making financing and operating decisions. As of June 30, 2026, certain funds controlled by the Company's Executive Chairman, a related party of the Company, invested $1,600 as members of the loan syndicate, for an aggregate investment of $7,100 of the total loan principal balance of the FG Loan (see Note 10). In addition, during the six months ended June 30, 2026, a director of the Company participated in the 2026 Private Placement by acquiring 1,000 convertible debentures for aggregate gross proceeds of $1,000 (see Note 12).

17.

Income taxes

The Company's effective tax rate was 758% and 441% for the three and six months ended June 30, 2026, respectively, and 301% and 333% for the three and six months ended June 30, 2025, respectively.

The Company has computed its provision for income taxes based on the actual effective tax rate for the quarter as the Company believes this is the best estimate for the annual effective tax rate. The Company is subject to income taxes in the United States and Canada.

Significant judgment is required in evaluating the Company’s uncertain tax positions and determining the provision for income taxes. The Company recognizes benefits from uncertain tax positions based on the cumulative probability method whereby the largest benefit with a cumulative probability of greater than 50% is recorded. An uncertain tax position is not recognized if it has less than a 50% likelihood of being sustained.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the period presented:


	June 30, 2026		December 31, 2025
	(In thousands)
Balance at beginning of year	$	177,047	$	148,979
Increase based on tax positions related to current periods		20,991		39,970
Increase based on tax positions related to prior periods		—		4,095
Settlements with tax authorities		—		(15,997	)
Balance at end of year	$	198,038	$	177,047

A reconciliation of the beginning and ending amount of uncertain tax liabilities, inclusive of accruals for related penalties and interest, for the period presented:


	June 30, 2026		December 31, 2025
	(In thousands)
Balance, beginning of year	$	128,798	$	106,991
Reductions based on tax positions related to prior years		—		(15,212	)
Additions based on tax positions related to prior years		5,639		9,842
Additions based on tax positions related to current year		14,400		27,177
Additions based on refunds received related to prior years		3,710		—
Ending carrying amount (1)	$	152,547	$	128,798

(1) Interest and penalties related to uncertain tax liabilities are recorded as components of the provision for income taxes. As of June 30, 2026 and December 31, 2025, the Company had interest and penalties accrued of $26,190 and $19,803, respectively.

The increase in uncertain tax positions is primarily due to legal interpretations that challenge the application of Section 280E of the Internal Revenue Code of 1986, as amended, to the Company (“280E Tax Position”). The Company believes it is reasonably possible that the unrecognized tax benefits will increase over the next twelve months due to its 280E Tax Position.

The Company files income tax returns in the U.S. federal jurisdiction, multiple U.S. state jurisdictions, and certain non-U.S. jurisdictions. The Company and its subsidiaries are subject to examination by various U.S. and non-U.S. taxing authorities. The Company is no longer subject to U.S. federal, state, or non-U.S. income tax examinations for tax years prior to 2022, other than items

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)

under examination. The Company is currently under examination by the Internal Revenue Service for U.S. federal income tax years 2021 through 2023. On April 6, 2026, the Company received correspondence from the U.S. Department of Justice ("DOJ") related to a federal income tax refund previously received by the Company for the 2020 tax year. The correspondence seeks repayment of approximately $9,533, inclusive of estimated interest of $1,172. On or about May 18, 2026, the United States of America filed a complaint to recover an erroneous refund in the United States District Court for the District of New Jersey. The Company is evaluating the matter, believes it has substantive defenses to the assertions raised, and intends to vigorously defend its position. Based on information currently available, the recent rescheduling of medical cannabis, and in consultation with external legal and tax advisors, the Company believes the likelihood of loss is not probable and, accordingly, no liability has been recorded as of June 30, 2026.

18.

General and administrative expenses

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


	For the Three Months Ended				For the Six Months Ended
	June 30, 2026		June 30, 2025			June 30, 2026		June 30, 2025
	(In thousands)
Salaries and wages	$	13,320	$	12,086		$	25,866		24,061
Office and general		2,416		2,706			5,061		5,281
Professional fees		2,193		2,244			3,854		4,395
Sales and marketing		1,579		888			3,102		1,679
Lease expense		1,187		1,179			2,344		2,333
Share-based compensation		829		779			1,714		2,293
Facility and maintenance		545		507			1,187		1,016
Provision for expected credit losses		587		193			826		673
Board of directors cash compensation		196		398			395		398
Total	$	22,852	$	20,980		$	44,349	$	42,129

19.

Revenue, net

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


	For the Three Months Ended					For the Six Months Ended
		June 30, 2026		June 30, 2025			June 30, 2026		June 30, 2025
		(In thousands)
Retail		$	46,906	$	43,665		$	93,313	$	84,497
Wholesale			20,213		21,341			39,345		44,812
Total		$	67,119	$	65,006		$	132,658	$	129,309

For the three and six months ended June 30, 2026 and 2025, the Company did not have any single customer that accounted for 10% or more of the Company’s revenue.

20.

Finance and other expenses

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


	For the Three Months Ended							For the Six Months Ended
		June 30, 2026			June 30, 2025				June 30, 2026			June 30, 2025
		(In thousands)
Interest		$	7,212		$	6,960			$	14,634		$	13,643
Accretion			2,135			2,002				4,466			3,740
Other income			(537	)		(215	)			(965	)		(301	)
Total		$	8,810		$	8,747			$	18,135		$	17,082

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.

Segment information

Operating Segment

The Company manages its operations through state-level operating segments, focused on the production and sale of cannabis products and regularly monitors for changes in facts and circumstances that may affect its determination of operating segments. Following further evaluation of the aggregation criteria under Accounting Standards Codification 280, Segment Reporting, the Company determined that it operates under three reportable segments consisting of New Jersey, Maryland and Pennsylvania. Operations in other states did not meet the quantitative threshold and are presented within All other segments. The Chief Operating Decision Maker (“CODM”) was determined to be the Chief Executive Officer of the Company. The CODM regularly evaluates the performance of the three reportable segments using gross profit and gross profit margin as its closest measures to GAAP. The CODM monitors these metrics to assess the efficiency of the Company’s production and distribution processes, as well as the effectiveness of pricing strategies.

The following tables summarize financial information for the Company's reportable segments:


	For the Three Months Ended June 30, 2026
	New Jersey			Maryland			Pennsylvania			All other segments			Total
	(In thousands)
Revenue, net	$	25,271		$	18,493		$	17,778		$	5,577		$	67,119
Cost of sales (1)		10,484			7,151			9,944			3,290		$	30,869
Gross Profit	$	14,787		$	11,342		$	7,834		$	2,287		$	36,250
Operating expenses														24,137
Interest and accretion expense														9,347
Other expense														1,238
Income from continuing operations before provision for income taxes													$	1,528

Gross profit margin (2)		58.5	%		61.3	%		44.1	%		41.0	%		54.0	%


	For the Three Months Ended June 30, 2025
	New Jersey			Maryland			Pennsylvania			All other segments			Total
	(In thousands)
Revenue, net	$	25,107		$	18,660		$	16,151		$	5,088		$	65,006
Cost of sales (1)		10,070			8,147			10,536			3,018		$	31,771
Gross Profit	$	15,037		$	10,513		$	5,615		$	2,070		$	33,235
Operating expenses														22,264
Interest and accretion expense														8,962
Other income														(1,183	)
Income from continuing operations before provision for income taxes													$	3,192

Gross profit margin (2)		59.9	%		56.3	%		34.8	%		40.7	%		51.1	%

(1) Depreciation and amortization included in cost of sales for the three months ended June 30, 2026 and 2025 was $563 and $507 for New Jersey, $618 and $583 for Maryland, $1,330 and $1,329 for Pennsylvania, and $83, and $81 for All other segments, respectively.

(2) The calculation of Gross profit margin is revenue, net less cost of sales, divided by revenue, net.

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 Six Months Ended June 30, 2026
	New Jersey			Maryland			Pennsylvania			All other segments			Total
	(In thousands)
Revenue, net	$	50,120		$	36,836		$	34,900		$	10,802		$	132,658
Cost of sales (1)		20,842			14,603			20,046			6,315		$	61,806
Gross Profit	$	29,278		$	22,233		$	14,854		$	4,487		$	70,852
Operating expenses														47,218
Interest and accretion expense														19,100
Other income														(415	)
Income from continuing operations before provision for income taxes													$	4,949

Gross profit margin (2)		58.4	%		60.4	%		42.6	%		41.5	%		53.4	%


	For the Six Months Ended June 30, 2025
	New Jersey			Maryland			Pennsylvania			All other segments			Total
	(In thousands)
Revenue, net	$	52,000		$	37,168		$	31,258		$	8,883		$	129,309
Cost of sales (1)		20,656			15,937			19,496			5,304		$	61,393
Gross Profit	$	31,344		$	21,231		$	11,762		$	3,579		$	67,916
Operating expenses														44,702
Interest and accretion expense														17,383
Other income														(203	)
Income from continuing operations before provision for income taxes													$	6,034

Gross profit margin (2)		60.3	%		57.1	%		37.6	%		40.3	%		52.5	%

(1) Depreciation and amortization included in cost of sales for the six months ended June 30, 2026 and 2025 was $1,118 and $1,012 for New Jersey, $1,236 and $1,149 for Maryland, $2,665 and $2,832 for Pennsylvania, and $167, and $163 for All other segments, respectively.

(2) The calculation of Gross profit margin is revenue, net less cost of sales, divided by revenue, net.

Assets

Information about total assets by segment is not disclosed because such information is not regularly provided to, or used by the CODM.

Geography

The Company has subsidiaries located in Canada and the United States. For the three and six months ended June 30, 2026, net revenue was primarily generated from sales in the United States. The Company's consolidated retail location in Canada generated net revenue of $200 and $368 for the three and six months ended June 30, 2026, respectively, and $219 and $397 for the three and six months ended June 30, 2025, respectively. Substantially all of the Company's non-current assets are held within its U.S. operations.

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)

22.

Financial instruments and risk management

Assets and liabilities measured at fair value

Financial instruments recorded at fair value are estimated by applying a fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy is summarized as follows:

•

Level 1 - quoted prices (unadjusted) in active markets for identical assets and liabilities

•

Level 2 - inputs other than quoted prices that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices) from observable market data

•

Level 3 - inputs for assets and liabilities not based upon observable market data

The following table represents the fair value amounts of financial assets and financial liabilities:


	At June 30, 2026							At December 31, 2025
		Level 1		Level 2		Level 3			Level 1		Level 2		Level 3
		(In thousands)
Assets
Cash and cash equivalents		$	42,026		—		—		$	37,414		—		—
Restricted cash			—		—		—			110		—		—
Residual economic interest in Michigan assets			—		—		7,787			—		—		—
Purchase option			—		—		—			—		—		13,000
Total Assets		$	42,026	$	—	$	7,787		$	37,524	$	—	$	13,000
Liabilities
Bifurcated conversion options			—		14,688		—			—		3,188		—
Total Liabilities		$	—	$	14,688	$	—		$	—	$	3,188	$	—

There were no transfers between the levels of fair value hierarchy during the three and six months ended June 30, 2026.

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

Includes cash, cash equivalents, and restricted cash represent financial instruments for which the carrying amount approximates fair value due to their short-term maturities.

Level 2

Includes bifurcated conversion options which are valued using the Black-Scholes Model with observable market inputs such as stock price, historical volatility, risk-free rate, and expected term. These inputs are derived from market data and do not require significant judgment.

The following table summarizes the changes in the derivative liability:


	(In thousands)
Balance at December 31, 2025	$	3,188
Private placement conversion option issued	$	11,737
Fair value loss on revaluation of bifurcated conversion options		(232	)
Effects of movements in foreign exchange		(5	)
Balance at June 30, 2026	$	14,688

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)

Bifurcated conversion options

The conversion option bifurcated from the 2026 Private Placement Convertible Debentures (see Note 12) has been measured at fair value as of June 30, 2026 and December 31, 2025. Key inputs and assumptions used in the Black-Scholes Model were as follows:


	June 30, 2026			June 23, 2026
Option exercise price	$	0.87		$	0.87
Annual volatility		101.9	%		101.8	%
Annual risk-free rate		4.20	%		4.28	%
Expected term (in years)		5.25			5.27

The conversion option bifurcated from the Union Chill Convertible Promissory Note has been measured at fair value as of June 30, 2026 and December 31, 2025. Key assumptions used in the Black-Scholes Model were as follows:


	June 30, 2026			December 31, 2025
Option exercise price	$	1.89		$	1.89
Annual volatility		114.4	%		105.3	%
Annual risk-free rate		4.16	%		3.61	%
Expected term (in years)		3.49			4.00

23.

Commitments and contingencies

Commitments

On June 12, 2026, the Company signed an option agreement to acquire equity interests in, and fully operate, Aunt Mary's Dispensary LLC, a dispensary in New Jersey for total consideration of $9,000, which will be comprised of $3,000 in the form of a five-year unsecured convertible promissory note bearing interest at 6.0% for an option to purchase 35% of Aunt Mary’s (“Option”) and $6,000 payable in cash upon exercise of the Option. The transaction is subject to customary closing conditions and regulatory approvals.

Legal proceedings

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, product liability, employment, and commercial matters. Although it is difficult to predict the ultimate outcome of these matters, management believes that any ultimate liability would not have a material adverse effect on the Consolidated Financial Statements. As of June 30, 2026 there were no pending lawsuits that could reasonably be expected to have a material effect on the results of the Company’s Consolidated Financial Statements.

24.

Subsequent events

On August 5, 2026, the Board appointed Ziad Ghanem, the Company’s President and Chief Executive Officer, to serve as a member of the Board, effective immediately.

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

The following discussion and analysis of financial condition and results of operations of TerrAscend Corp. (the “Issuer”), its subsidiaries, including TerrAscend Growth Corp. (“TerrAscend”) and its subsidiaries (collectively, the “Company”) should be read in conjunction with the Company's unaudited interim condensed consolidated financial statements ("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, 2025, which was filed with the Securities and Exchange Commission, (the “SEC”), on March 12, 2026, (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 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 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 the Company is for the three and six months ended June 30, 2026 and 2025 and the accompanying notes for each respective period.

Overview

The Company is a leading North American cannabis company. The Company has vertically integrated licensed operations in Pennsylvania, New Jersey, Maryland and California. In addition, the Company has retail operations in Ohio and Ontario, Canada with a majority-owned dispensary in Toronto, Ontario, Canada. Notwithstanding the fact that various states in the United States have implemented medical marijuana laws or 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.

The Company owns a portfolio of operating businesses, including:

•

TerrAscend New Jersey (“TerrAscend NJ”), a majority-owned operation with four dispensaries, and a cultivation/processing facility;

•

TerrAscend Maryland (“TerrAscend MD”), a wholly-owned operation with four dispensaries, and a cultivation/processing facility;

•

TerrAscend Pennsylvania (“TerrAscend PA”), a wholly-owned operation with six dispensaries, and a cultivation/processing facility;

•

TerrAscend California (“TerrAscend CA”), a wholly-owned operation with four dispensaries, and a cultivation facility;

•

TerrAscend Ohio ("TerrAscend OH"), a cannabis retailer in New Philadelphia, Ohio with one wholly-owned dispensary; and

•

TerrAscend Canada Inc. (“TerrAscend Canada”), a cannabis retailer in Toronto, Ontario, Canada with a majority-owned dispensary.

Recent Developments

•

On May 6, 2026, the Court entered an order appointing a Receiver over the Michigan Receivership Entities.

•

On May 1, 2026, the Company and its subsidiaries party to the Loan Agreement, certain lender parties to the FG Loan Agreement and the Agent (as defined below) entered into a Forbearance Agreement as a result of the Michigan Receivership.

•

Effective April 27, 2026, the Company appointed Eric Jackson as Chief Financial Officer.

•

On April 23, 2026, the Acting Attorney General issued a Final Order reclassifying cannabis for medical use from Schedule I to Schedule III under the Controlled Substances Act. The order does not apply to adult-use cannabis which remains classified as a Schedule I controlled substance. The Final Order, effective as published in the Federal Register on April 28, 2026, establishes an expedited registration process for state medical licensees and indicates that registered state medical licensees would no longer be subject to Section 280E of the Internal Revenue Code following the effective date of the order. Additionally, the Order recommends to the Secretary of the Treasury that retrospective 280E relief be granted to licensees in line with their state license start dates. Separately, the Attorney General withdrew the pending hearing related to the proposed rulemaking notice issued in 2024 and instituted a new expedited hearing process starting on June 29, 2026 addressing both medical and adult-use cannabis, which concluded on July 15, 2026. The IRS has publicly indicated that, for Section 280E purposes, forthcoming guidance regarding the impact of rescheduling may include a transition rule allowing rescheduling relief to apply beginning with the taxable year that includes the effective date of the Final Order for activities no longer involving Schedule I or II substances; however, formal IRS guidance has not been issued yet. The ultimate impact of these developments, including the potential impact on previously recorded uncertain tax positions, remains uncertain and subject to ongoing evaluation due to the complexity of the evolving regulatory and tax environment. Accordingly, the Company is continuing to assess the potential financial statement impacts and is unable to reasonably estimate the ultimate effect at this time.

Subsequent Transactions

•

On August 5, 2026, the Board appointed Ziad Ghanem, the Company’s President and Chief Executive Officer, to serve as a member of the Board, effective immediately.

Components of Results of Operations

The following discussion sets forth certain components of the Company's unaudited interim condensed consolidated statements of comprehensive loss as well as factors that impact those items.

Revenue, net

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

Cost of sales

Cost of sales primarily consists of expenses related to providing cannabis products and services to 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.

Operating Expenses

General and administrative

General and administrative ("G&A") expenses consist primarily of personnel costs related to finance, human resources, legal, certain royalties, and other administrative functions. Additionally, G&A expenses include professional fees to third parties, as well as marketing expenses. Moreover, G&A expenses include share-based compensation on options, restricted share units and warrants.

Amortization and depreciation

Amortization and depreciation includes the amortization of intangible assets and the depreciation of property and equipment, in each case to the extent not included in the cost of sales. Amortization is calculated on a straight-line basis over the following terms:


Brand intangibles- indefinite lives	Indefinite useful lives
Software	5 years
Licenses	15-30 years

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


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

(Gain) loss on fair value of derivative liabilities

Derivative liabilities consist of convertible options, that contain embedded derivative features, which are remeasured to fair value at the end of each reporting period using the Black-Scholes Option Pricing Model (the "Black-Scholes Model"). A gain or loss is recognized as a result of the revaluation.

Finance and other expenses

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

Unrealized and realized foreign exchange loss

Unrealized and realized foreign exchange (gain) loss represents the loss recognized on the remeasurement of U.S. dollar ("USD") denominated cash and other assets recorded in the Canadian dollars ("CAD") functional currency at the Company's Canadian operations.

Provision for income taxes

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

Results of Operations - Three Months Ended June 30, 2026 and June 30, 2025

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

Continuing Operations

The following tables represent the Company’s results of operations for the three months ended June 30, 2026 and 2025.

Revenue, net


	For the Three Months Ended
		June 30, 2026			June 30, 2025
		(In thousands)
Revenue, net		$	67,119		$	65,006
$ change		$	2,113
% change			3	%

Revenue increased by $2,113, from $65,006 for the three months ended June 30, 2025 to $67,119 for the three months ended June 30, 2026. The increase was primarily attributable to Pennsylvania, where revenue increased $1,627 due to higher retail sales driven by

increased customer foot traffic. In both New Jersey and Maryland, retail sales were substantially offset by wholesale sales, resulting in relatively consistent revenue compared to the prior-year period. The remaining increase was attributable to all other segments.

Cost of sales


	For the Three Months Ended
		June 30, 2026			June 30, 2025
		(In thousands)
Cost of sales		$	30,869		$	31,771
$ change		$	(902	)
% change			-3	%
Cost of sales as a % of revenue			46	%		49	%

Cost of sales decreased by $902, from $31,771 for the three months ended June 30, 2025 to $30,869 for the three months ended June 30, 2026. The decrease was primarily due to decreases of $592 and $996 in Pennsylvania and Maryland, respectively, driven by improved verticality and facility utilization. The decrease was partially offset by an increase of $414 in New Jersey. The remaining decrease was attributable to all other segments.

The decrease in cost of sales as a percentage of revenue is mainly due to reduced unit cost and improved cost absorption.

General and administrative expense


	For the Three Months Ended
		June 30, 2026			June 30, 2025
		(In thousands)
General and administrative expense		$	22,852		$	20,980
$ change		$	1,872
% change			9	%

The increase of $1,872 in general and administrative expense for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, was primarily due to operational expenses related to Company's acquisition of Union Chill Cannabis Company LLC ("Union Chill") and an increase in the provision for expected credit losses.

Finance and other expenses


	For the Three Months Ended
		June 30, 2026			June 30, 2025
		(In thousands)
Finance and other expenses		$	8,810		$	8,747
$ change		$	63
% change			1	%

Finance and other expenses for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, was relatively flat.

Loss (gain) on fair value of derivative liabilities


	For the Three Months Ended
		June 30, 2026			June 30, 2025
		(In thousands)
Loss (gain) on fair value of derivative liabilities		$	1,171		$	(279	)
$ change		$	1,450
% change			-520	%

The loss on derivative liabilities of $1,171 for the three months ended June 30, 2026 compared with a gain of $279 for the three months ended June 30, 2025, was primarily driven by changes in the Common Share price during the respective periods, which resulted in changes in the fair value of the Company's outstanding derivative liabilities.

Provision for income taxes


	For the Three Months Ended
		June 30, 2026			June 30, 2025
		(In thousands)
Provision for income taxes		$	11,587		$	9,598
$ change		$	1,989
% change			21	%

The provision for income taxes increased by $1,989 from $9,598 for the three months ended June 30, 2025 compared to $11,587 for the three months ended June 30, 2026 primarily driven by accrued interest and penalties related to the Company's uncertain tax position and higher relative gross profit margin.

Discontinued Operations


	For the Three Months Ended
		June 30, 2026			June 30, 2025
		(In thousands)
Income (loss) from discontinued operations, net of tax		$	2,004		$	(41,701	)
$ change		$	43,705
% change			105	%

Income from discontinued operations for the three months ended June 30, 2026 primarily reflects the gain recognized in connection with the deconsolidation of the Michigan Receivership Entities following the appointment of the Receiver. In contrast, the loss from discontinued operations for the three months ended June 30, 2025 primarily reflects impairment charges and operating losses incurred prior to the classification of the Company's Michigan operations as discontinued operations.

Results of Operations - Six Months Ended June 30, 2026 and June 30, 2025

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

Continuing Operations

The following tables represent the Company’s results of operations for the six months ended June 30, 2026 and 2025.

Revenue, net


	For the Six Months Ended
	June 30, 2026			June 30, 2025
	(In thousands)
Revenue, net	$	132,658		$	129,309
$ change	$	3,349
% change		3	%

Revenue increased by $3,349, from $129,309 for the six months ended June 30, 2025 to $132,658 for the six months ended June 30, 2026. The increase was primarily attributable to Pennsylvania, where revenue increased $3,642 due to higher retail sales driven by increased customer foot traffic. In New Jersey, Maryland, and all other segments, retail sales were substantially offset by wholesale sales, resulting in relatively consistent revenue compared to the prior-year period.

Cost of sales


	For the Six Months Ended
	June 30, 2026			June 30, 2025
	(In thousands)
Total cost of sales	$	61,806		$	61,393
$ change	$	413
% change		1	%
Cost of sales as a % of revenue		47	%		47	%

Cost of sales for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, was relatively flat due to a decrease in cost of sales in New Jersey which was offset by an increase in cost of sales in Pennsylvania and Maryland.

The cost of sales as a % of revenue remained flat compared to the prior year.

General and administrative expense


	For the Six Months Ended
	June 30, 2026			June 30, 2025
	(In thousands)
General and administrative expense	$	44,349		$	42,129
$ change	$	2,220
% change		5	%

The increase of $2,220 in general and administrative expense for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, was primarily due to operational expenses related to the Ratio Cannabis, LLC and Union Chill acquisitions and an increase in the provision for expected credit losses.

Finance and other expenses


	For the Six Months Ended
	June 30, 2026			June 30, 2025
	(In thousands)
Finance and other expenses	$	18,135		$	17,082
$ change	$	1,053
% change		6	%

The increase of $1,053 in finance and other expenses for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, was primarily due to an increase of interest and accretion related to the FG Loan.

Gain on fair value of derivative liabilities


	For the Six Months Ended
	June 30, 2026			June 30, 2025
	(In thousands)
Gain on fair value of derivative liabilities	$	(232	)	$	(376	)
$ change	$	144
% change		-38	%

The gain on derivative liabilities of $232 for the six months ended June 30, 2026 compared with a gain of $376 for the six months ended June 30, 2025, was primarily driven by the decrease in fair value of private placement convertible debentures that expired during the second quarter of 2026.

Provision for income taxes


	For the Six Months Ended
	June 30, 2026			June 30, 2025
	(In thousands)
Provision for income taxes	$	21,837		$	20,105
$ change	$	1,732
% change		9	%

The provision for income taxes increased by $1,732 from $20,105 for the six months ended June 30, 2025 compared to $21,837 for the six months ended June 30, 2026. This increase was primarily driven by accrued interest and penalties related to the Company's uncertain tax position and higher relative gross profit margin.

Discontinued Operations


	For the Six Months Ended
	June 30, 2026			June 30, 2025
	(In thousands)
Income (loss) from discontinued operations, net of tax	$	828		$	(46,305	)
$ change	$	47,133
% change		-102	%

Discontinued operations for the six months ended June 30, 2026 and 2025, reflected similar trends to the three month ended periods.

Liquidity and Capital Resources

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


	June 30, 2026		December 31, 2025
Cash and cash equivalents	$	42,026	$	37,414
Restricted Cash		-		110
Current assets		113,463		110,108
Non-current assets		440,242		447,271
Current liabilities		61,997		79,931
Non-current liabilities		407,666		378,427
Working capital		51,466		30,177
Total shareholders' equity	$	84,042	$	99,021

The calculation of working capital provides additional information and is not defined under GAAP. The Company defines working capital as current assets less current liabilities. Management believes that working capital provides useful information to investors because it reflects the Company’s short-term financial health and its ability to meet current obligations with current assets. This measure should not be considered in isolation or as a substitute for any standardized measure under GAAP.

Management assesses the Company's liquidity in terms of its ability to generate cash to fund its operating, investing, and financing activities. The Company remains in a strong financial position, with resources available for reinvesting in existing businesses, conducting acquisitions, and managing its capital structure on a short and long-term basis. The Company believes its existing cash balances will be sufficient to meet its anticipated cash requirements from the date of this Quarterly Report on Form 10-Q through at least the next 12 months

Since its inception, the Company's primary sources of capital have been through the issuance of equity securities or debt facilities, and the Company has received aggregate net proceeds from such transactions totaling $880,299 as of June 30, 2026.

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

•

cash from ongoing operations.

•

private placements and public offerings of equity or debt securities.

•

additional debt from additional creditors.

•

sale of real property.

•

sale leaseback transactions.

•

exercise of options and warrants.

As of June 30, 2026, the Company had $209,682 in principal outstanding under its loans payable, excluding any prepayment or exit fees, of which $6,570 is due in the next twelve months. The Company also had $31,085 in principal outstanding under its convertible debt, none of which is due within the next twelve months.

The Company has entered into leases for certain premises and offices for which it owes monthly lease payments. The Company has $58,703 in lease obligations. Of this amount, $4,383 of lease payments are due in the next twelve months.

As of June 30, 2026, the Company had accounts payable and accrued liabilities of $40,133 and corporate income taxes payable of $2,290.

The Company intends to meet its capital commitments through any or all of the sources of capital noted above. 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.

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

The Company is subject to a financial covenant as a result of its loan payable with its primary lender. The Company was in compliance with its debt covenant as of June 30, 2026. In the event that, in future periods, the Company’s financial results are below levels required to maintain compliance with its covenant, the Company will assess and undertake appropriate corrective initiatives with a view to allowing it to continue to comply with its covenant. Other than the covenant related to loans payable, the Company is not subject to externally imposed capital requirements.

Debt Facilities

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


	Principal Paid during the Six Months Ended June 30, 2026		Principal Outstanding as of June 30, 2026
	(In thousands)
FocusGrowth Term Loan	$	15,590	$	202,092
Blue Ridge Promissory Note		176		2,583
Ratio Promissory Note		—		3,980
Other Loans		2		1,027
2023 Private Placement Convertible Debentures		8,630		250
Union Chill Convertible Promissory Note		—		9,000
2026 Private Placement Convertible Debentures		—		21,835
Total	$	24,398	$	240,767

FocusGrowth Term Loan

On August 1, 2024, the Issuer and TerrAscend USA, Inc., as guarantors, and certain subsidiaries and affiliates of the Company, as borrowers (collectively, the “Borrowers”), and FG Agency Lending LLC, as the administrative agent for the lenders (the "Agent"), entered into a Loan Agreement (the “Initial FG Loan Agreement”) for a four-year, $140,000 senior-secured term loan.

On July 8, 2025, additional subsidiaries of the Company (the "Incremental Amendment Borrowers"), became parties to the Initial FG Loan Agreement as borrowers pursuant to a joinder agreement (the "FG Loan Amendment") and, together with the Initial FG Loan Agreement and such other amendments to the Initial FG Loan Agreement, the “FG Loan Agreement”), which provided for a $79,000 upsize to the Initial FG Loan Agreement, and following which TerrAscend USA, Inc. no longer served as guarantor. Funds received pursuant to the FG Loan Agreement were used to retire certain Company indebtedness, in addition to being used for future growth initiatives.

On May 1, 2026, the Company, the Borrowers, the Incremental Amendment Borrowers, certain lenders party to the FG Loan Agreement (constituting “Required Lenders” under the FG Loan Agreement) and the Agent entered into the Forbearance Agreement in relation to certain events of default that occurred or were anticipated under the FG Loan Agreement, resulting from the Michigan Receivership, (the “Specified Defaults”). Under the Forbearance Agreement, the Secured Parties (as defined in the Forbearance Agreement) agreed to conditionally waive the Specified Defaults and forbear from exercising default-related remedies during the period from the Forbearance Effective Date ending the earliest to occur of the termination of the receivership process and the occurrence of any event of default not otherwise specified in the Forbearance Agreement (the “Forbearance Period”). Upon the “Successful Exit” (as defined in the Forbearance Agreement) of the Michigan Receivership, all Specified Defaults (as defined below) will be deemed automatically and irrevocably waived by the Secured Parties.

Within five days of receipt of net cash proceeds from any disposition of Michigan real property, the Borrowers must prepay the term loans in the amount of such net cash proceeds.

On June 23, 2026, the parties to the FG Loan Agreement entered into Amendment No. 5 to Loan Agreement, which among other things, permitted the Company’s issuance of the 2026 Private Placement Convertible Debentures in an aggregate face amount of up to $25,000, the repayment of approximately $13,000 of the Company’s outstanding existing 9.9% senior unsecured convertible debentures that matured on June 23, 2026, and certain additional specified acquisitions and indebtedness.

The FG Loan bears interest at 12.75% per annum with a maturity date of August 1, 2028 (the "FG Loan Maturity Date"). The FG Loan is guaranteed by the Issuer and is secured by substantially all of the assets of the Borrowers and the Incremental Amendment Borrowers. Depending on the timing of repayment, an exit fee of between 2.0% and 4.0% of the FG Loan (the "Exit Fee") will be due upon either the prepayment, in part or in full, of the FG Loan or the FG Loan Maturity Date.

The FG Loan Agreement contains covenants that limit the Borrowers’ and the Incremental Amendment Borrowers' ability to, among other things: (i) incur additional indebtedness or guarantee indebtedness; (ii) create liens; (iii) pay dividends; (iv) make investments; (v) enter into transactions with affiliates; and (vi) consolidate, merge, sell or otherwise dispose of all or substantially all of their respective assets. The FG Loan Agreement also includes a minimum liquidity covenant with respect to the Borrowers and the Incremental Amendment Borrowers. If an event of default occurs and is not cured within an applicable grace period or waived, the principal amount, any accrued interest and any other obligations outstanding under the FG Loan Agreement may become immediately due and payable.

During the six months ended June 30, 2026, the Company made aggregate prepayments of $15,590 on the FG Loan, including applicable 3% prepayment fees.

Blue Ridge Promissory Note

Ratio Promissory Note

Other Loans

Class A Shares of TerrAscend Growth

In connection with the 2023 Reorganization (see Note 3), TerrAscend issued $1,000 of Class A shares with a 20% guaranteed annual dividend ("Class A Shares") to an investor. TerrAscend holds a call right and the investor holds a put right (exercisable after June 28, 2028) with respect to the Class A Shares. The instrument is accounted for as debt. See Note 10 to the Consolidated Financial Statements for additional detail.

Convertible Debt

2026 Private Placement Convertible Debentures

On June 23 and June 30, 2026, the Company entered into subscription agreements with certain accredited investors (the “Debenture Subscription Agreements”) in connection with a private placement offering of secured convertible debentures of the Company (the “2026 Private Placement Convertible Debentures”) and closed the initial issuance and sale of 21,835 debentures at a purchase price of $1,000 per debenture (the “Debenture Offering”). The Company used $11,124 of the proceeds from the Debenture Offering to retire the Company’s existing senior unsecured convertible debentures that matured on June 23, 2026, with the remaining portion of the proceeds available for mergers and acquisitions, and the repayment or refinancing of indebtedness. The 2026 Private Placement Convertible Debentures mature on September 30, 2031 (the “Maturity Date”) and bear interest at a rate of 8.00% per annum, payable quarterly in arrears in cash, beginning on September 30, 2026. The Company may elect to pay all or any portion of such interest in kind by capitalizing the interest as additional principal (see Note 12 to the Consolidated Financial Statements). The 2026 Private Placement Convertible Debentures are convertible, in whole or in part, into Common Shares, at the option of the holder, at any time prior to the close of business on the last business day immediately preceding the Maturity Date, at a conversion price of $0.87 per Common Share. The 2026 Private Placement Convertible Debentures are secured by a second lien on certain assets of the U.S. business and also secured by certain personal property assets of TerrAscend USA, Inc. under a subordinated guaranty and security agreement.

Union Chill Convertible Promissory Note

On December 26, 2025, the Company issued a convertible promissory note for $9,000 in relation to the transaction with Union Chill. Unless repaid or converted earlier, the outstanding principal and interest shall be due and payable on December 26, 2029 (the "Convertible Note Maturity Date"). The convertible promissory note bears interest at the rate of 6.5% per annum payable in quarterly payments within five days following the first business day of each fiscal quarter. The convertible promissory note is convertible into Common Shares, at the option of the holder, at any time or times prior to the close of business on the last business day immediately preceding the Convertible Note Maturity Date, at a conversion price of $1.89 per Common Share.

Share Repurchases

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

On August 20, 2025, the Board approved the Share Repurchase Program, which replaced the Original Program. The Share Repurchase Program authorizes the Company to repurchase up to 10,000,000 Common Shares of the Company at any time, or from time to time, from August 22, 2025 until August 21, 2026. The Share Repurchase Program authorizes the Company to repurchase up to 60,255 Common Shares daily, which represents 25% of the Company’s average daily trading volume on the TSX of 241,023 Common Shares. Any repurchases under the program may be made by means of open market transactions, negotiated block transactions, or otherwise, including pursuant to a repurchase plan administered in accordance with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended. The size and timing of any repurchases will depend on price, market and business conditions, and other factors.

During the second quarter of 2026, the Company repurchased 463,500 common shares under the Share Repurchase Program for total consideration of $311. As of June 30, 2026, the Company had a total of 9,346,500 Common Shares remaining that can be authorized for repurchase.

Cash Flows

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

Cash flows provided by operating activities


	June 30, 2026			June 30, 2025
Net cash provided by operating activities - continuing operations	$	16,037		$	18,479
Net cash used in operating activities - discontinued operations		(971	)		(7,658	)
Net cash provided by operating activities	$	15,066		$	10,821

Continuing Operations

The decrease of $2,442 in net cash provided by operating activities for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily driven by changes in net working capital, including increased inventory.

Discontinued Operations

Net cash used in operating activities for the six months ended June 30, 2026 primarily relates to costs associated with the disposition of certain assets and liabilities and entering into the Michigan Receivership. In contrast, net cash used in operating activities for the six months ended June 30, 2025 was primarily driven by unfavorable changes in working capital.

Cash flows used in investing activities


	June 30, 2026			June 30, 2025
Net cash used in investing activities - continuing operations	$	(3,017	)	$	(10,381	)
Net cash provided by (used in) investing activities - discontinued operations		1,293			(737	)
Net cash (provided by) investing activities	$	(1,724	)	$	(11,118	)

Continuing Operations

The decrease of $7,364 in net cash used in investing activities for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily driven by a decrease of $2,146 for investments in capital expenditures. The change was also attributable to cash consideration, net of cash acquired of $3,722 paid in connection with the Union Chill acquisition, and a $3,400 refund of the deposit for a potential business acquisition.

Discontinued Operations

The increase of $2,030 in net cash provided by (used in) investing activities for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily driven by the sale of property and equipment related to the exit of Michigan.

Cash flows used in financing activities


	June 30, 2026			June 30, 2025
Net cash (used in) provided by financing activities - continuing operations	$	(8,833	)	$	283
Net cash used in financing activities - discontinued operations		(200	)		-
Net cash (used in) provided by financing activities	$	(9,033	)	$	283

Continuing Operations

The increase of $8,550 in net cash used in financing activities for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was primarily attributable to higher loan principal paid, including exit fees, of $14,270, repayments of existing private placement convertible debentures of $8,630, and higher distributions to non-controlling interests during 2026. This was partially offset by $18,967 net of proceeds received from the issuance of the 2026 Private Placement Convertible Debentures. In contrast, financing activities during the prior-year period included $5,000 of loan proceeds, net of transaction costs.

Discontinued Operations

The net cash used in financing activities for the six months ended June 30, 2026 was primarily driven by the finance lease termination fee paid.

Reconciliation of Non-GAAP Measures

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

In addition to reporting the financial results in accordance with GAAP, 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. 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 the Company calculates: (i) Free cash flow from net cash provided by operating activities from continuing operations less capital expenditures for 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) EBITDA from continuing operations and Adjusted EBITDA from continuing operations as net loss, adjusted to exclude provision for income taxes, finance expenses, depreciation and amortization, share-based compensation, unrealized and realized (gain) loss on investments, (gain) loss from revaluation of contingent consideration, unrealized and realized foreign exchange (gain) loss, loss (gain) on fair value of derivative liabilities, (gain) loss on lease terminations, and certain other items, which management believes is not reflective of the ongoing operations and performance of the Company. 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.

The Company believes Adjusted EBITDA from continuing operations is a useful performance measure to assess the performance of the Company as it provides more meaningful ongoing operating results by excluding the effects of expenses that are not reflective of 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 and six months ended June 30, 2026 and 2025:



		For the Three Months Ended							For the Six Months Ended
	Notes		June 30, 2026			June 30, 2025				June 30, 2026			June 30, 2025
			(In thousands)
Net loss			$	(8,055	)	$	(48,107	)		$	(16,060	)	$	(60,376	)
(Income) loss from discontinued operations				(2,004	)		41,701				(828	)		46,305
Net loss from continuing operations				(10,059	)		(6,406	)			(16,888	)		(14,071	)

Add (deduct) the impact of:
Provision for income taxes				11,587			9,598				21,837			20,105
Finance expenses				9,347			8,962				19,100			17,383
Amortization and depreciation				3,881			3,784				8,021			7,729
EBITDA from continuing operations	(a)			14,756			15,938				32,070			31,146
Add (deduct) the impact of:
Share-based compensation	(b)			829			779				1,714			2,293
Loss (gain) on fair value of derivative liabilities	(c)			1,171			(279	)			(232	)		(376	)
Unrealized and realized foreign exchange loss (gain)	(d)			333			(648	)			511			(607	)
Unrealized and realized (gain) loss on investments	(e)			271			(7	)			271			735
(Gain) loss on lease termination	(f)			(1	)		—				35			—
(Gain) loss from revaluation of contingent consideration	(g)			—			(34	)			—			346
Other one-time items	(h)			302			267				656			625
Adjusted EBITDA from continuing operations			$	17,661		$	16,016			$	35,025		$	34,162

EBITDA from continuing operations is a non-GAAP measure and is calculated from net loss.

Represents non-cash share-based compensation expense.

Represents the gain on fair value of conversion options.

Represents the remeasurement of USD denominated cash and other assets recorded in CAD functional currency.

Represents unrealized and realized loss on fair value changes investments.

Represents the gain recognized as a result of lease termination.

Represents the revaluation of the Company's contingent consideration liabilities.

Includes one-time items incurred primarily in connection with the Company's acquisitions and other costs considered one-time in nature, such as expenses related to professional, consulting, legal, and accounting fees. These fees are not indicative of the Company's ongoing costs.

Adjusted EBITDA from continuing operations increased by $1,773 and $991 for the three and six months ended June 30, 2026 as compared to three and six months ended June 30, 2025, respectively. These increases were primarily driven by gross profit margin expansion.

The table below reconciles net cash provided by operating activities from continuing operations to free cash flow for the six months ended June 30, 2026 and 2025:


	For the Six Months Ended
	June 30, 2026			June 30, 2025
	(In thousands)
Net cash provided by operating activities - continuing operations	$	16,037		$	18,479
Capital expenditures for property and equipment		(2,504	)		(4,650	)
Free Cash Flow	$	13,533		$	13,829

Critical Accounting Estimates and Policies

The Consolidated Financial Statements have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements 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 Operations", as contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

Emerging Growth Company and Smaller Reporting Company Status

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 opts out of the extended transition period provided in the JOBS Act. As a result, the 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) December 31, 2027 (a) in which the Company has total annual gross revenue of $1,235,000 or more, or (b) in which the Company is deemed to be a large accelerated filer, which means the market value of the Company's Common Shares that are held by non-affiliates exceeds $700,000 as of the last business day of the Company’s most recent second fiscal quarter; and (ii) the date on which the Company has issued more than $1,000,000 in non-convertible debt during the prior three-year period.

Additionally, as of June 30, 2025, the market value of the Common Shares held by non-affiliates decreased to below $60,000, which triggered the Company being classified as a smaller reporting company and non-accelerated filer with respect to SEC regulations and

filing requirements effective December 31, 2025. The Company will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our Common Shares held by non-affiliates exceeds $250,000 as of the last business day of our second fiscal quarter, and (ii) either our annual revenue exceeded $100,000 during such completed fiscal year or the market value of our Common Shares held by non-affiliates exceeds $700,000 as of the last business day of our second fiscal quarter. As the market value of the Common Shares held by non-affiliates remained below $250,000 as of June 30, 2026, the Company will continue to qualify as a smaller reporting company.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

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, 2025.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company's management, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of 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 (the "Exchange Act"), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2026, 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 the Company files or submits 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 the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in 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 June 30, 2026, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating 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.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

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, product liability, employment, and commercial matters. Although it is difficult to predict the ultimate outcome of these matters, management believes that any ultimate liability would not have a material adverse effect on the Consolidated Balance Sheets or results of operations. As of June 30, 2026, there were no pending lawsuits that could reasonably be expected to have a material effect on the results of the Company's Consolidated Financial Statements.

Item 1A. Risk Factors.

Investing in the Company's Common Shares involves a high degree of risk. Please refer to Part I, Item 1A, “Risk Factors” in the Company's Annual Report for a description of the material risks and uncertainties to which the Company’s business, financial condition and results of operations are subject. The Company may disclose changes to risk factors or disclose additional factors from time to time in its future filings with the SEC. Additional risks and uncertainties not presently known to the Company or that the Company currently deems immaterial may impair its business operations. There have been no material changes to the risk factors previously disclosed in Part I, Item 1A, “Risk Factors” in the Company's Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

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


Period	Total Number of Common Shares Purchased		Weighted Average Price Paid per Common Share		Total Number of Common Shares as Part of a Publicly Announced Program		Number of Common Shares that may yet be Purchased under the Program
April 1 through April 30, 2026		—	$	—		—		9,810,000
May 1 through May 31, 2026		398,000	$	0.67		398,000		9,412,000
June 1 through June 30, 2026		65,500	$	0.67		65,500		9,346,500
For the Quarter Ended June 30, 2026		463,500		0.67		463,500		9,346,500

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Rule 10b5-1 Trading Plans

During the second quarter of 2026, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted, modified, or terminated a Rule 10b5-1 trading arrangement.

Item 6. Exhibits.


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

3.1	Articles of TerrAscend Corp., dated March 7, 2017.	10-12G	000-56363	3.1	11/02/2021

3.2	Articles of Amendment to the Articles of TerrAscend Corp., dated November 30, 2018.	10-12G/A	000-56363	3.2	12/22/2021

3.3	Articles of Amendment to the Articles of TerrAscend Corp., dated May 22, 2020.	10-12G/A	000-56363	3.3	12/22/2021

3.4	By-laws of TerrAscend Corp., dated March 7, 2017.	10-12G	000-56363	3.3	11/02/2021

4.1	Form of Convertible Debenture.	8-K	000-56363	10.1	06/25/2026

10.1	Form of Subscription Agreement for Debenture Offering.	8-K	000-56363	4.1	06/25/2026

10.2†	Employment Agreement, effective April 27, 2026, by and between TerrAscend USA, Inc. and Eric Jackson.	8-K	000-56363	10.1	04/16/2026

10.3#	Forbearance Agreement, on May 1, 2026, by and among TerrAscend USA, Inc., as Borrower Representative, the subsidiaries and affiliates of the Borrower Representative, as Borrowers, and FG Agency Lending LLC, as the Administrative Agent.					X

10.4#	Amendment No. 5, dated June 23, 2026, by and among TerrAscend USA, Inc., as Borrower Representative, the subsidiaries and affiliates of the Borrower Representative, as Borrowers, each of the lenders party thereto, and FG Agency Lending LLC, as the Administrative Agent.					X

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.	X

101.SCH	Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents	X

104	Cover Page Interactive Data File (embedded within the Inline XBRL document)	X

* This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of TerrAscend Corp. under the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

# Certain information contained in this agreement has been omitted because it is not material and is the type that the registrant treats as private or confidential.

† Indicates management contract or compensatory plan.

SIGNATURES

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.


	TerrAscend Corp.

Date: August 6, 2026	By:	/s/ Ziad Ghanem
		Ziad Ghanem
		President and Chief Executive Officer (Principal Executive Officer)




Date: August 6, 2026	By:	/s/ Eric Jackson
		Eric Jackson
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)