TerrAscend Corp.

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

	At December 31, 2024	At December 31, 2023
Assets
Current assets
Cash and cash equivalents	$ 26,381	$ 22,241
Restricted cash	606	3,106
Accounts receivable, net	20,880	19,048
Investments	1,727	1,913
Inventory	48,799	51,683
Prepaid expenses and other current assets	6,040	4,898
Total current assets	104,433	102,889
Non-current assets
Property and equipment, net	184,019	196,215
Deposits	168	337
Operating lease right of use assets	41,355	43,440
Intangible assets, net	169,604	215,854
Goodwill	106,929	106,929
Other non-current assets	722	854
Total non-current assets	502,797	563,629
Total assets	$ 607,230	$ 666,518
Liabilities and shareholders' equity
Current liabilities
Accounts payable and accrued liabilities	$ 46,725	$ 49,897
Deferred revenue	5,129	4,154
Loans payable, current	6,761	137,737
Contingent consideration payable, current	3,121	6,446
Operating lease liability, current	2,511	1,244
Derivative liability, current	92	—
Lease obligations under finance leases, current	1,864	2,030
Corporate income tax payable	11,531	4,775
Other current liabilities	795	717
Total current liabilities	78,529	207,000
Non-current liabilities
Loans payable, non-current	183,461	61,633
Operating lease liability, non-current	42,469	45,384
Lease obligations under finance leases, non-current	—	407
Derivative liability, non-current	451	5,162
Convertible debt	9,114	7,266
Deferred income tax liability	8,428	17,175
Contingent consideration payable, non-current	172	—
Liability on uncertain tax position	106,991	79,627
Other long term liabilities	799	2,124
Total non-current liabilities	351,885	218,778
Total liabilities	430,414	425,778
Commitments and contingencies
Shareholders' equity
Share capital
Series A, convertible preferred stock, no par value, unlimited shares authorized; 12,350 and 12,350 shares outstanding as of December 31, 2024 and December 31, 2023, respectively	—	—
Series B, convertible preferred stock, no par value, unlimited shares authorized; 600 and 600 shares outstanding as of December 31, 2024 and December 31, 2023, respectively	—	—
Exchangeable shares, no par value, unlimited shares authorized; 63,492,038 and 63,492,038 shares outstanding as of December 31, 2024 and December 31, 2023, respectively	—	—
Common shares, no par value, unlimited shares authorized; 293,232,131 and 288,327,497 shares outstanding as of December 31, 2024 and December 31, 2023, respectively	—	—
Treasury stock, no par value; 129,500 and nil shares outstanding as of December 31, 2024 and December 31, 2023, respectively	—	—
Additional paid in capital	952,463	944,859
Accumulated other comprehensive income	3,011	1,799
Accumulated deficit	(778,514)	(704,162)
Non-controlling interest	(144)	(1,756)
Total shareholders' equity	176,816	240,740
Total liabilities and shareholders' equity	$ 607,230	$ 666,518

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

TerrAscend Corp.

Consolidated Statements of Operations and Comprehensive Loss
(Amounts expressed in thousands of United States dollars, except for per share amounts)

	For the Years Ended
	December 31, 2024	December 31, 2023	December 31, 2022
Revenue, net	$ 306,677	$ 317,328	$ 247,829
Cost of sales	156,717	157,630	146,325
Gross profit	149,960	159,698	101,504
Operating expenses:
General and administrative	111,596	115,189	115,588
Amortization and depreciation	8,823	9,433	9,658
Impairment of intangible assets	39,334	51,303	140,727
Impairment of goodwill	—	4,690	170,357
Impairment of property and equipment and right of use assets	8,511	2,079	1,089
Other operating income	(1,198)	(3,131)	—
Total operating expenses	167,066	179,563	437,419
Loss from operations	(17,106)	(19,865)	(335,915)
Other expense (income)
Loss (gain) from revaluation of contingent consideration	2,465	(645)	(1,061)
Loss (gain) on extinguishment of debt	1,662	—	(4,153)
Gain on fair value of derivative liabilities and purchase option derivative assets	(4,549)	(322)	(58,523)
Finance and other expenses	34,370	37,041	35,893
Transaction and restructuring costs	—	344	1,445
Unrealized and realized foreign exchange loss (gain)	940	(53)	712
Unrealized and realized loss (gain) on investments	238	2,603	(43)
Loss from continuing operations before provision for income taxes	(52,232)	(58,833)	(310,185)
Provision for (benefit from) income taxes	20,438	23,453	(10,783)
Net loss from continuing operations	$(72,670)	$(82,286)	$(299,402)
Discontinued operations:
Loss from discontinued operations, net of tax	$ —	$(4,444)	$(25,949)
Net loss	$(72,670)	$(86,730)	$(325,351)
Foreign currency translation adjustment	(1,212)	286	738
Comprehensive loss	$(71,458)	$(87,016)	$(326,089)
Net loss from continuing operations attributable to:
Common and proportionate Shareholders of the Company	$(80,232)	$(91,101)	$(303,959)
Non-controlling interests	$ 7,562	$ 8,815	$ 4,557
Comprehensive loss attributable to:
Common and proportionate Shareholders of the Company	$(79,020)	$(95,831)	$(330,646)
Non-controlling interests	$ 7,562	$ 8,815	$ 4,557
Net loss per share - basic & diluted:
Continuing operations	$(0.28)	$(0.33)	$(1.24)
Discontinued operations	—	(0.02)	(0.11)
Net loss per share - basic & diluted	$(0.28)	$(0.35)	$(1.35)
Weighted average number of outstanding common shares	291,513,878	279,285,588	244,351,028

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

F-4

TerrAscend Corp.

Consolidated Statements of Changes in Shareholders' Equity (Deficit)
(Amounts expressed in thousands of United States dollars, except for per share amounts)

	Number of Shares
	Convertible Preferred Stock
	Common Shares	Exchangeable Shares	Series A Series B Series C	Common Shares Equivalent	Treasury Stock	Additional paid in capital	Accumulated other comprehensive income (loss)	Accumulated deficit	Non-controlling interest	Total
Balance at December 31,2021	190,930,800	38,890,571	13,708	610	36	244,175,394	—	$535,418	$2,823	$(314,654)	$5,367	$228,954
Shares issued - stock options, warrant and RSU	10,633,857	—	—	—	—	10,633,857	—	25,927	—	—	—	25,927
Shares, options and warrants issued - acquisitions	56,812,852	13,504,500	—	—	—	70,317,352	—	331,983	—	—	—	331,983
Shares issued - liability settlement	101,203	—	—	—	—	101,203	—	264	—	—	—	264
Shares issued - conversion	1,145,819	—	(1,100)	(10)	(36)	—	—	—	—	—	—	—
Shares issued - Canopy USA arrangement	—	24,601,467	—	—	—	24,601,467	—	55,520	—	—	—	55,520
Share-based compensation expense	—	—	—	—	—	—	—	12,162	—	—	—	12,162
Options and warrants expired/forfeited	—	—	—	—	—	—	—	(26,302)	—	26,302	—	—
Capital distributions	—	—	—	—	—	—	—	—	—	—	(7,550)	(7,550)
Net loss for the year	—	—	—	—	—	—	—	—	—	(329,908)	4,557	(325,351)
Foreign currency translation	—	—	—	—	—	—	—	—	(738)	—	—	(738)
Balance at December 31, 2022	259,624,531	76,996,538	12,608	600	—	349,829,273	—	$934,972	$2,085	$(618,260)	$2,374	$321,171
Shares issued - stock options, warrant and RSU	1,913,641	—	—	—	—	1,913,641	—	98	—	—	—	98
Shares, options and warrants issued - acquisitions	5,913,963	—	—	—	—	5,913,963	—	8,601	—	—	—	8,601
Shares, options and warrants issued - legal settlement	532,185	—	—	—	—	532,185	—	794	—	—	—	794
Warrants issued for services performed	—	—	—	—	—	—	—	1,000	—	—	—	1,000
Shares issued - conversion	13,762,500	(13,504,500)	(258)	—	—	—	—	—	—	—	—	—
Private placement net of share issuance costs	6,580,677	—	—	—	—	6,580,677	—	7,507	—	—	—	7,507
Share-based compensation expense	—	—	—	—	—	—	—	7,707	—	—	—	7,707
Options and warrants expired/forfeited	—	—	—	—	—	—	—	(9,643)	—	9,643	—	—
Capital distributions	—	—	—	—	—	—	—	—	—	—	(11,622)	(11,622)
Acquisition of non-controlling interest	—	—	—	—	—	—	—	(6,177)	—	—	(1,323)	(7,500)
Net loss for the year	—	—	—	—	—	—	—	—	—	(95,545)	8,815	(86,730)
Foreign currency translation	—	—	—	—	—	—	—	—	(286)	—	—	(286)
Balance at December 31, 2023	288,327,497	63,492,038	12,350	600	—	364,769,739	—	$944,859	$1,799	$(704,162)	$(1,756)	$240,740
Shares issued - stock options, warrant and RSU	1,249,216	—	—	—	—	1,249,216	—	—	—	—	—	—
Shares issued - price protection adjustment	874,730	—	—	—	—	874,730	—	693	—	—	—	693
Share-based compensation expense	—	—	—	—	—	—	—	9,706	—	—	—	9,706
Options and warrants expired/forfeited	—	—	—	—	—	—	—	(5,880)	—	5,880	—	—
Capital distributions	—	—	—	—	—	—	—	—	—	—	(7,324)	(7,324)
Repurchase of common stock, including excise tax	(107,400)	—	—	—	—	(107,400)	(129,500)	(215)	—	—	—	(215)
Acquisition of non-controlling interest	2,888,088	—	—	—	—	2,888,088	—	3,300	—	—	1,374	4,674
Net loss for the year	—	—	—	—	—	—	—	—	—	(80,232)	7,562	(72,670)
Foreign currency translation	—	—	—	—	—	—	—	—	1,212	—	—	1,212
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

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

TerrAscend Corp.

Consolidated Statements of Cash Flows
(Amounts expressed in thousands of United States dollars, except for per share amounts)

	December 31, 2024	For the Years Ended December 31, 2023	December 31, 2022
Operating activities
Net loss from continuing operations	$ (72,670)	$ (82,286)	$ (299,402)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities	—	—	—
Non-cash adjustments of inventory	—	985	9,082
Accretion expense	11,622	10,674	9,740
Depreciation of property and equipment and amortization of intangible assets	20,103	20,382	22,624
Amortization of operating right-of-use assets	2,882	2,319	1,980
Share-based compensation	9,706	7,707	12,162
Deferred income tax recovery	(8,746)	(18,615)	(35,299)
Gain on fair value of derivative liabilities and purchase option derivative assets	(4,549)	(322)	(58,523)
Gain on disposal of fixed assets	(30)	(1,914)	—
Unrealized and realized loss (gain) on investments	238	2,603	(43)
Loss (gain) from revaluation of contingent consideration	2,465	(645)	(1,061)
Impairment of goodwill and intangible assets	39,334	55,993	311,084
Impairment of property and equipment and right of use assets	8,511	2,079	1,089
(Gain) loss on lease termination and derecognition of finance lease	(1,220)	(1,217)	1,163
Release of indemnification asset	—	—	3,973
Bad debt (recovery) expense	(1,136)	—	9,941
Employee Retention Credits recorded in other income	—	—	(9,440)
Loss (gain) on extinguishment of debt	1,662	—	(4,153)
Debt modification fees	—	—	2,507
Unrealized and realized foreign exchange loss (gain)	940	(53)	712
Changes in operating assets and liabilities
Receivables	(2,950)	(9,259)	2,862
Inventory	4,166	(5,185)	676
Prepaid expense and other current assets	307	1,198	856
Deposits	169	500	3,666
Other assets	78	797	711
Accounts payable and accrued liabilities and other payables	(5,288)	644	(12,103)
Operating lease liability	(2,351)	(1,861)	(1,314)
Other liability	(388)	(2,070)	(13,846)
Uncertain tax position liabilities	27,364	66,404	3,905
Contingent consideration payable	—	—	(410)
Corporate income tax payable	6,756	(18,946)	14,598
Deferred revenue	975	1,219	428
Net cash provided by (used in) operating activities- continuing operations	37,950	31,131	(21,835)
Net cash used in operating activities - discontinued operations	—	(3,660)	(4,288)
Net cash provided by (used in) operating activities	37,950	27,471	(26,123)
Investing activities
Investment in property and equipment	(9,362)	(7,762)	(39,631)
Investment in note receivable, net of interest received	(1,460)	—	—
Investment in intangible assets	(1,187)	(1,666)	(2,261)
Principle payments received on lease receivable	—	—	515
Insurance recovery for property and equipment	871	—	—
Success fees related to Alternative Treatment Center license	—	(3,012)	—
Deposits for business acquisition	—	—	(1,065)
Payment for land contracts	(859)	(1,275)	(1,271)
Cash portion of consideration paid in acquisitions, net of cash of acquired	(250)	(16,789)	16,227
Net cash used in investing activities - continuing operations	(12,247)	(30,504)	(27,486)
Net cash provided by (used in) investing activities - discontinued operations	—	14,285	(93)
Net cash used in investing activities	(12,247)	(16,219)	(27,579)
Financing activities
Transfer of Employee Retention Credit	—	12,677	—
Proceeds from loan payable, net of transaction costs	129,382	23,869	43,419
Proceeds from options and warrants exercised	—	98	24,342
Loan principal paid	(146,159)	(50,154)	(42,221)
Loan amendment fee paid and prepayment premium paid	—	(1,178)	(4,977)
Tax distributions to NJ partners	—	—	(1,539)
Capital distributions paid to non-controlling interests	(7,324)	(11,621)	(7,550)
Proceeds from contingent consideration	—	—	(6,630)
Proceeds from private placement, net of share issuance costs	—	20,822	—
Payments made for financing obligations and finance lease	(400)	(1,474)	(1,125)
Repurchases of common shares	(215)	—	—
Net cash (used in) provided by financing activities- continuing operations	(24,716)	(6,961)	3,719
Net cash used in financing activities- discontinued operations	—	(5,539)	—
Net cash (used in) provided by financing activities	(24,716)	(12,500)	3,719
Net increase (decrease) in cash and cash equivalents and restricted cash during the year	987	(1,248)	(49,983)
Net effects of foreign exchange	653	(168)	(2,896)
Cash and cash equivalents and restricted cash, beginning of the year	25,347	26,763	79,642
Cash and cash equivalents and restricted cash, end of the year	$ 26,987	$ 25,347	$ 26,763

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

TerrAscend Corp.

Consolidated Statements of Cash Flows (Continued)

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

	For the Years Ended
	December 31, 2024	December 31, 2023	December 31, 2022
Supplemental disclosure with respect to cash flows
Cash (received) paid for income tax, net	$ (6,229)	$ 3,280	$ (9,917)
Interest paid	23,847	23,037	26,840
Lease termination fee paid	271	379	3,300
Non-cash transactions
Equity and warrant liability issued for acquisitions and non-controlling interest	$ 4,674	$ 8,601	$ 338,739
Equity issued for price protection on contingent consideration	693	—	—
Change in accrued capital expenditures	(1,098)	1,494	2,187
Warrant issued as consideration for services	—	1,000	—
Promissory note issued as consideration for acquisitions	—	11,689	10,000
Shares issued for legal and liability settlement	—	794	264
Shares issued by Canopy USA arrangement	—	—	55,520

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

F-7

F-8

TERRASCEND CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit 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, 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, Michigan, Maryland and California. In addition, the Company has retail operations in 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 U.S. federal law for any purpose, by way of the Controlled Substances Act of 1970 (the "Controlled Substances Act").

The Company operates under one reportable segment, which is the cultivation, production and sale of cannabis products.

The Company owns a portfolio of operating businesses, including:

TerrAscend New Jersey ("TerrAscend NJ"), a majority-owned operation with three 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 Michigan ("TerrAscend MI"), a wholly-owned operation with twenty dispensaries, one cultivation facility, one processing facility, and two cultivation/processing facilities;
TerrAscend California ("TerrAscend CA"), a wholly-owned operation with four dispensaries, and a cultivation facility; and;
TerrAscend Canada Inc. ("TerrAscend Canada"), a cannabis retailer in Ontario, Canada with a majority-owned dispensary in Toronto, Ontario, Canada ("Cookies Canada").

The common shares in the capital of the Company ("Common Shares") commenced trading on the Canadian Securities Exchange ("CSE") 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 OTCQX 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.

2. Summary of significant accounting policies

(a) Basis of presentation and measurement and going concern

These consolidated financial statements as of December 31, 2024 and December 31, 2023 and for the years ended December 31, 2024, December 31, 2023, and December 31, 2022 (the "Consolidated Financial Statements") of the Company were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

The accompanying Consolidated Financial Statements have been prepared on the going concern basis, under the historical cost convention, except for certain financial instruments that are measured at fair value as described herein.

The Company previously concluded that substantial doubt existed as to its ability to continue as a going concern primarily due to the Company's current liabilities exceeding its current assets related to its loans maturing within the current year. During the year ended on December 31, 2024, the Company entered into a four-year $140,000 senior secured term loan which was

F-9

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

primarily used to retire a majority of the Company's loans coming due within the next year. See Note 10 for more information regarding the refinancing.

Following the retiring and financing of the Company’s loans coming due within the next year, along with its ability to identify access to future capital, and continued improvement in cash flow from the Company's consolidated operations, management has determined that substantial doubt no longer exists in the Company's ability to continue as a going concern.

Reclassification

Certain prior year amounts have been reclassified to conform to the current year presentation. Specifically, (Gain) loss on disposal of fixed assets has been reclassified out of Impairment of property and equipment and right of use assets and into Other operating income on the Consolidated Statements of Operations and Comprehensive Loss.

(b) Functional and presentation currency

All operations in the United States have a functional currency of the U.S dollar ("USD"). Canadian operations have a functional currency of Canadian dollars ("CAD"). The Company’s presentation currency is in USD. All amounts are presented in USD unless otherwise specified. References to CAD are to Canadian dollars.

(c) Basis of consolidation

These Consolidated Financial Statements include the financial information of the Company. The Company consolidates legal entities in which it holds a controlling financial interest. The Company has a two-tier consolidation model: one focused on voting rights (the voting interest model) and the second focused on a qualitative analysis of power over significant activities and exposure to potentially significant losses or benefits (the variable interest model). All entities are first evaluated to determine whether they are variable interest entities ("VIE"). If an entity is determined not to be a VIE, it is assessed on the basis of voting and other decision-making rights under the voting interest model ("VOE").

Voting Interest Entities

A VOE is an entity in which (i) the total equity investment at risk is deemed sufficient to absorb the expected losses of the entity, (ii) the at-risk equity holders, as a group, have all of the characteristics of a controlling financial interest and (iii) the entity is structured with substantive voting rights. The Company consolidates its Canadian operations under a VOE model based on the controlling financial interest obtained through Common Shares with substantive voting rights.

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 (i) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance (power) and (ii) 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).

The accounts of the subsidiaries are prepared for the same reporting period using consistent accounting policies. For further information on VIEs, see Note 3.

All intercompany balances and transactions were eliminated on consolidation.

(d) Cash, cash equivalents and restricted cash

Cash and cash equivalents include cash on hand at retail locations, demand deposits with financial institutions and other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and subject to an insignificant risk of change in value. Cash held in money market investments are carried at fair value, cash held in financial institutions and cash held at retail locations have carrying values that approximate fair value. Restricted cash consists of cash held with financial institutions which are subject to certain withdrawal restrictions.

F-10

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

(e) Accounts Receivable

Accounts receivable are recorded net of current expected credit losses. The Company estimates current expected credit losses based on existing contractual payment terms, actual payment patterns of its customers and individual customer circumstances.

(f) Inventory

Inventories of harvested and purchased finished goods as well as packaging materials are valued at the lower of cost or net realizable value. Net realizable value is determined as the estimated selling price in the ordinary course of business less the reasonably predictable costs of completion, disposal and transportation. The direct and indirect costs of inventory include materials, labor and depreciation expense on property and equipment involved in packaging, labeling and inspection. Inventories are generally maintained with the weighted average cost method. Amortization of acquired cannabis production licenses as well as royalties paid relating to the production of inventory are also considered to be indirect costs of inventory. All direct and indirect costs related to inventory are capitalized as they are incurred and they are subsequently recorded within cost of sales on the Consolidated Statements of Operations and Comprehensive Loss at the time cannabis is sold.

Products for resale and supplies and consumables are valued at the lower of cost or net realizable value. The Company reviews inventory for obsolete, redundant, and slow-moving goods, and any such inventories are written down to net realizable value.

(g) Property and equipment and long-lived assets held for sale

Property and equipment is measured at cost, including capitalized borrowing costs, less accumulated depreciation and impairment losses. Ordinary repairs and maintenance are expensed as incurred. Depreciation 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	Lease term
Assets in process	Not depreciated

Assets in process are transferred to the appropriate asset type when available for use and depreciation of the assets commences at that point.

The Company classifies assets and liabilities (the "disposal group") as held for sale in the period when all of the relevant criteria to be classified as held for sale are met. Long-lived assets held for sale are recorded at the lower of their carrying value or fair value less costs to sell. Any loss resulting from the measurement is recognized in the period during which the held for sale criteria is met. The Company discontinues depreciation on these assets.

An asset's residual value, useful life and depreciation method are reviewed annually, or when events or circumstances indicate that the current estimate or depreciation method are no longer applicable. Changes are adjusted prospectively if appropriate. Gains and losses on disposal of an asset are determined by comparing the proceeds from disposal with the carrying amount of the items and are recognized in the Consolidated Statements of Operations and Comprehensive Loss.

The Company evaluates the recoverability of property and equipment whenever events or changes in circumstances indicate that the carrying value of the asset or asset group may not be recoverable. See – Impairment of long-lived assets information within this note for detailed information on the Company's impairment assessment of its property and equipment.

The Company capitalizes interest and borrowing costs on significant qualifying capital construction projects. Upon the asset becoming available for use, capitalization of borrowing costs ceases, and depreciation commences on a straight-line basis over the estimated useful life of the related asset.

(h) Leases

Leases are classified as operating or finance leases based on the terms of the lease agreement and certain characteristics of the identified assets. The majority of the Company's leases are operating leases used primarily for corporate offices, retail

F-11

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

dispensaries, and cultivation and manufacturing facilities. The remaining operating lease periods range from 1 to 24 years. Additionally, the Company has one finance lease at December 31, 2024 and two finance leases at December 31, 2023. The remaining lease period for the finance lease is less than one year.

The Company’s leases include fixed payments, as well as in some cases, scheduled base rent increases over the term of the lease. Certain leases require variable payments of common area maintenance, operating expenses, and real estate taxes applicable to the property. Variable payments are excluded from the measurements of lease liabilities and are expensed as incurred. Any tenant improvement allowances received from the lessor are recorded as a reduction to rent expense over the term of the lease. None of the Company’s lease agreements contain residual value guarantees or material restrictive covenants.

The Company determines if an arrangement is a lease at the inception of the contract. Lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term for those arrangements where there is an identified asset and the contract conveys the right to control its use. The right-of-use (“ROU”) asset is measured at the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, and initial direct costs. For operating leases, right-of-use assets are reduced over the lease term by the straight-line expense recognized, less the amount of accretion of the lease liability determined by using the effective interest rate method. Finance leases are included in property and equipment in the Company's Consolidated Balance Sheets.

Operating lease expense is recognized on a straight-line basis over the term of the lease and is included in cost of sales and general and administrative expense in the Company’s Consolidated Statements of Operations and Comprehensive Loss. Finance lease cost includes amortization, which is recognized on a straight-line basis over the expected life of the lease asset, and interest expense, which is recognized following an effective interest rate method and is included in finance and other expenses in the Company’s Consolidated Statements of Operations and Comprehensive Loss.

The majority of the Company’s leases do not provide an implicit rate that can be easily determined. Therefore, the Company applies its incremental borrowing rate to the lease based on the information available at the commencement date (see Note 11).

Certain leases include one or more options to renew or terminate the lease at the Company’s discretion. The Company regularly evaluates lease renewal and termination options and, when they are reasonably certain of the exercise of the option to renew or terminate a lease, incorporates the renewal or termination term for accounting purposes.

The Company evaluates its ROU assets for impairment consistent with its impairment of long-lived assets. See – Impairment of long-lived assets information within this note for detailed information on the Company’s impairment assessment of its right-of-use assets.

In some instances, the Company subleases excess office space to third-party tenants. The Company, as sublessor, continues to account for the head lease. If the lease cost for the term of the sublease exceeds the Company’s anticipated sublease income for the same period, this indicates that the ROU asset associated with the head lease should be assessed for impairment under the long-lived asset impairment provisions. Sublease income is included in Finance (expense) income in the Company’s Consolidated Statements of Operations and Comprehensive Loss.

The Company accounts for non-lease and lease components to which they relate as a single lease component. Additionally, the Company recognized lease payments under short-term leases with an initial term of twelve months or less, as well as low value assets, as an expense on a straight-line basis over the lease term without recognizing the lease liability and ROU asset.

(i) Goodwill

Goodwill is recorded at the time of acquisition and represents the excess of the aggregate consideration paid for an acquisition over the fair value of the net tangible and intangible assets acquired. Goodwill is not subject to amortization and is tested for impairment on an annual basis or more frequently if events or changes in circumstances indicate that they might be impaired. See – Impairment of goodwill and intangible assets information within this note for detailed information on the Company’s impairment assessment of its goodwill and intangible assets.

(j) Intangible assets

Intangible assets are recorded at cost less accumulated amortization and impairment losses, if any. Intangible assets acquired in a business combination are measured at fair value at the acquisition date. Amortization is provided on a straight-line basis

F-12

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

over the assets' estimated useful lives, which do not exceed the contractual period, if any. The estimated useful lives, residual values and amortization methods are reviewed annually and any changes in estimates are accounted for prospectively. Amortization is calculated on a straight-line basis over the following terms:

Brand intangibles - indefinite lives	Indefinite useful lives
Brand intangibles - definite lives	3 years
Software	5 years
Licenses	15-30 years
Non-compete agreements	3 years

Licenses relating to cultivation and dispensaries are amortized using a useful life consistent with the property and equipment to which they relate.

Intangible assets that have indefinite useful lives, which include brand names, are not subject to amortization but the carrying value is tested for impairment on an annual basis or more frequently if events or changes in circumstances indicate that they may be impaired. See – Impairment of long-lived assets information within this note for detailed information on the Company’s impairment assessment of its goodwill and intangible assets.

(k) Impairment of indefinite lived intangible assets and goodwill

The Company operates as one reportable segment. For the purposes of testing goodwill, the Company has identified six reporting units. The Company analyzed its reporting units by first reviewing the operating statements based on the jurisdictions in which the Company conducts business (or each market).

Goodwill is reviewed for impairment annually and whenever there are events or changes in circumstances that indicate the carrying amount has been impaired. The Company has the option to first assess qualitative factors to determine whether a quantitative goodwill impairment test is necessary. If the Company concludes it is more likely than not that the fair value of a reporting unit exceeds its carrying value, a quantitative fair value test is performed. If the carrying value of the reporting unit exceeds the estimated fair value, a goodwill impairment charge is recorded.

Indefinite lived intangible assets are tested for impairment annually or more frequently if events or changes in circumstances between annual tests indicate that the asset may be impaired. Impairment losses on indefinite lived intangible assets are recognized based on a comparison of the fair value of the asset to its carrying value.

(l) Impairment of long-lived assets and definite lived intangible assets

The Company evaluates the recoverability of long-lived assets, including property and equipment, ROU assets, and definite lived intangible assets, based on whether events or changes in circumstances indicate that the carrying value of the asset, or asset group, may not be recoverable.

When the Company determines that the carrying value of the long-lived asset may not be recoverable based upon the existence of one or more indicators, the assets are assessed for impairment based on the estimate of future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the undiscounted cash flows are less than the carrying value, the Company measures the fair value of the asset group. In certain circumstances, an appraisal was obtained to determine the fair value of certain long-lived assets. If the carrying value of an asset group exceeds its fair value, an impairment loss is recorded for the excess of the asset group’s carrying value over its estimated fair value.

(m) Revenue recognition

Revenue is recognized by the Company in accordance with ASU 2014-09 Revenue from Contracts with Customers (Topic 606). The standard requires sales to be recognized in a manner that depicts the transfer of promised goods or services to a customer and at an amount that reflects the consideration expected to be received in exchange for transferring those goods or services. This is achieved by applying the following five steps: i) identify the contract with a customer; ii) identify the

F-13

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

performance obligations in the contract; iii) determine the transaction price; iv) allocate the transaction price to the performance obligations in the contract; and v) recognize sales when (or as) the entity satisfies a performance obligation.

Revenues consist of wholesale and retail sales, which are recognized when control of the goods has transferred to the purchaser and the collectability is reasonably assured. This is generally when goods have been delivered, which is also when the performance obligations have been fulfilled under the terms of the related sales contract. Revenue from retail sales of cannabis to customers for a fixed price is recognized when the Company transfers control of the goods to the customer at the point of sale and the customer has accepted and paid for the goods. Revenue for wholesale sales for a fixed price is recognized upon delivery to the customer. Sales are recorded net of returns and discounts and incentives, but inclusive of freight. Payment is typically due upon transferring the goods to the customer or within a specified time period permitted under the Company's credit policy. All shipping and handling activities are performed before the customers obtain control of products and are accounted for as cost of sales.

From time to time, the Company enters into sales agreements with suppliers pursuant to which it also purchases inventory. As part of the five-step revenue model, the Company assesses whether instances of bulk sales made to suppliers of goods have commercial substance and should be recognized as revenue, or whether they should be assessed under Accounting Standards Codification ("ASC") 845, Nonmonetary Transactions.

Local authorities will often impose excise or cultivation taxes on the sale or production of cannabis products. Excise and cultivation taxes are effectively a production tax which become payable when a cannabis product is delivered to the customer and are not directly related to the value of sales. The Company has made a policy election to exclude from the measurement of transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with the specific revenue-producing transaction and collected by the Company from a customer. Therefore, the net revenue on the Consolidated Statements of Operations and Comprehensive Loss is netted for any excise or cultivation taxes.

(n) Business combinations

The Company accounts for business combinations using the acquisition method when control is obtained by the Company (see Note 2(c)). The Company measures the consideration transferred, the assets acquired, and the liabilities assumed in a business combination at their acquisition-date fair values. Acquisition related costs are recognized as expenses in the periods in which the costs are incurred, and the services are received, except for the costs to issue debt or equity securities which are recognized according to specific requirements. The excess of the consideration transferred to obtain control, over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed, is recognized as goodwill as of the acquisition date.

Contingent consideration for a business combination is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as a liability is measured at subsequent reporting dates at fair value with the corresponding gain or loss being recognized in profit or loss.

If the acquiree's former owners contractually indemnify the Company for a particular uncertainty, an indemnification asset is recognized on a basis that matches the indemnified item, subject to the contractual provisions or any collectability considerations.

(o) Investments

The majority of the Company's investments are initially recorded at cost. Management assesses investments for impairment on an annual basis, or when events or changes in circumstances indicate that the carrying value of the investment may not be recoverable.

(p) Non-controlling interests

Non-controlling interests ("NCI") represents equity interests owned by outside parties. NCI is initially measured at fair value as of the acquisition date (see Note 2z(vii)).

(q) Income taxes

Income tax expense, consisting of current and deferred tax expense, is recognized in the Consolidated Statements of Operations and Comprehensive Loss. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates

F-14

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

enacted at period-end, adjusted for amendments to tax payable with regard to previous years. Deferred tax assets and liabilities and the related deferred income tax expense or recovery are recognized for deferred tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply when the asset is realized, or the liability settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income (loss) in the period that enactment occurs. A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. To the extent that the Company does not consider it more likely than not that a deferred tax asset will be recovered, the deferred tax asset is reduced. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

The Internal Revenue Service (the "IRS") has taken the position that cannabis companies are subject to the limits of Section 280E of the Internal Revenue Code of 1986, as amended (the "Code"), under which they are only allowed to deduct expenses directly related to the cost of producing the products or cost of production. The Company has taken the position that it does not owe taxes attributable to the application of Section 280E the Code. This position is treated as an unrecognized tax benefit, and is recorded on the Consolidated Balance Sheets as a liability on uncertain tax position and other long term liabilities.

(r) Share capital

Common Shares

Common Shares are classified as equity. The proceeds from the exercise of stock options and warrants are recorded as share capital. Incremental costs directly attributable to the issuance of Common Shares are recognized as a deduction from equity.

Equity units

Equity units are comprised of Common Shares and one-half warrants. Warrants issued during the year are classified as liabilities. The proceeds are allocated first to warrants based on their fair value, measured using the Black-Scholes Option Pricing Model (the "Black-Scholes Model"), and the residual is allocated to Common Shares.

Treasury Stock

Repurchases of Common Shares are accounted for at cost and are included as a component of shareholders' equity in the Consolidated Balance Sheets. The Common Shares are then canceled in subsequent transactions.

(s) Share-based compensation

The Company has a stock option plan in place (the "Stock Option Plan"). The Company measures equity settled share-based payments based on their fair value at the grant date and recognizes compensation expense on a straight-line basis over the vesting period. Fair value is measured using the Black-Scholes Model. In estimating fair value, management is required to make certain assumptions and estimates such as the expected term of the award, volatility of the future price of the Common Shares, risk free rates, and future dividend yields at the initial grant date. Changes in assumptions used to estimate fair value could result in materially different results. Forfeitures are accounted for as they occur rather than estimating for them at the grant date.

Upon exercise of stock options and warrants that are classified as equity, any historical fair value in the warrants and share-based compensation reserve is allocated to additional paid in capital. Amounts recorded for expired unexercised stock options and warrants are transferred to deficit in the year of expiration.

The fair value of restricted share units is based on the closing price of the Company's stock as of the grant date. Compensation expense is recognized on a straight-line basis, by amortizing the grant date fair value over the vesting period.

(t) Convertible instruments

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities.

F-15

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

The Company issued convertible debentures with detachable share purchase warrants at various times to raise capital to expand its business and support general corporate needs. The convertible instruments also included embedded derivatives in the form of conversion features and put options. Management evaluated the convertible debentures to determine the proper accounting and whether the embedded derivatives required bifurcation from the host instrument.

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. The proceeds are allocated first to the conversion option based on its fair value, measured using the Black-Scholes Model, and the residual was allocated to the host instrument and recorded as convertible debt at amortized cost.

(u) Convertible preferred stock and detachable warrants

The Company evaluates convertible preferred stock in accordance with ASC 470-20-35-7, Debt with Conversion and Other Options. The preferred shares in the capital of the Company (the "Preferred Shares") are convertible into Common Shares at a conversion ratio of one Preferred Share for 1,000 Common Shares. All series of Preferred Shares are classified as shareholders' equity in the Company's Consolidated Balance Sheets. The fair value of the related Preferred Shares is based on the closing price of the Common Shares on the day of issuance of the Preferred Shares.

Included in the issuance were detachable warrants to purchase Preferred Shares. The detachable purchase warrants were evaluated for equity or liability classification and were determined to meet liability classification. The warrants are legally detachable and separately exercisable from the Preferred Shares.

(v) Warrant liability

The Company may issue Common Share warrants with debt, equity or as a standalone financing instrument that is recorded as either liabilities or equity in accordance with the respective accounting guidance. Warrants recorded as equity are recorded at their relative fair value determined at the issuance date and remeasurement is not required. Warrants recorded as liabilities are recorded at their fair value, within warrant liability on the Consolidated Balance Sheets, and remeasured on each reporting date with changes recorded in the Company's Consolidated Statements of Operations and Comprehensive Loss.

(w) Embedded derivative liabilities

The Company evaluates its financial instruments to determine if those instruments or any embedded components of those instruments qualify as derivatives that need to be separately accounted for in accordance with ASC 815, Derivatives and Hedging. Embedded derivatives satisfying certain criteria are recorded at fair value at issuance and marked-to-market at each balance sheet date with the change in the fair value recorded as income or expense. In addition, upon the occurrence of an event that requires the derivative liability to be reclassified to equity, the derivative liability is revalued to fair value at that date.

(x) (Loss) earnings per share

The Company presents basic and diluted (loss) earnings per share data for its ordinary shares. Basic (loss) earnings per share is calculated using the treasury stock method, by dividing the (loss) income attributable to holders of Common Shares and proportionate voting shares in the capital of the Company ("Proportionate Voting Shares") by the weighted average number of Common Shares and Proportionate Voting Shares outstanding during the period. Contingently issuable shares (including shares held in escrow) are not considered outstanding Common Shares and consequently are not included in the (loss) earnings per share calculations. The Company has the following categories of potentially dilutive Common Share equivalents: RSUs (as defined below), stock options, warrants, Preferred Shares, non-participating non-voting exchangeable shares in the capital of the Company ("Exchangeable Shares") and convertible debentures.

In order to determine diluted (loss) earnings per share, it is assumed that any proceeds from the exercise of dilutive instruments would be used to repurchase Common Shares at the average market price during the period. The Company also considers all outstanding convertible securities, such as the Preferred Shares, convertible debentures, and outstanding Exchangeable Shares as if such instruments were converted into Common Shares.

Diluted (loss) earnings per share is determined by adjusting the (loss) income attributable to common shareholders and the weighted average number of Common Shares and Proportionate Voting Shares outstanding, adjusted for the effects of all dilutive potential Common Shares and Proportionate Voting Shares. Proportionate Voting Shares are converted to their

F-16

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

Common Share equivalent of one thousand Common Shares for every one Proportionate Voting Share for the purposes of calculating basic and diluted (loss) earnings per share. In a period of losses, all of the potentially dilutive Common Share equivalents are excluded in the determination of dilutive net loss per share because their effect is antidilutive. During the years ended December 31, 2024, December 31, 2023 and December 31, 2022, no potentially dilutive Common Share equivalents were included in the computation of diluted loss per share because their impact would have been anti-dilutive.

(y) Discontinued operations

The Company deems it appropriate to classify a part of the business as discontinued operations if the related disposal group meets all of the following criteria: (i) the disposal group is a component of the Company, (ii) the component meets the held-for-sale criteria, and (iii) the disposal of the component represents a strategic shift that has a major effect on the Company's operations and financial results. A disposal group that represents a strategic shift to the Company is reflected as discontinued operations on the Consolidated Statements of Operations and Comprehensive Loss and prior periods are recast to reflect the earnings or losses as income from discontinued operations.

TerrAscend Canada is a cannabis retailer in Ontario, Canada. TerrAscend Canada operates the Company's a majority-owned Cookies Canada dispensary in Toronto, Ontario, Canada. TerrAscend Canada was previously a Licensed Producer (as such term is defined in the Cannabis Act) of cannabis until the Company commenced an optimization of its operations in Canada, whereby the Company reduced its manufacturing footprint in order to focus on its Canadian retail business. The Company ceased operations at TerrAscend Canada's manufacturing facility during the three months ended December 31, 2022.

All prior year amounts from discontinued operations have been reclassified for consistency with the current year presentation.

(z) Use of significant estimates and judgments

The preparation of the Company’s Consolidated Financial Statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Management has applied significant estimates and judgments related to the following:

i) Inventory

The determination of net realizable value requires significant judgment, including consideration of factors such as shrinkage, the aging of and future demand for inventory, expected future selling price the Company expects to realize by selling the inventory, and the contractual arrangements with customers. Reserves for excess and obsolete inventory are based upon quantities on hand, projected volumes from demand forecasts and net realizable value. The future realization of these inventories may be affected by market-driven changes that may reduce future selling prices. A change to these assumptions could impact the Company’s inventory valuation and gross profit.

The impact of inventory reserves is reflected in cost of sales.

ii) Revenue recognition

From time to time, the Company partakes in sales agreements with suppliers in which it also purchases inventory. As part of the five-step revenue model, the Company assesses whether instances of bulk sales made to suppliers of goods have commercial substance and should be recognized as revenue, or whether they should be assessed under ASC 845, Nonmonetary Transactions, which requires management judgment to determine if the transaction has commercial substance.

iii) Share-based payments

In calculating share-based compensation expense, key estimates are used such as the expected term of the award, the volatility of the Company’s stock price, and the risk-free interest rate.

F-17

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

iv) Warrant liability and contingent consideration

The Company calculates the fair value of warrants issued and contingent consideration from business combinations using key estimates, including stock price volatility and the risk-free interest rate. The Company exercises judgment in selecting valuation methods and performing fair value calculations, both at the initial measurement upon issuance or acquisition and during subsequent recurring remeasurements.

v) Income taxes

The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company generating future taxable income against which the deferred tax assets can be utilized. In addition, significant judgment is required in classifying transactions and assessing probable outcomes of tax positions taken, and in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions.

Provisions for taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Company reviews the adequacy of these provisions at the end of the reporting period. It is possible, however, that at some future date, an additional liability could result from audits by taxing authorities.

vi) Impairment of goodwill, intangible assets, and long-lived assets

The Company assesses goodwill, intangible assets, and long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Goodwill and indefinite-lived intangible assets are tested for impairment annually, while finite-lived intangible assets and long-lived assets are evaluated whenever indicators of impairment exist. The Company's impairment loss calculation contains significant estimates and assumptions while applying judgment to qualitative factors as well as estimating future cash flows and asset fair values, including forecasting projected financial information and selecting the discount rate that reflects the risk inherent in future cash flows.

vii) Business combinations

Classification of an acquisition as a business combination or an asset acquisition depends on whether the asset acquired constitutes a business, which can be a complex judgment. The Company has determined that its acquisitions in Note 5 are business combinations under ASC, 805 Business Combinations.

In a business combination, substantially all identifiable assets, liabilities and contingent liabilities acquired are recorded at the date of acquisition at their respective fair values. One of the most significant areas of judgment and estimation relates to the determination of the fair value of these assets and liabilities, including the fair value of contingent consideration, if applicable. If any intangible assets are identified, depending on the type of intangible asset and the complexity of determining its fair value, the Company may utilize an independent external valuation expert to develop the fair value, using appropriate valuation techniques, which are generally based on a forecast of the total expected future net cash flows. These valuations are linked closely to the assumptions made by management regarding the future performance of the assets concerned and any changes in the discount rate applied.

viii) Incremental borrowing rates

Lease payments are discounted using the rate implicit in the lease if that rate is readily available. If that rate cannot be easily determined, the lessee is required to use its incremental borrowing rate. The incremental borrowing rate is the rate of interest that the Company estimates it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. The Company calculates its incremental borrowing rate as the interest rate the Company would pay to borrow funds necessary to obtain an asset of similar value over similar

F-18

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

terms taking into consideration the economic factors and the credit risk rating at the commencement date of the lease.

ix) Control, joint control or level of influence

When determining the appropriate basis of accounting for the Company’s interests in affiliates, the Company makes judgments about the degree of influence that it exerts directly or through an arrangement over the investees’ relevant activities.

x) Employee Retention Tax Credit

The Employee Retention Tax Credit ("ERC"), introduced under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), provided refundable tax credits to eligible businesses affected by COVID-19-related shutdowns or revenue declines from March 13, 2020, to December 31, 2021. The Company elected to account for the ERC as a government grant under International Accounting Standard ("IAS") 20, Accounting for Government Grants and Disclosure of Government Assistance, due to limited applicable U.S. GAAP guidance. The collectability of the ERC requires significant judgment, including an assessment of eligibility. No formal determination has been made regarding the Company’s eligibility to receive the ERC, and there remains a risk that a regulatory determination could deem the Company ineligible, potentially impacting amounts previously recognized.

xi) Variable Interest Entity

The Company consolidates legal entities in which it holds a controlling financial interest. Determining whether it has a controlling financial interest in VIE is subject to significant judgment and estimates. There is inherent uncertainty in evaluating who has the power to direct the activities of the VIE that most significantly impact the entity's economic performance. Our considerations include, but are not limited to, voting interests of the VIE, management, service and other agreements with the VIE, involvement in the VIE’s initial design and the existence of explicit or implicit financial guarantees. Management has applied significant judgment when evaluating the facts and circumstances of the VIE (see Note 3).

xii) Current Expected Credit Losses

Management determines the current expected credit losses by evaluating individual receivable balances along with the consideration of other financial and current economic conditions. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded as income when received. All receivables are expected to be collected within one year of the balance sheet date.

(aa) New standards, amendments and interpretations adopted

(i) In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The expanded annual disclosures are effective for the financial year ended December 31, 2024, and the expanded interim disclosures will be effective for the financial year ending 2025 and will be applied retrospectively to all prior periods presented. The Company adopted this standard during the year ended December 31, 2024, see Note 21.

(ab) New standards, amendments and interpretations not yet adopted

(i) In November 2024, the Financial Accounting Standards Board ("FASB") issued ASU 2024-03, Income Statement – Reporting Comprehensive Loss – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, a new accounting standard to improve the disclosures about an entity’s expenses and address requests from investors for more detailed information about the types of expenses included in commonly presented expense captions. The new standard will be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with retrospective application permitted. The Company is currently evaluating the

F-19

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

impact of ASU 2024-03 on its Consolidated Financial Statements; however, the Company does not expect the adoption of ASU 2024-03 to have a material impact on its Consolidated Financial Statements.

(ii) In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires, among other things, additional disclosures primarily related to the income tax rate reconciliation and income taxes paid. The expanded annual disclosures will be effective for the financial year ending December 31, 2025. The Company is currently evaluating the impact that ASU 2023-09 will have on its Consolidated Financial Statements and whether we will apply the standard prospectively or retrospectively.

3. Consolidation

In connection with the listing of the Common Shares on the TSX, the Company reorganized its ownership structure to segregate the Company's Canadian retail operations from TerrAscend's cultivation and manufacturing operations in the United States (the "Reorganization"). Following the completion of the Reorganization, the Company owns 95% of its Canadian retail business. The Company continues to consolidate both its Canadian and U.S. cannabis operations under two different consolidation models.

In connection with the 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 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 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 in accordance with ASC 810, Consolidation.

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. The Company's assets and liabilities that are not consolidated through the VIE model include convertible debt and derivative liability. The Company also consolidates a minimal amount of assets and liabilities within Canada, see Note 21 for more information.

4. Accounts receivable, net

The following table presents the Company's accounts receivable balances, including the allowance for credit losses:

	December 31, 2024	December 31, 2023
Trade receivables	$ 20,243	$ 28,403
Sales tax receivable	970	408
Other receivables	1,024	1,154
Provision for current expected credit losses	(1,357)	(10,917)
Total receivables, net	$ 20,880	$ 19,048

The following table presents the aging of trade receivables, including the allowance for credit losses:

F-20

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

	December 31, 2024	December 31, 2023
Trade receivables	$ 20,243	$ 28,403
Less: provision for current expected credit losses	(1,357)	(10,917)
Total trade receivables, net	$ 18,886	$ 17,486
Of which
Current	12,114	13,799
31-90 days	4,040	2,837
Over 90 days	4,089	11,767
Less: current expected credit losses	(1,357)	(10,917)
Total trade receivables, net	$ 18,886	$ 17,486

The following is a roll-forward of the provision for expected credit losses and sales returns and allowances related to trade accounts receivable:

	December 31, 2024	December 31, 2023
Beginning of the year	$ 10,917	$ 10,556
Provision for sales returns	—	14
Expected credit losses	31	668
Write-offs charged against provision	(9,591)	(321)
Total provision for current expected credit losses	$ 1,357	10,917

During the year ended December 31, 2024, the Company settled accounts receivable that had been previously accounted for as expected credit losses which resulted in a bad debt recovery of $4,188 within General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Loss. All trade receivables and provision for current expected credit losses relating to this settlement has been written off as at December 31, 2024.

5. Acquisitions

2023 Acquisitions

AMMD

On January 27, 2023, in order to establish its retail footprint in Maryland, the Company acquired Allegany Medical Marijuana Dispensary ("AMMD"), a medical dispensary located in Cumberland, Maryland from Moose Curve Holdings, LLC. Pursuant to the terms of the agreement, the Company acquired a 100% equity interest in AMMD for total consideration of $10,000 in cash (the "AMMD Cash Consideration"). The AMMD Cash Consideration paid included a long-term lease with the option to purchase the real estate and repayments of indebtedness and transaction expenses on behalf of AMMD of $160 and $29, respectively.

F-21

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

The following table presents the fair value of assets acquired and liabilities assumed as of the January 27, 2023 acquisition date and allocation of the consideration to net assets acquired:

Cash and cash equivalents	$ 20
Inventory	303
Prepaid expense	4
Operating right of use asset	1,499
Fixed assets	416
Intangible asset	5,330
Goodwill	6,312
Accounts payable and accrued liabilities	(366)
Deferred tax liability	(2,097)
Corporate income taxes payable	(291)
Operating lease liability	(1,499)
Net assets acquired	$ 9,631
Cash	10,000
Working capital adjustment	(369)
Total consideration	$ 9,631

The acquired intangible assets include a medical 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.

Costs related to this transaction were $191, including legal, accounting, due diligence, and other transaction-related expenses. Of the total amount of transaction costs, $99 were recorded during the year ended December 31, 2023.

On a standalone basis, had the Company acquired the business on January 1, 2023, sales estimates would have been $12,289 for the year ended December 31, 2023 and net income estimates would have been $3,775. Actual sales and net income for the year ended December 31, 2023 since the date of acquisition are $11,610 and $3,531, respectively.

Peninsula

On June 28, 2023, in order to expand its retail footprint in Maryland, the Company closed the acquisition (the "Peninsula Acquisition") of Derby 1, LLC ("Peninsula"), a dispensary located in Salisbury, Maryland. Pursuant to the terms of the agreement, the Company acquired a 100% equity interest in Peninsula for total consideration of $15,394 exclusive of assumed financing obligations of $7,226 (see Note 10). The consideration was comprised of: (i) 5,442,282 Common Shares (the "Peninsula Share Consideration"), valued at $7,857 using the trading price of the Common Shares on the acquisition date less an applicable share restriction discount, (ii) a $3,646 secured promissory note bearing interest at a rate of 7.25% and maturing on June 28, 2026, (iii) $2,657 of contingent consideration in connection with the Peninsula Share Consideration ("Peninsula Contingent Consideration"), and (iv) $1,234 in cash (the "Peninsula Cash Consideration"). The Peninsula Cash Consideration included transaction expenses and repayments of indebtedness on behalf of Peninsula of $290 and $33, respectively.

The Peninsula Share Consideration was subject to a statutory lock-up restriction of six months, and therefore, a share restriction discount was considered in determining the fair value of the Peninsula Share Consideration on the date of issuance, using the Finnerty Model.

Pursuant to the terms of the agreement, the Company agreed that if within eighteen months from the date of issuance of the Peninsula Share Consideration, the aggregate gross proceeds resulting from the sales of the Common Shares plus the aggregate value of the remaining Common Shares was less than $9,000, the Company would be required to pay the difference to the sellers and in accordance with such terms, the Company issued the Peninsula Contingent Consideration. The fair value of Peninsula Contingent Consideration was calculated using the Black-Scholes Model.

F-22

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

The following table presents the fair value of assets acquired and liabilities assumed as of the June 28, 2023 acquisition date and allocation of the consideration to net assets acquired:

Cash and cash equivalents	217
Inventory	468
Prepaid expense	187
Operating right of use asset	1,168
Fixed assets	70
Intangible asset	19,224
Goodwill	3,484
Accounts payable and accrued liabilities	(1,030)
Loans payable	(7,226)
Operating lease liability	(1,168)
Net assets acquired	$ 15,394
Cash	1,234
Common shares of TerrAscend	7,857
Loans payable	3,646
Contingent consideration	2,657
Total consideration	$ 15,394

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

Costs related to this transaction were $626, including legal, accounting, due diligence, and other transaction-related expenses and were recorded during the year ended December 31, 2023.

On a standalone basis, had the Company acquired the business on January 1, 2023, sales estimates would have been $17,791 for the year ended December 31, 2023 and net income estimates would have been $3,483. Actual sales and net income for the year ended December 31, 2023 since the date of acquisition are $11,004 and $1,708, respectively.

Blue Ridge

On June 30, 2023, in order to expand its retail footprint in Maryland, the Company closed the acquisition of Hempaid, LLC ("Blue Ridge"), a medical dispensary located in Parkville, Maryland. The Company relocated the Blue Ridge dispensary to a new, high-traffic retail center in Nottingham, Maryland as of May 29, 2024. Pursuant to the terms of the agreement, the Company acquired a 100% equity interest in Blue Ridge for total consideration of $6,277, comprised of: (i) a promissory note of $3,109, bearing interest at a rate of 7.0% and maturing on June 30, 2027 (see Note 10) and (ii) $3,168 in cash (the "Blue

F-23

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

Ridge Cash Consideration"). The Blue Ridge Cash Consideration included repayments of indebtedness and transaction expenses on behalf of Blue Ridge of $707 and $281, respectively.

The following table presents the fair value of assets acquired and liabilities assumed as of the June 30, 2023 acquisition date and allocation of the consideration to net assets acquired:

Inventory	231
Prepaid expense	113
Operating right of use asset	2,325
Intangible asset	4,799
Goodwill	4,161
Other asset	91
Corporate income tax payable	(154)
Deferred tax liability	(1,665)
Accounts payable and accrued liabilities	(706)
Operating lease liability	(2,325)
Liability on uncertain tax position	(593)
Net assets acquired	$ 6,277
Cash	3,168
Loans payable	3,109
Total consideration	$ 6,277

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

Costs related to this transaction were $401, including legal, accounting, due diligence, and other transaction-related expenses and were recorded during the year ended December 31, 2023.

On a standalone basis, had the Company acquired the business on January 1, 2023, sales estimates would have been $5,402 for the year ended December 31, 2023 and net income estimates would have been $993. Actual sales and net income for the year ended December 31, 2023 since the date of acquisition are $3,404 and $621, respectively.

Herbiculture

On July 10, 2023, in order to expand its retail footprint in Maryland, the Company closed the acquisition of Herbiculture Inc. ("Herbiculture"), a medical dispensary in Maryland. Pursuant to the terms of the agreement, the Company acquired 100% equity interest in Herbiculture for total consideration of $7,710, comprised of: (i) $2,776 in cash (the "Herbiculture Cash Consideration"), and (ii) a promissory note of $4,934, bearing interest at a rate of 10.50% and maturing on June 30, 2026. The Herbiculture Cash Consideration included transaction expenses and repayments of indebtedness on behalf of Herbiculture of $616 and $1,674, respectively.

F-24

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

The following table presents the fair value of assets acquired and liabilities assumed as of the July 10, 2023 acquisition date and allocation of the consideration to net assets acquired:

Inventory	$ 140
Prepaid expense	38
Accounts receivable	10
Fixed assets	230
Operating right of use asset	525
Intangible asset	3,543
Goodwill	7,334
Deferred tax liability	(1,327)
Accounts payable and accrued liabilities	(602)
Corporate income taxes payable	(199)
Operating lease liability	(525)
Liability on uncertain tax position	(1,457)
Net assets acquired	$ 7,710
Cash	2,776
Loans payable	4,934
Total consideration	$ 7,710

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

Costs related to this transaction were $786, including legal, accounting, due diligence, and other transaction-related expenses and were recorded during the year ended December 31, 2023.

On a standalone basis, had the Company acquired the business on January 1, 2023, sales estimates would have been $3,281 for the year ended December 31, 2023 and net loss estimates would have been $110. Actual sales and net loss for the year ended December 31, 2023 since the date of acquisition are $1,426 and $82, respectively.

Contingent consideration

Contingent consideration recorded relates to the Company's business acquisitions. Contingent consideration is based upon the potential earnout of the underlying business unit and is measured at fair value using a projection model for the business and the formulaic structure for determining the consideration under the terms of the agreement.

F-25

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

The balance of contingent consideration is as follows:

	State Flower	Apothecarium	Pinnacle	Peninsula	Total
Carrying amount, December 31, 2022	$ 1,406	$ 3,028	$ 750	$ —	$ 5,184
Amount recognized on acquisition	—	—	—	2,657	2,657
Payments of contingent consideration	—	—	(750)	—	(750)
Gain on revaluation of contingent consideration	—	—	—	(645)	(645)
Carrying amount, December 31, 2023	$ 1,406	$ 3,028	$ —	$ 2,012	$ 6,446
Settlement of contingent consideration	(1,334)	(3,591)	—	—	(4,925)
Payments of contingent consideration	(188)	(505)	—	—	(693)
Loss (gain) on revaluation of contingent consideration	903	3,188	—	(1,626)	2,465
Carrying amount, December 31, 2024	$ 787	$ 2,120	$ —	$ 386	$ 3,293
Less: current portion	(741)	(1,994)	—	(386)	(3,121)
Non-current contingent consideration	$ 46	$ 126	$ —	$ —	$ 172

On January 19, 2024, the Company amended the original purchase agreement and issued an aggregate of 2,888,088 Common Shares and paid $250 of cash to the sellers of its previously acquired State Flower and The Apothecarium businesses. The issuance of Common Shares fully settled the previous contingent consideration balances. The remaining balance owing relates to a price protection the Company provided on the Common Shares issued. On September 13, 2024, the Company issued an additional 874,730 Common Shares related to the price protection clause.

On December 28, 2024 the Company settled its contingent consideration associated with the Peninsula acquisition in the amount of $386. This amount was paid subsequent to the year end. In connection with the settlement, management recognized a gain on revaluation of contingent consideration in the amount of $1,626 on the consolidated statements of operations and comprehensive loss.

6. Inventory

The Company’s inventory of dry cannabis and oil includes both purchased and internally produced inventory. The Company’s inventory is comprised of the following items:

	December 31, 2024	December 31, 2023
Raw materials	$ 826	$ 378
Finished goods	19,710	18,821
Work in process	25,489	28,451
Accessories, supplies and consumables	2,774	4,033
Total inventory	$ 48,799	$ 51,683

During the year ended December 31, 2023, the Company adjusted inventory by $985 mainly due to defective cartridges.

7. Discontinued operations

TerrAscend Canada operated out of a 67,300 square foot facility located in Mississauga, Ontario and was licensed to cultivate, process and sell cannabis for medical and adult-use purposes. These licenses allowed for sales of dried cannabis, cannabis oil and extracts, topicals, and edibles. The Company ceased operations at TerrAscend Canada’s manufacturing facility during the three months ended December 31, 2022. As such, TerrAscend Canada's Licensed Producer (as such term is defined in the Cannabis Act) results are presented in discontinued operations.

F-26

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

The results of operations for the discontinued operations includes revenues and expenses directly attributable to the disposed of operations. Corporate and administrative expenses, including interest expense, not directly attributable to the operations were not allocated to the Canadian Licensed Producer business. The results of discontinued operations were as follows:

	For the Years Ended
	December 31, 2024	December 31, 2023	December 31, 2022
Revenue, net	$ —	$ —	$ 2,678
Cost of Sales	—	—	12,029
Gross profit	—	—	(9,351)
Operating expenses:
General and administrative	—	900	5,141
Amortization and depreciation	—	48	1,623
Impairment of property and equipment	—	3,036	7,870
Total operating expenses	—	3,984	14,634
Loss from discontinued operations	—	(3,984)	(23,985)
Other expense
Finance and other expenses	—	460	1,964
Net loss from discontinued operations	$ —	$ (4,444)	$ (25,949)

8. Property and equipment, net

Property and equipment consisted of:

	December 31, 2024	December 31, 2023
Land	$ 6,469	$ 6,103
Assets in process	18,622	24,211
Buildings & improvements	155,750	151,989
Machinery & equipment	37,293	35,370
Office furniture & equipment	9,262	9,066
Assets under finance leases	1,489	2,362
Total cost	228,885	229,101
Less: accumulated depreciation	(44,866)	(32,886)
Property and equipment, net	$ 184,019	$ 196,215

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

During the years ended December 31, 2024, and December 31, 2023, borrowing costs were not capitalized because the assets in process did not meet the criteria of a qualifying asset.

Depreciation expense was $12,413 ($8,448 included in cost of sales) for the year ended December 31, 2024, $11,517 ($8,049 included in cost of sales) for the year ended December 31, 2023, and $10,043 ($7,611 included in cost of sales) for the year ended December 31, 2022.

Impairment of Property and Equipment

The impairment test for property and equipment follows the same criteria as finite-lived intangible assets (see Note 9) with the exception of obtaining independent appraisals for certain properties to determine the fair value of the asset groups. During the

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

years ended December 31, 2024 and December 31, 2023, the Company determined that the carrying value of the certain assets may not be recoverable. As a result, the Company recorded an impairment loss of $6,073 and $2,079 for certain Michigan properties during the years ended December 31, 2024 and December 31, 2023, respectively.

During the year ended December 31, 2024, the Company recorded an impairment loss of certain property and equipment of $2,438 due to the wind-down of one of its California dispensaries.

9. Intangible assets, net and goodwill

Intangible assets consisted of the following:

At December 31, 2024	Gross Carrying Amount	Accumulated Amortization	Net Carrying Amount
Finite lived intangible assets
Software	$ 2,708	$ (964)	$ 1,744
Licenses	167,459	(24,371)	143,088
Non-compete agreements	280	(280)	—
Total finite lived intangible assets	170,447	(25,615)	144,832
Indefinite lived intangible assets
Brand intangibles	24,772	—	24,772
Total indefinite lived intangible assets	24,772	—	24,772
Intangible assets, net	$ 195,219	$ (25,615)	$ 169,604
At December 31, 2023	Gross Carrying Amount	Accumulated Amortization	Net Carrying Amount
Finite lived intangible assets
Software	$ 2,050	$ (720)	$ 1,330
Licenses	186,624	(20,216)	166,408
Brand intangibles	1,144	(1,144)	—
Non-compete agreements	280	(280)	—
Total finite lived intangible assets	190,098	(22,360)	167,738
Indefinite lived intangible assets
Brand intangibles	48,116	—	48,116
Total indefinite lived intangible assets	48,116	—	48,116
Intangible assets, net	$ 238,214	$ (22,360)	$ 215,854

Amortization expense was $7,636 ($2,832 included in cost of sales) for the year ended December 31, 2024, $8,865 ($2,900 included in cost of sales) for the year ended December 31, 2023, and $12,581 ($5,355 included in cost of sales) for the year ended December 31, 2022.

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

2025	$ 6,145
2026	6,067
2027	6,017
2028	5,903
2029	5,903
Thereafter	114,797
Total	$ 144,832

F-27

TERRASCEND CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share/unit amounts)

As of December 31, 2024, the weighted average amortization period remaining on intangible assets was 25.8 years.

The Company's goodwill is allocated to one reportable segment. The following table summarizes the activity in the Company's goodwill balance:

Balance at December 31, 2022	$ 90,328
Additions at acquisition date	21,291
Impairment of goodwill	(4,690)
Balance at December 31, 2023	$ 106,929
Additions at acquisition date	—
Impairment of goodwill	—
Balance at December 31, 2024	$ 106,929

Impairment of Intangible Assets

The Company recorded the following impairment losses by category of intangible assets:

	December 31, 2024	December 31, 2023	December 31, 2022
Finite lived intangible assets
Licenses	$ 17,134	$ 15,518	$ 121,527
Total impairment of finite lived intangible assets	17,134	15,518	121,527
Indefinite lived intangible assets
Brand intangibles	22,200	35,785	19,200
Total impairment of indefinite lived intangible assets	22,200	35,785	19,200
Total impairment of intangible assets	$ 39,334	$ 51,303	$ 140,727

The Company evaluates the recoverability of long-lived assets, including definite lived intangible assets, whether events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.

During the year ended December 31, 2024, the Company determined that changes in market expectations of cash flows in its Michigan business related to increased competition and supply, were indicators that an impairment test was appropriate for the reporting unit and respective asset groups.

During the year ended December 31, 2023, the Company determined that changes in market expectations of cash flows in its Michigan and California businesses, as well as increased competition and supply in those states, were indicators that an impairment test was appropriate for each of these reporting units.

During the year ended December 31, 2022, the Company determined that changes in market expectations of cash flows in its Michigan, Pennsylvania and California businesses, as well as increased competition and supply in those states, were indicators that an impairment test was appropriate for each of these reporting units.

Impairment of indefinite lived assets

Indefinite lived intangible assets are reviewed for impairment annually and whether there are events or changes in circumstances that indicate that the carrying amount has been impaired.

The impairment indicators previously noted for Michigan indicate that the fair value of the indefinite lived intangible assets associated with the Gage brand are more likely than not lower than their carrying value. As such, the Company performed an quantitative impairment analysis and determined the fair value of its brands intangible assets using the relief of royalty method on the following key assumptions:

Cash flows: estimated cash flows were projected based on actual operating results from internal sources, as well as industry and market trends. The forecasts were extended through a discrete projection period, after which a terminal value was applied to reflect the remaining economic useful life of the assets;

F-28

F-29

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

Royalty rate: estimated royalty rate was projected based on industry and market trends.
Post-tax discount rate: the post-tax discount rate is reflective of the weighted average cost of capital ("WACC"). The WACC was estimated based on the risk-free rate, equity risk premium, beta premium, and after-tax cost of debt based on corporate bond yields; and
Tax rate: the tax rates used in determining future cash flows were those substantively enacted at the respective valuation date.

As a result of the quantitative analysis, the Company recognized impairment of the Gage brand of $22,200, $35,785 and $19,200, for the year ended December 31, 2024, 2023, and 2022, respectively.

Impairment of finite lived intangible assets

When testing for the impairment of finite lived intangible assets, management first calculates the undiscounted cash flows relating to each asset group. If the undiscounted cash flows are less than the carrying value, the Company measures the fair value of the asset group. If the fair value is less than the carrying value of the asset group, then impairment is indicated.

The fair value of each asset group was calculated using a discounted cash flow approach based on the following key assumptions:

Cash flows: estimated cash flows were projected based on actual operating results from internal sources, as well as industry and market trends. The forecasts were extended through the estimated useful lives of the assets;
Post-tax discount rate: the post-tax discount rate is reflective of the WACC. The WACC was estimated based on the risk-free rate, equity risk premium, beta premium, and after-tax cost of debt based on corporate bond yields; and
Tax rate: the tax rates used in determining future cash flows were those substantively enacted at the respective valuation date.

During the year ended December 31, 2024, for the Michigan asset group, the Company compared the carrying value of certain retail licenses to their fair value and determined that the carrying value exceeded the fair value. The Company recorded impairment charges of $17,134, reducing its carrying values to $nil.

During the year ended December 31, 2023, for the California asset group, the Company compared the carrying value of the retail license to its fair value and determined that the carrying value exceeded the fair value. The Company recorded impairment charges of $15,518, reducing its carrying values to $nil.

During the year ended December 31, 2022, for the Michigan reporting unit, the Company determined the fair value of the asset groups and allocates the impairment to the assets, being the (i) cultivation and processing licenses, and (ii) retail licenses, acquired through the Gage Acquisition. The Company compared the carrying value of the assets to its fair value and determined that the carrying value exceeded the fair value for both the retail and the cultivation and processing licenses. As such, the Company recorded impairment charges of $79,462 and $42,065 for the cultivation and processing licenses and retail licenses, respectively, reducing both the carrying values to $nil.

Impairment of Goodwill

Goodwill is reviewed for impairment annually and whenever there are events or changes in circumstances that indicate the carrying value has been impaired.

Based on the indicators of impairment noted previously, the Company determines whether a quantitative impairment test is necessary to assess that the fair value of its reporting units are more likely than not lower than its carrying value at some of its reporting units.

The following significant assumptions were applied in the determination of the fair value of the reporting units using a discounted cash flow model:

F-30

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

Cash flows: estimated cash flows were projected based on actual operating results from internal sources, as well as industry and market trends. The forecasts were extended to a total of five years (with a terminal value thereafter);
Terminal value growth rate: The terminal growth rate was based on historical and projected consumer price inflation, historical and projected economic indicators and projected industry growth;
Post-tax discount rate: the post-tax discount rate is reflective of the WACC. The WACC was estimated based on the risk-free rate, equity risk premium, beta premium, and after-tax cost of debt based on corporate bond yields; and
Tax rate: the tax rates used in determining future cash flows were those substantively enacted at the respective valuation date.

Based on the impairment indicators noted previously, during the year ended December 31, 2024, the Company recorded no impairment of goodwill.

Based on the impairment indicators noted previously, during the year ended December 31, 2023, the Company recorded impairment of goodwill of $4,690 at its California reporting unit, reducing its carrying value to $nil.

During the year ended December 31, 2022, the Company recorded impairment of goodwill of $170,357 at its Michigan reporting unit, reducing the carrying value of the goodwill acquired through the Gage Acquisition and Pinnacle Acquisition to $nil.

F-31

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

10. Loans payable

	December 31, 2024	December 31, 2023
Ilera term loan retired August 2024
Principal amount	$ —	$ 76,927
Deferred financing cost	—	(3,191)
Net carrying amount	$ —	$ 73,736
Stearns loan retired August 2024
Principal amount	$ —	$ 24,809
Deferred financing cost	—	(791)
Net carrying amount	$ —	$ 24,018
Chicago Atlantic term loan retired September 2024
Principal amount	$ —	$ 24,611
Deferred financing cost	—	—
Net carrying amount	$ —	$ 24,611
Pelorus term loan due October 2027
Principal amount	$ 45,478	$ 45,478
Deferred financing cost	(1,168)	(1,490)
Net carrying amount	$ 44,310	$ 43,988
Maryland Acquisition loans (1)
Principal amount	$ 18,029	$ 19,873
Unamortized discount	(746)	(1,403)
Net carrying amount	$ 17,283	$ 18,470
FocusGrowth loan due August 2028
Principal amount	$ 140,000	$ —
Unamortized discount and deferred financing cost	(12,799)	—
Exit fee accretion	390	—
Net carrying amount	$ 127,591	$ —
Other loans	$ 1,038	$ 2,698
Short-term debt	—	11,849
Total debt, net	$ 190,222	$ 199,370
Loans payable, current	6,761	137,737
Loans payable, non-current	183,461	61,633
Total principal	$ 204,545	$ 206,453

(1) For maturity breakout, refer to Maryland Acquisition Loans section below.

Total interest paid on all loan payables was $23,847, $23,037, and $26,840, for the years ended December 31, 2024, 2023 and 2022, respectively. The Company had accrued interest for its loan payables of $2,537 and $3,491 as of December 31, 2024 and December 31, 2023, respectively, included in accounts payable and accrued liabilities on the Consolidated Balance Sheets.

FocusGrowth Term Loan

On August 1, 2024, the Company and TerrAscend USA, Inc. ("TerrAscend USA"), as guarantors, and each of WDB Holding CA, Inc., WDB Holding PA, Inc., Moose Curve Holdings, LLC, Hempaid, LLC and pursuant to a joinder agreement dated September 30, 2024, WDB Holding MI, Inc., including certain of each of their respective subsidiaries, as borrowers (collectively, the "Borrowers"), and FG Agency Lending LLC, as the Administrative Agent, and certain lenders entered into a loan agreement (the "FG Loan"). The FG Loan provides for a four-year, $140,000 senior-secured term loan with an initial draw on August 1, 2024 of $114,000 (the "Initial Draw") and a delayed draw on September 30, 2024 of $26,000 (the "Delayed Draw"). Net proceeds of the FG Loan were received in an amount equal to 95% of the $140,000.

F-32

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

The FG Loan bears interest at 12.75% per annum and matures on August 1, 2028 (the "FG Loan Maturity Date"). The FG Loan is guaranteed by the Company and TerrAscend USA, Inc. 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 outstanding principal balance of the FG Loan (the "Exit Fee") will be due upon either the date of prepayment or the FG Loan Maturity Date.

Proceeds from the FG Loan were used to retire the Ilera Term Loan, the Stearns Loan, the Chicago Atlantic Term Loan and certain other short-term indebtedness (collectively, the "Retired Loans"), in addition to being used for working capital and general corporate purposes. Each outstanding obligation under the Retired Loans was repaid in full and subsequently terminated.

As of December 31, 2024, there was an outstanding principal amount of $140,000 under the FG Loan.

Pelorus Term Loan

On October 11, 2022, subsidiaries of, TerrAscend, among others, entered into a loan agreement with Pelorus Fund REIT, LLC ("Pelorus") for a single-draw senior secured term loan (the "Pelorus Term Loan") in an aggregate principal amount of $45,478. The Pelorus Term Loan is based on a variable rate tied to the one month Secured Overnight Financing Rate ("SOFR"), subject to a base rate, plus 9.5%, with interest-only payments for the first 36 months and matures on October 11, 2027. The base rate is defined as, on any day, the greatest of: (i) 2.5%, (b) the effective federal funds rate in effect on such day plus 0.5%, and (c) one month SOFR in effect on such day. The obligations of the borrowers under the Pelorus Term Loan are guaranteed by the Company, TerrAscend USA and certain other subsidiaries of the Company and are secured by all of the assets of TerrAscend's New Jersey businesses and certain assets of TerrAscend's Maryland business, including certain real estate in Maryland. The Pelorus Term Loan is not secured by any of the MD dispensaries.

As of December 31, 2024, there was an outstanding principal amount of $45,478 under the Pelorus Term Loan.

Maryland Acquisition Loans

In connection with the Peninsula Acquisition, the acquisition of Blue Ridge, and the acquisition of Herbiculture (collectively, the "Maryland Acquisitions"), the Company entered into a series of promissory notes with an aggregate principal amount of $20,625 that bear interest at rates ranging from 7.0% to 10.5% with maturities ranging from June 28, 2025 to June 30, 2027.

As of December 31, 2024, there was an outstanding principal amount of $18,029 under the Maryland Acquisition promissory notes.

Chicago Atlantic Term Loan

In connection with the Gage Acquisition, the Company assumed a senior secured term loan (the "Chicago Atlantic Term Loan") with an acquisition date fair value of $53,857. The credit agreement bore interest at a rate equal to the greater of (i) the Prime Rate plus 7% or (ii) 10.25%. The Chicago Atlantic Term Loan was payable monthly and had a maturity date of November 30, 2022. The Chicago Atlantic Term Loan was secured by a first lien on all Gage's assets.

On July 19, 2024, the Company made a prepayment of the Chicago Atlantic Term Loan of $1,500 at par. On August 1, 2024, as described above, the Company entered into the FG Loan, of which, a portion of the proceeds from the Delayed Draw, which occurred on September 30, 2024, was used to retire the then outstanding principal of the Chicago Atlantic Term Loan in the amount of $22,557. Due to the early retirement of the Chicago Atlantic Term Loan, the Company paid an exit fee of $500 and recognized a loss on extinguishment of debt of $500 on the Consolidated Statements of Operations and Comprehensive Loss.

Ilera Term Loan

On December 18, 2020, WDB PA, a subsidiary of TerrAscend, entered into a senior secured term loan with a syndicate of lenders in the amount of $120,000 ("Ilera Term Loan"). The Ilera Term Loan was solely secured by the Company's Pennsylvania-based Ilera Healthcare LLC ("Ilera"). The Ilera Term Loan bore interest at 12.875% and was set to mature on December 17, 2024.

F-33

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

On January 2, 2024, the Company completed a prepayment of the Ilera Term Loan of $4,800 at the prepayment price of 100% to par. On April 30, 2024, the Company made a prepayment of $3,200 of the Ilera Term Loan, at the prepayment price of 100% to par. In accordance with ASC 470, Debt, these amendments were not considered extinguishment of debt.

On August 1, 2024, as described above, the Company entered into the FG Loan, of which, a portion of the proceeds from the Initial Draw was used to retire the Ilera Term Loan and pay the entire outstanding principal amount of $68,927. Due to the early retirement of the Ilera Term Loan, the Company recognized a loss on extinguishment of debt of $1,272 on the Consolidated Statements of Operations and Comprehensive Loss.

Stearns Loan

On June 26, 2023, the Company closed on a $25,000 commercial loan with Stearns Bank, secured by the Company's cultivation facility in Pennsylvania and its AMMD dispensary in Cumberland, Maryland (the "Stearns Loan"). The Stearns Loan bore an interest rate of prime plus 2.25% and was set to mature on December 26, 2024.

On August 1, 2024, as described above, the Company entered into the FG Loan, of which, a portion of the proceeds from the Initial Draw was used to retire the Stearns Loan and pay the outstanding principal amount of $24,638. Due to the early retirement of the Stearns Loan, the Company recognized a loss on extinguishment of debt of $369 on the Consolidated Statements of Operations and Comprehensive Loss.

Other loans

Class A Shares of TerrAscend

In connection with the Reorganization (see Note 3), TerrAscend issued $1,000 of Class A shares with a 20% guaranteed annual dividend 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 option. In addition, the Investor holds a put right that is exercisable at any time after four months' advanced written notice following the five-year anniversary of the closing of the investment 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.

Stadium Ventures

In connection with the Gage Acquisition, the Company assumed existing indebtedness in the form of a promissory note in the amount of $4,500, which was set to mature on January 1, 2025. The promissory note bore interest at a rate of 6%. On October 1, 2024, the Company paid the outstanding principal amount of $539 and retired the promissory note.

Short-Term Debt

On January 15, 2024, the Company paid off the IHC Real Estate LP promissory note with a payment of $5,000.

On August 1, 2024, as described above, the Company entered into the FG Loan, of which, a portion of the proceeds from the Initial Draw was used to retire certain short-term debt and pay an outstanding principal amount of $1,333. The Company recognized a gain on extinguishment of debt of $45 on the Consolidated Statements of Operations and Comprehensive Loss.

On August 13, 2024, the Company paid off and retired two promissory notes entered into in connection with the Pinnacle Acquisition with a payment of $5,582. The Company recognized a gain on extinguishment of debt of $434 on the Consolidated Statements of Operations and Comprehensive Loss.

F-34

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

Maturities of loans payable

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

	December 31, 2024
2025	$ 8,106
2026	10,932
2027	44,490
2028 (1)	141,007
2029	7
Thereafter	3
Total principal payments	$ 204,545

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

11. Leases

Amounts recognized in the Consolidated Balance Sheets were as follows:

	December 31, 2024	December 31, 2023
Operating leases:
Operating lease right-of-use assets	$ 41,355	$ 43,440
Operating lease liability classified as current	2,511	1,244
Operating lease liability classified as non-current	42,469	45,384
Total operating lease liabilities	$ 44,980	$ 46,628
Finance leases:
Property and equipment, net	$ 1,370	$ 2,112
Lease obligations under finance leases classified as current	1,864	2,030
Lease obligations under finance leases classified as non-current	-	407
Total finance lease obligations	$ 1,864	$ 2,437

The Company recognized operating lease expense of $7,826 ($369 included in cost of sales), $6,098 ($558 included in cost of sales), and $5,028 ($723 included in cost of sales) for the years ended December 31, 2024, 2023 and 2022, respectively.

Other information related to operating leases consisted of the following:

	December 31, 2024	December 31, 2023
Weighted-average remaining lease term (years)
Operating leases	12.0	12.5
Finance leases	0.75	1.2
Weighted-average discount rate
Operating leases	11.45%	11.43%
Finance leases	9.44%	9.47%

F-35

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

Supplemental cash flow information related to leases were as follows:

	December 31, 2024	December 31, 2023
Cash paid for amounts included in measurement of operating lease liabilities	$ 7,390	$ 6,264
Right-of-use assets obtained in exchange for operating lease obligations	1,594	16,603
Cash paid for amounts included in measurement of finance lease liabilities	75	153

Undiscounted lease obligations as of December 31, 2024 are as follows:

	Operating	Finance	Total
2025	$ 7,421	$ 2,000	$ 9,421
2026	7,204	—	7,204
2027	7,089	—	7,089
2028	6,888	—	6,888
2029	6,931	—	6,931
Thereafter	50,470	—	50,470
Total lease payments	86,003	2,000	88,003
Less: interest	(41,023)	(136)	(41,159)
Total lease liabilities	$ 44,980	$ 1,864	$ 46,844

A sale-leaseback transaction occurs when an entity sells an asset it owns and then immediately leases the asset back from the buyer. The seller then becomes the lessee and the buyer becomes the lessor. Under ASC 842, Leases, both parties must assess whether the buyer-lessor has obtained control of the asset and a sale has occurred. Through the Gage Acquisition, the Company entered into leaseback transactions on six properties of owned real estate. The Company has determined that these transactions do not qualify as a sale because control was not transferred to the buyer-lessor. Therefore, the Company has classified the lease portion of the transaction as a finance lease and continues to depreciate the asset.

During the third fiscal quarter of 2023, five out of the six agreements were amended to remove the purchase option which qualified the transactions as a sale. As a result, the Company derecognized underlying assets of $8,725 and its related financial obligations in the amount of $10,528, resulting in a gain of $1,803. The Company concurrently recognized an operating right of use asset and operating lease liability of $10,518 for the five dispensaries.

During the fourth quarter of 2023, the Company issued a promissory note to buy back the remaining property for $1,430. As a result, the Company derecognized the financial obligation in the amount of $983, recognizing $447 of adjustment to accretion expense in accordance with ASC 842, Leases.

12. Convertible debt

In June and August 2023, the Company closed the private placements of a total of 10,355 senior unsecured convertible debentures at a price of $1,000 per debenture for total gross proceeds of $10,355. Unless repaid or converted earlier, the outstanding principal and accrued and unpaid interest on the debentures will be due and payable 36 months following the closing of the debenture offering (the "Debenture Maturity Date"). Each debenture bears interest at a rate of 9.9% per annum from the date of issuance, calculated and compounded semi-annually, and payable on the Debenture Maturity Date. Each holder has the option to elect to receive up to 4.95% per annum of such interest payable in cash on a semi-annual basis. Each debenture 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 Maturity Date, at a conversion price of $2.01. Holders converting their debentures will receive accrued and unpaid interest for the period from and including the date of the last interest payment date, to and including, the date of conversion.

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 Model (see Note 23). The proceeds are allocated first to the conversion option based on its fair

F-36

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

value of $3,600, and the residual was allocated to the host instrument and recorded as convertible debt at a residual value of $6,755.

The following table summarizes the convertible debt activity for the year-ended December 31, 2024:

	December 31,
	2024	December 31, 2023
Convertible debt proceeds, net of transaction costs - Maturing June 2026	$ 10,098	$ 10,098
Allocation to conversion option	3,600	3,600
Allocation to debt	6,498	6,498
Interest and accretion	2,616	768
Net carrying amount	$ 9,114	$ 7,266

The Company had accrued interest for its convertible debt of $1,200 and $380 as of December 31, 2024 and December 31, 2023, respectively, included in accounts payable and accrued liabilities on the Consolidated Balance Sheets.

13. Shareholders' equity

The Company is authorized to issue an unlimited number of Common Shares, an unlimited number of Proportionate Voting Shares, an unlimited number of Exchangeable Shares, and an unlimited number of Preferred Shares, issuable in series. The Company's board of Directors ("Board") has the discretion to determine the rights, preferences, privileges, and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges, and liquidation preferences, of each class of the Company's capital stock.

Unlimited Number of Preferred Shares

The Board has authorized the Company to issue an unlimited number of Series A, Series B, Series C and Series D Preferred Shares. The Preferred Shares of each series will, with respect to the payment of dividends and the distribution of assets in the event of the liquidation, dissolution or winding-up of the Company, whether voluntarily or involuntarily, rank on parity with the Preferred Shares of every other series, and will be entitled to preference over the Proportionate Voting Shares, Common Shares and Exchangeable Shares.

Voting Rights

Holders of Preferred Shares are not entitled to receive notice of, or to attend or to vote at any meeting of the shareholders of the Company.

Dividends

Holders of Preferred Shares are not entitled to receive any dividends, except if the Company issues a dividend when necessary to comply with contractual provisions in respect of an adjustment to the conversion ratio in connection with any dividend paid on the Common Shares.

Conversion Rights

Holders of Preferred Shares are entitled to convert each outstanding Preferred Share into 1,000 Common Shares of the Company (or the economic equivalent in Proportionate Voting Shares for U.S. investors) at the option of the holder, subject to customary anti-dilution provisions.

The Preferred Shares will be automatically converted into Proportionate Voting Shares at the then-effective conversion ratio, instead of being redeemed for cash and other assets, in the event of a change in control.

Redemption Rights

The Company classified the Preferred Shares as permanent equity in the financial statements given that the terms do not obligate the Company to buy back the shares of Preferred Shares in exchange for cash or other assets, nor do the shares represent an

F-37

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

obligation that must or may be settled with a variable number of shares, which are debt-like features. No other redemption provisions exist within the terms of the instrument.

Liquidation Preference

In the event of liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, or upon any other return of capital or distribution of the assets of the Company among its shareholders, in each case for the purposes of winding up its affairs, each Preferred Share entitles the holder thereof to receive and to be paid out of the assets of the Company available for distribution, before any distribution or payment may be made to a holder of any Common Shares, Proportionate Voting Shares, Exchangeable Shares or any other shares ranking junior in such liquidation, dissolution, or winding up to the Preferred Shares, an amount per Preferred Share equal to the fair market value of the consideration paid for such Preferred Share upon issuance.

The Company’s Series A, Series B, Series C and Series D Preferred Shares have a liquidation preference that is initially equal to $2,000, $2,000, $3,000 and $3,000, respectively, per Preferred Share; provided that if the Company makes a distribution to holders of all or substantially all of the respective series of Preferred Shares, or if the Company effects a share split or share consolidation of the respective series of Preferred Shares, then the liquidation preference will then be adjusted on the effective date of such event by a rate computed as (i) the number of respective series of Preferred Shares outstanding immediately before giving effect to such event divided by (ii) the number of respective series of Preferred Shares outstanding immediately after such event.

After payment to the holders of the Preferred Shares of the full liquidation preference to which they are entitled in respect of outstanding Preferred Shares (which, for greater certainty, have not been converted prior to such payment), such Preferred Shares will have no further right or claim to any of the assets of the Company.

The liquidation preference will be payable to holders of Preferred Shares in cash; provided, however, that to the extent the Company has, having exercised commercially reasonable efforts to make such payment, insufficient cash available to pay the liquidation preference in full in cash, the portion of the liquidation preference with respect to which the Company has insufficient cash may be paid in property or other assets of the Company. The value of any property or assets not consisting of cash that is distributed by the Company in satisfaction of any portion of the liquidation preference will equal the fair market value on the date of distribution. As of December 31, 2024, the Convertible Preferred Series A and B Shares had an aggregate liquidation value of $25,900, or $2,000 per share.

Unlimited Number of Proportionate Voting Shares

Holders of Proportionate Voting Shares are entitled to receive, as and when declared by the Board, dividends in cash or property of the Company. No dividend may be declared on the Proportionate Voting Shares unless the Company simultaneously declares dividends on the Common Shares in an amount equal to the dividend declared per Proportionate Voting Share divided by 1,000.

In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company among its shareholders for the purpose of winding up its affairs, the holders of Proportionate Voting Shares are entitled to participate pari passu with the holders of Common Shares in an amount equal to the amount of such distribution per Common Share multiplied by 1,000.

Holders of Proportionate Voting Shares are not entitled to a right of first refusal to subscribe for, purchase or receive any part of any issue of shares, or bonds, debentures or other securities of the Company.

There may be no subdivision or consolidation of the Proportionate Voting Shares unless, simultaneously, the Common Shares and Exchangeable Shares are subdivided or consolidated using the same divisor or multiplier.

Proportionate Voting Shares carry 1,000 votes per share.

Unlimited Number of Exchangeable Shares

Voting Rights

Holders of Exchangeable Shares will not be entitled to receive notice of, attend or vote at meetings of the shareholders of the Company; provided that the holders of Exchangeable Shares will, however, be entitled to receive notice of meetings of

F-38

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

shareholders called for the purpose of authorizing the dissolution of the Company or the sale of its assets, or a substantial part thereof, but holders of Exchangeable Shares will not be entitled to vote at such meeting of the shareholders of the Company.

Dividends

Holders of Exchangeable Shares will not be entitled to receive any dividends.

Dissolution

In the event of liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, or any other distribution of assets of the Company among its shareholders for the purpose of winding-up its affairs, holders of Exchangeable Shares will not be entitled to receive any amount, property or assets of the Company.

Exchange Rights

Each issued and outstanding Exchangeable Share may, at any time following the exchange start date applicable to the holder of such Exchangeable Share, at the option of the holder and subject to any restrictions or limitations, be exchanged for one Common Share.

Unlimited Number of Common Shares

Voting Rights

Holders of Common Shares are entitled to receive notice of, and to attend, all meetings of the shareholders of the Company and shall have one vote per each Common Share held at all meetings of the Company, except for meetings at which only holders of another specified class or series of shares of the Company are entitled to vote separately as a class or series.

Dividend Rights

Holders of Common Shares are entitled to receive, subject to the rights of the holder of any other class of shares, any dividends declared by the Company. If, as and when dividends are declared by the directors, each Common Share will be entitled to 0.001 times the amount paid or distributed per Proportionate Voting Share (or, if a stock dividend is declared, each Common Share will be entitled to receive the same number of Common Shares per Common Share of Proportionate Voting Shares entitled to be received per Proportionate Voting Share).

Dissolution

In the event of liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, or any other distribution of assets of the Company among its shareholders for the purpose of winding-up its affairs, the holders of the Common Shares will, subject to the rights of any other class of shares, be entitled to receive the remaining property of the Company on the basis that each Common Share will be entitled to 0.001 times the amount distributed per Proportionate Voting Share, but otherwise there is no preference or distinction among or between the Proportionate Voting Shares and the Common Shares.

Conversion Rights

Each issued and outstanding Common Share may at any time, at the option of the holder, be converted into 0.001 of a Proportionate Voting Share.

Description of Transactions:

Common Shares (Private Placements)

In June 2023, concurrently with convertible debenture placements (see Note 12), the Company closed three tranches of private placements and issued 6,580,677 units at a price of $1.50 per unit for total proceeds of $9,476, net of share issuance costs of $395 (the "Private Placements"). Each unit is comprised of one Common Share and one-half of one Common Share purchase

F-39

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

warrant. Each warrant entitles the holder to acquire one Common Share at a price of $1.95 per Common Share for a period of 24 months following the date of issuance.

Detachable warrants issued in a bundled transaction are accounted for separately. Under ASC 815, Derivatives and Hedging, the detachable warrants meet the definition of derivative because the exercise price is denominated in a currency that is different from the functional currency of the Company. It was recorded at a fair value of $2,216, using the Black-Scholes Model. The proceeds are allocated first to the warrants based on their fair value, and the residual of $7,655 was allocated to the equity (Note 23). As of December 31, 2023, the warrants were revalued at $1,830, and for the year ended December 31, 2023, a gain of $386 was recorded in (Gain) loss on fair value of warrants and purchase option derivative asset on the Company's Consolidated Statements of Operations and Comprehensive Loss.

On January 28, 2021, the Company completed a private placement and issued 18,115,656 Common Shares at a price of $9.64 per Common Share for total proceeds of $173,477, net of share issuance costs of $1,643.

Share Repurchase Authorization

On August 20, 2024, the Board approved a normal course issuer bid ("Share Repurchase Program") to repurchase up to $10,000 of the Company's common shares ("Shares"). 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, 2024 until August 21, 2025. The share repurchase program authorizes the Company to repurchase up to 65,361 Shares daily, which represents 25% of the Company's average daily trading volume on the Toronto Stock Exchange of 261,445 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. Common Shares may be purchased on the TSX, the OTCQX, or alternative trading systems and are subject to the limitations and rules imposed by U.S. and Canadian securities regulations. The actual number of Common Shares purchased, timing of purchases and share price depend upon market conditions at the time and securities law requirements. Any Common Shares acquired pursuant to the Share Repurchase Program will be returned to treasury and cancelled. Shareholders may obtain a copy of the Form 12 – Notice of Intention to make a Normal Course Issuer Bid filed by the Company with the TSX, without charge, by contacting the Company.

During the year ended December 31, 2024, the Company repurchased 236,900 common shares under the share repurchase program for total consideration of approximately $215, including excise tax. As of December 31, 2024, the Company had a total of 9,763,100 shares remaining that can be authorized for repurchase.

	For the Year Ended December 31,
	2024	2023
	(In thousands, except per share data)
Total shares repurchased	236,900	—
Shares canceled	107,400	—
Weighted average price per share	$ 0.93	$ —
Total cost	$ 206	$ —
Excise tax (1)	$ 9	$ —

(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 Company's Consolidated Balance Sheets as of December 31, 2024.

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

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, 2021	30,995,473	8,855,066	$ 4.20	5.66
Replacement warrants granted on acquisition of Gage	282,023		6.47
Exercised	(7,989,436)		2.50
Expired	(47,730)		3.61
Outstanding, December 31, 2022	23,240,330	728,715	$ 4.49	9.72
Granted	435,212	435,212	1.81	2.50
Expired	(345,000)	(345,000)	3.14	—
Outstanding, December 31, 2023	23,330,542	818,927	$ 4.56	8.74
Granted	344,140	344,140	2.17	2.75
Expired	(304,055)	(304,055)	5.64	—
Outstanding, December 31, 2024	23,370,627	859,012	$ 4.14	7.77

On December 9, 2022, the Company entered into an arrangement with Canopy USA, LLC ("Canopy USA") and certain of its subsidiaries to convert CAD$125,500 in aggregate loans plus accrued interest in exchange for 24,601,467 Exchangeable Shares at a notional price of CAD$5.10 per Exchangeable Share and 22,474,130 new Common Share purchase warrants (the "New Warrants") to acquire Common Shares at a weighted average exercise price of CAD$6.07 per Common Share. In addition, the Company, TerrAscend Canada and Arise Bioscience, Inc. (collectively, "TerrAscend Entities") and Canopy USA, Canopy USA I Limited Partnership ("Canopy USA LP I") and Canopy USA III Limited Partnership ("Canopy USA LP III") entered into a debt settlement agreement (the "Debt Settlement Agreement"), pursuant to which the TerrAscend Entities are required to deliver to Canopy USA LP I and Canopy USA LP III an aggregate of 24,601,467 Exchangeable Shares and New Warrants with exercise prices ranging from CAD$3.74 to CAD$17.19 as consideration for extinguishing the debt obligations, including all principal and interest on the amounts outstanding thereunder. All of the New Warrants expire on December 31, 2032. Additionally, all of the existing warrants held by Canopy USA LP I and Canopy USA LP III, consisting of 22,474,130 warrants (the "Prior Warrants") originally issued to Canopy Growth Corporation and RIV Capital Inc. (previously Canopy Rivers Corporation) between 2019 and 2020 were canceled. The Exchangeable Shares can be converted to Common Shares at Canopy USA LP I and Canopy USA LP III's option, subject to certain conditions.

The fair value of the New Warrants was determined using the Black-Scholes Model using the following inputs and assumptions:

	December 9, 2022
Volatility	78.98%
Risk-free interest rate	2.87%
Expected life (years)	10.06
Dividend yield	0%

Pursuant to the terms of the Gage Acquisition, each holder of a warrant to purchase subordinate voting shares of Gage (a "Gage Warrant") was replaced with a warrant to purchase Common Shares (a "Replacement Warrant") on the basis of 0.3001 of a Replacement Warrant for each Gage Warrant held. Each Replacement Warrant is exercisable into Common Shares at an exercise price ranging from $3.83 to $7.00. The Replacement Warrants expire at various dates from October 6, 2022 to July 2, 2025. Refer to Note 5 for the determination of fair value of Replacement Warrants acquired.

F-40

F-41

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

The following is a summary of the outstanding warrant liabilities that are exchangeable into 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, 2021	—	—	$ —	—
Granted	7,129,517	—	$ —	—
Outstanding, December 31, 2022	7,129,517	7,129,517	$ 8.66	0.99
Granted	3,590,334	—	$ 1.95	1.48
Expired	(7,129,517)	(7,129,517)
Outstanding, December 31, 2023	3,590,334	—	$ 1.95	1.48
Granted	—	—	—	—
Expired	—	—	—	—
Outstanding, December 31, 2024	3,590,334	—	$ 1.95	0.48

14. Share-based compensation plans

Share-based payments expense

Total share-based payments expense was as follows:

	For the Years Ended
	December 31, 2024	December 31, 2023	December 31, 2022
Stock options	$ 6,993	$ 4,424	$ 9,485
Restricted share units	2,713	3,283	$ 2,677
Total share-based payments	$ 9,706	$ 7,707	$ 12,162

As of December 31, 2024, the total unrecognized compensation cost related to nonvested stock options was $5,254. The weighted average period over which it is expected to be recognized is 2.24 years for options.

Stock Options

The Company's 15% rolling Stock Option Plan was originally adopted and approved by the Board effective March 8, 2017. The Stock Option Plan governs the grant, administration and exercise of options to purchase Common Shares, which may be granted to employees, directors or consultants ("Eligible Persons") of the Company. The number of Common Shares reserved for issuance to any one person under an option granted pursuant to the Stock Option Plan, when combined with the number of Common Shares reserved for issuance under all awards granted within the one-year period prior to the date of grant under all other share compensation plans, including the Stock Option Plan and the Company's share unit plan (the "RSU Plan"), may not exceed 5% of the issued and outstanding Common Shares at the date of grant on a non-diluted basis, unless the Company has obtained disinterested shareholder approval. Options to purchase Common Shares granted under the Stock Option Plan will have an exercise price not less than the "fair market value" of a Common Share on the date of grant, being the five-day volume weighted average price of the Common Shares based on the date of grant of the option. The exercise price, term and vesting of options to purchase Common Shares shall otherwise be as approved by the Board. Unless otherwise determined by the Board, options to purchase Common Shares typically vest and become exercisable at a rate of 25% on each of the first four anniversary dates from the date of grant.

The options to purchase Common Shares outstanding noted below consist of service-based options granted to employees, the majority of which vest over a one to four-year period and have a five to ten-year contractual term. These awards are subject to the risk of forfeiture until vested by virtue of continued employment or service to the Company.

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

The following table summarizes the stock option activity:

	Number of Stock Options	Weighted average remaining contractual life (in years)	Weighted Average Exercise Price (per share) $	Aggregate intrinsic value
Outstanding, December 31, 2021	12,854,519	4.84	$ 4.85	$ 27,557
Granted	7,058,840	—	3.69	—
Replacement options granted on acquisition of Gage	4,940,364	—	2.99	—
Exercised	(778,245)	—	0.62	—
Forfeited	(3,397,021)	—	5.96	—
Expired	(567,211)	—	7.14	—
Outstanding, December 31, 2022	20,111,246	4.86	$ 3.63	$ 320
Granted	2,191,627	—	1.69	—
Exercised	(416,852)	—	0.23	—
Forfeited	(3,478,453)	—	4.45	—
Expired	(2,129,188)	—	3.85	—
Outstanding, December 31, 2023	16,278,380	4.74	$ 3.35	$ 658
Granted	3,355,000	—	1.90	—
Exercised	(30,625)	—	1.55	—
Forfeited	(913,145)	—	2.22	—
Expired	(2,568,691)	—	3.53	—
Outstanding, December 31, 2024	16,120,919	5.90	$ 3.13	$ 32
Exercisable, December 31, 2024	11,169,004	4.72	$ 3.51	$ 32

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between Company's closing stock price at the end of the year and the exercise price, multiplied by the number of the in-the-money options) that would have been received by the option holders had all option holders exercised their in-the-money options on December 31, 2024, 2023, and 2022, respectively.

The total pre-tax intrinsic value (the difference between the market price of the Common Shares on the exercise date and the price paid by the options to exercise the option) related to stock options exercised is presented below:

	For the Years Ended
	December 31, 2024	December 31, 2023	December 31, 2022
Exercised	$ 6	$ 558	$ 1,355

Pursuant to the terms of the Gage Acquisition, each holder of a stock option to purchase subordinate voting shares of Gage (a "Gage Option") was replaced with an option to purchase Common Shares (a "Replacement Option") on the basis of 0.3001 of a Replacement Option for each Gage Option held. The Company issued 4,940,364 Replacement Options in connection with the Gage Acquisition. The Replacement Options vest over a one to three year period. The fair value of the Replacement Options is estimated using the Black-Scholes Model with the following assumptions:

	March 10, 2022
Volatility	55.0%-80.0%
Risk-free interest rate	1.22%-1.94%
Expected life (years)	1.00-5.00
Dividend yield	0%

F-42

F-43

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

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

	December 31, 2024	December 31, 2023	December 31, 2022
Volatility	70.54% - 78.31%	77.79% - 80.16%	77.55% - 77.89%
Risk-free interest rate	3.18% - 4.45%	2.85% - 4.26%	1.63% - 3.51%
Expected life (years)	4.01 - 10.01	9.78 - 10.01	9.62 - 10.01
Dividend yield	0.00%	0.00%	0.00%

Volatility was estimated by using the historical volatility of the Company. 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 is based on the fact 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 years ended December 31, 2024, 2023, and 2022, was $5,943, $5,552, and $8,352, respectively.

Restricted Share Units

The Company's RSU Plan was approved by the Board effective November 19, 2019. The RSU Plan governs the grant, administration and release of share units ("RSUs") which may be granted to Eligible Persons of the Company. Pursuant to the RSU Plan, the number of Common Shares that may be reserved for issuance under the RSU Plan and under any other share compensation plans of the Company, including the Stock Option Plan, may not exceed (in the aggregate) 10% of the outstanding Common Shares on the date of grant on a non-diluted basis. The Company is required, at all times during the term of the RSU Plan, to reserve and keep available the number of Common Shares necessary to satisfy the requirements of the RSU Plan.

The following table summarizes the activities for the RSUs:

	Number of RSUs
Outstanding, December 31, 2021	192,171
Granted	1,176,397
Vested	(669,478)
Forfeited	(283,450)
Outstanding, December 31, 2022	415,640
Granted	2,387,275
Vested	(1,596,814)
Forfeited	(127,517)
Outstanding, December 31, 2023	1,078,584
Granted	2,449,011
Vested	(1,581,997)
Forfeited	(345,293)
Outstanding, December 31, 2024	1,600,305

RSUs granted during the year ended December 31, 2024, vest over a three month to four year term. Of the RSUs granted in 2023, 602,183 vested on the grant date, with the remainder vesting over a six month to four year term. Of the RSUs granted in 2022, 106,840 vested on the grant date, with the remainder vesting over a six month to four year term.

As of December 31, 2024, there was $3,420 of total unrecognized compensation cost related to unvested RSUs.

F-44

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

15. Non-controlling interest

Non-controlling interest consists mainly of a 12.5% minority ownership interest in TerrAscend's New Jersey operations.

On January 19, 2024, the Company reduced its non-controlling interest through the acquisition of the remaining 50.1% equity in both State Flower and the three Apothecarium dispensaries in California. The carrying amount of non-controlling interest was adjusted by $1,374 and recognized in additional paid in capital and attributed to the parent's equity holders.

On June 26, 2023, the Company reduced its non-controlling interest through a buyout of the minority interest in IHC Real Estate LP (Note 10). The transaction was accounted for as an equity transaction. The carrying amount of the non-controlling interest was adjusted by $1,323 to reflect the change in the net book value ownership interest. The difference from the consideration paid of $7,500 is recognized in additional paid in capital and attributed to the parent's equity holders.

The following table summarizes the non-controlling interest activity for the years ended:

	December 31, 2024	December 31, 2023
Opening carrying amount	$ (1,756)	$ 2,374
Capital distributions	(7,324)	(11,622)
Acquisition of non-controlling interest	1,374	(1,323)
Net income attributable to non-controlling interest	7,562	8,815
Ending carrying amount	$ (144)	$ (1,756)

16. Related parties

The amounts due to/from related parties consisted of:

(a) Loans payable: During the year ended December 31, 2024, certain funds controlled by Jason Wild, a related party of the Company, invested $5,500 of the total loan principal balance of the FG Loan (see Note 10), as a member of the loan syndicate.

(b) Private Placements: The Private Placements constitute a related party transaction because related persons, which consisted of key management and directors of the Company participated in the transaction. The Company's Executive Chairman, participated, directly and indirectly, in the Private Placement and acquired 800,002 units for gross proceeds of $1,200. In total, the related persons acquired, in the aggregate, 2,000 debentures and 825,734 units in connection with the Private Placements for aggregate gross proceeds of $3,239.

17. Income taxes

The domestic and foreign components of loss from continuing operations before provision for income taxes are as follows:

For the Years Ended

	December 31, 2024	December 31, 2023	December 31, 2022
Domestic	(38,237)	(45,490)	(337,019)
Foreign	(13,995)	(13,343)	26,834
Loss before income taxes	$ (52,232)	$ (58,833)	$ (310,185)

The Company has computed its provision for income taxes based on the actual effective tax rate for the year 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

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

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.

The provision for income taxes consists of:

	For the Years Ended
	December 31, 2024	December 31, 2023	December 31, 2022
Current:
Federal	27,372	30,727	21,692
State	1,812	11,279	2,718
Foreign	—	62	106
Total Current	$ 29,184	$ 42,068	$ 24,516
Deferred:
Federal	(7,284)	(13,363)	(29,297)
State	(1,462)	(5,271)	(6,002)
Foreign	—	19	—
Total Deferred	$ (8,746)	$ (18,615)	$ (35,299)
Total Income Tax Provision	$ 20,438	$ 23,453	$ (10,783)

The following table reconciles the expected statutory federal income tax to the actual income tax provision:

	December 31, 2024		December 31, 2023		December 31, 2022
	Amount	Percent	Amount	Percent	Amount	Percent
Loss income before taxes	$ (52,232)		$ (58,833)		$ (310,185)
Expected income benefit at statutory tax rate	(10,969)	21.0%	(12,355)	21.0%	(65,139)	21.0%
U.S. state income taxes	(5,927)	11.4%	(2,218)	3.8%	(7,067)	-4.4%
IRC 280E adjustment	32,192	-61.6%	31,960	-54.3%	28,607	-8.4%
Share based compensation	2,038	-3.9%	1,619	-2.8%	2,554	-1.7%
Return to provision true-up	(2,021)	3.9%	5,342	-9.1%	(7,359)	0.0%
Impairment of goodwill and intangible assets	—	0.0%	985	-1.7%	35,775	0.0%
Changes in unrecognized tax benefits	1,030	-2.0%	3,041	-5.2%	10,662	2.4%
Extinguishment of debt	105	-0.2%	173	-0.3%	(8,239)	0.0%
Canada income taxes at different statutory rates	(458)	0.9%	(413)	0.7%	(2,511)	0.4%
Changes in valuation allowance	(1,111)	2.1%	155	-0.3%	19,146	5.4%
Revaluation of equity/warrants	(955)	1.8%	(68)	0.1%	(12,290)	-19.9%
Revaluation of contingent consideration	518	-1.0%	(136)	0.2%	(223)	-3.4%
Investment in partnerships	3,740	-7.2%	2,938	-5.0%	—	-3.4%
Other	2,256	-4.3%	(7,570)	12.9%	(4,699)	0.6%
Actual income tax provision	$ 20,438	-39.1%	$ 23,453	-39.8%	$ (10,783)	-9.2%

As the operations of the Company are predominantly U.S. based, the Company has prepared the tax rate table using the U.S. Federal tax rate of 21%.

F-45

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

The following table presents a reconciliation of unrecognized tax benefits:

	December 31, 2024	December 31, 2023
Balance at beginning of year	$ 84,485	$ 18,883
Increase based on tax positions related to current periods	37,278	37,337
Increase based on tax positions related to prior periods	40,986	30,250
Settlements with tax authorities	(13,770)	(1,985)
Balance at end of year	$ 148,979	$ 84,485

A reconciliation of the beginning and ending amount of uncertain tax liabilities, inclusive of accruals for related penalties and interest, recorded in the consolidated balance sheets for the years presented:

	December 31, 2024	December 31, 2023
Balance, beginning of year	$ 79,627	$ 13,223
Increases based on tax positions related to prior years	4,536	4,613
Additions based on tax positions related to the current year	26,825	59,248
Additions based on refunds received related to prior years	10	—
Reclass of tax payments on deposit and other	(4,007)	2,543
Ending carrying amount (1)	$ 106,991	$ 79,627

(1) Related to uncertain tax liabilities, the Company accrued $8,006 in interest and $4,803 in penalties as of December 31, 2024, and $1,531 in interest and $1,567 in penalties as of December 31, 2023.

The increase in uncertain tax positions is primarily due to legal interpretations that challenge the application of Section 280E of the Code to the Company ("280E Tax Position"). The Company believes that it is reasonably possible that the unrecognized tax benefits will increase over the next 12 months due to its 280E Tax Position.

The principal component of deferred taxes are as follows:

	December 31, 2024	December 31, 2023
Deferred tax assets
Net operating losses	$ 49,222	$ 50,440
Reserves	63	286
Share issuance costs	1,039	1,039
Intangible assets	4,667	5,267
Investment in partnerships	9,182	10,867
Lease liability	8,510	4,974
Other	2,171	2,116
Total deferred tax assets	74,854	74,989
Valuation allowance	(61,497)	(62,608)
Net deferred tax assets	$ 13,357	$ 12,381
Deferred tax liabilities
Intangible assets	$ (14,013)	$ (24,949)
Property and equipment	—	(52)
Right of use asset	(7,772)	(4,555)
Total deferred tax liabilities	$ (21,785)	$ (29,556)
Net deferred tax liabilities	$ (8,428)	$ (17,175)

The Company assesses available positive and negative evidence to estimate if it is more likely than not to use certain jurisdiction-based deferred tax assets including net operating loss carryovers. On the basis of this assessment, the Company continues to maintain a valuation allowance on certain deferred tax assets for the year ended December 31, 2024.

F-46

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

As of December 31, 2024, the Company had $163,630 of Canadian net operating loss carryovers that expire at different times, the earliest of which is 2035 for $547. As of December 31, 2024, the Company had $24,859 of domestic federal net operating loss carryovers with no expiration date. As of December 31, 2024, the Company had various state net operating loss carryovers that expire at different times. The statute of limitations with respect to our federal returns remains open for tax years 2021 and forward. Over the next twelve months, the Company believes it is reasonably possible that various statutes of limitation will expire which would have the effect of reducing the balance of unrecognized tax benefits by $31,919.

As the Company operates in the cannabis industry, the IRS takes the position that the Company is subject to the limitations of Section 280E of the Code, under which the Company is only allowed to deduct expenses directly related to sales of product. Application of Section 280E results in permanent differences between ordinary and necessary business expenses deemed non-deductible under Section 280E of the Code. Therefore, the effective tax rate can be highly variable and may not necessarily correlate with pre-tax income or loss.

Related to its 280E Tax Position, the Company has filed amended federal and state returns for tax years 2020 through 2022. During the year ended December 31, 2024, the Company received refunds related primarily to the amended federal tax return for tax year 2020 in the amount of $8,699, including interest. During the year ended December 31, 2024, certain of the Company's amended federal income tax returns were selected for routine examinations by the Internal Revenue Service. The Company does not currently anticipate completion of the audits within the next twelve months. During the year ended December 31, 2024, the Company released a portion of its uncertain tax benefits in the amount of $16,568.

18. General and administrative expenses

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

	For the Years Ended
	December 31, 2024	December 31, 2023	December 31, 2022
Office and general	$ 14,774	$ 15,673	$ 15,669
Professional fees	12,451	13,119	12,942
Lease expense	7,918	6,441	5,302
Facility and maintenance	4,953	5,180	4,050
Salaries and wages	60,348	57,336	44,814
Share-based compensation	9,706	7,707	12,162
Sales and marketing	6,135	9,658	10,318
Bad debt (recovery) expense	(3,818)	75	10,331
Insurance recovery for property and equipment	(871)	—	—
Total	$ 111,596	$ 115,189	$ 115,588

19. Revenue, net

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

	For the Years Ended
	December 31, 2024	December 31, 2023	December 31, 2022
Retail	$ 208,170	$ 239,957	184,019
Wholesale	98,507	77,371	$ 63,810
Total	$ 306,677	$ 317,328	$ 247,829

For the years ended December 31, 2024, 2023, and 2022, the Company did not have any single customer that accounted for 10% or more of the Company’s revenue.

As a result of the vape recall in Pennsylvania, the Company recorded sales returns of $1,040 during the year ended December 31, 2022.

TERRASCEND CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share/unit amounts)

Finance and other expense

Finance and other expenses were as follows:

	For the Years Ended
	December 31, 2024	December 31, 2023	December 31, 2022
Interest and accretion	$ 35,402	$ 35,106	$ 39,059
Employee retention credits and transfer fee	—	2,236	(9,440)
Indemnification asset release	—	—	3,973
Debt modification fees	—	—	2,507
Other income	(1,032)	(301)	(206)
Total	$ 34,370	$ 37,041	$ 35,893

The indemnification asset release is the reduction of the indemnification asset related to the expiration of the escrow agreement related to the acquisition of The Apothecarium. The debt modification fees relate to amounts paid to modify the Gage Amended Term Loan which did not meet the criteria to capitalize under ASC 470, Debt.

Segment information

Operating Segment

The Company has determined that it operates as one reportable segment focused on the production and sale of cannabis products. While the Company manages its operations through state-level operating segments, these segments have been aggregated into one reportable segment due to similar long-term economic characteristics and other required criteria of similarity outlined in ASC 280, Segment Reporting, and in accordance with ASU 2023-07. 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 single reportable segment using gross profit margin as its closest measure to GAAP. Gross margin is a measure that is calculated as total revenue minus cost of goods sold, divided by total revenue. The CODM monitors this metric to assess the efficiency of the Company's production and distribution processes, as well as the effectiveness of pricing strategies.

	For the Years Ended
	December 31, 2024	December 31, 2023	December 31, 2022
Revenue, net	$ 306,677	$ 317,328	$ 247,829
Cost of sales	156,717	157,630	146,325
Gross profit	149,960	159,698	101,504
Gross profit margin	48.9%	50.3%	41.0%

Assets

The measure of reportable segment assets is consistent with the presentation of total consolidated assets as reported on the balance sheet

Revenue

For the year ended, December 31, 2024, the Company did not have any single customer that accounted for 10% or more of the Company's revenue.

Geography

The Company has subsidiaries located in Canada and the United States. For each of the twelve months ended December 31, 2024 and 2023, net revenue was primarily generated from sales in the United States. As a result of the Reorganization (see

F-48

F-49

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

Note 3), the Company consolidated its retail location in Canada and generated $1,042 and $925 for the year ended December 31, 2024 and 2023, respectively.

The Company had non-current assets by geography of:

	December 31, 2024	December 31, 2023
United States	$ 502,260	$ 562,854
Canada	537	775
Total	$ 502,797	$ 563,629

22. Capital management

The Company’s objective in managing capital is to ensure a sufficient liquidity position to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders. In order to achieve this objective, the Company prepares a capital budget to manage its capital structure. The Company defines capital as borrowings, equity comprised of issued share capital, share-based payments, accumulated deficit, as well as funds borrowed from related parties.

Since inception, the Company has primarily financed its liquidity needs through the issuance of share capital and debt. The equity issuances are outlined in Note 13, debt financings are outlined in Note 10, and convertible debt is outlined in Note 12.

The Company is subject to financial covenants as a result of its loans payable with various lenders. The Company was in compliance with its debt covenants as of December 31, 2024. In the event that, in future periods, the Company’s financial results are below levels required to maintain compliance with any of its covenants, the Company will assess and undertake appropriate corrective initiatives with a view to allowing it to continue to comply with its covenants. Other than these items related to loans payable, the Company is not subject to externally imposed capital requirements.

23. 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 measured at estimated fair value on a recurring basis:

	At December 31, 2024			At December 31, 2023
	Level 1	Level 2	Level 3	Level 1	Level 2	Level 3
Assets
Cash and cash equivalents	$ 26,381	—	—	$ 22,241	—	—
Restricted cash	606	—	—	3,106	—	—
Total Assets	$ 26,987	—	—	$ 25,347	—	$ —
Liabilities
Contingent consideration payable	—	3,293	—	—	2,012	4,434
Detachable warrants	—	451	—	—	3,332	—
Bifurcated conversion options	—	92	—	—	1,830	—
Total Liabilities	$ —	$ 3,836	$ —	$ —	$ 7,174	$ 4,434

F-50

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

There were no transfers between the levels of fair value hierarchy during the years ended December 31, 2024 or December 31, 2023.

The valuation approaches and key inputs for each category of assets or liabilities that are classified within Level 1, Level 2 and Level 3 of the fair value hierarchy are presented below.

Level 1

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

The Company's derivative liability consists of a detachable warrant liability issued through the private placement (see Note 13) and a conversion option related to the convertible debenture offering (see Note 12).

The following table summarizes the changes in the derivative liability:

Balance at December 31, 2022	$ 711
Conversion option issued in 2023 private placement	3,600
Detachable warrants issued in 2023 private placement	2,216
Fair value gain on revaluation of warrants and conversion option	(1,372)
Effects of movements in foreign exchange	7
Balance at December 31, 2023	$ 5,162
Fair value gain on revaluation of warrants and conversion option	(4,549)
Effects of movements in foreign exchange	(70)
Balance at December 31, 2024	$ 543

The warrant liability is remeasured each year using the Black-Scholes Model. The Company recognized a gain on fair value of warrants of $4,549, $1,372, and $59,341 for the year ended December 31, 2024, 2023, and 2022, respectively.

Detachable Warrants

The detachable warrants issued as a part of the June 2023 private placement (see Note 13) have been measured at fair value as of December 31, 2024. Key inputs and assumptions used in the Black-Scholes Model were as follows:

	December 31,		December 31,
	2024		2023
Common Stock Price of TerrAscend Corp.	$	0.65	$	1.63
Option exercise price	$	1.95	$	1.95
Annual volatility		107.5%		74.7%
Annual risk-free rate		4.24%		4.23%
Expected term (in years)		0.48		1.48

Bifurcated conversion options

The conversion option issued as a part of the June and August 2023 private placement (see Note 12) has been measured at fair value as of December 31, 2024. Key inputs and assumptions used in the Black-Scholes Model were as follows:

	December 31,		December 31,
	2024		2023
Common Stock Price of TerrAscend Corp.	$	0.65	$	1.63
Option exercise price	$	2.01	$	2.01
Annual volatility		86.9%		70.1%
Annual risk-free rate		4.25%		4.23%
Expected term (in years)		1.48 - 1.59		2.48 - 2.59

TERRASCEND CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share/unit amounts)

Level 3

The purchase option derivative asset expired during the second quarter of 2023.

Contingent Consideration Payable

The fair value of the State Flower and The Apothecarium contingent considerations were calculated using the Black-Scholes Model. Key inputs and assumptions were as follows:

	December 31, 2024		January 19, 2024
Common Stock Price of TerrAscend Corp.	$	0.65	$	1.95
Option exercise price	$	1.33	$	1.76
Annual volatility		106.6%		68.7%
Annual risk-free rate		4.24%		5.21%
Expected term (in years)		1.05		2.00

On December 28, 2024 the company settled it's contingent consideration associated with the Peninsula acquisition in the amount of $386. This amount was paid subsequent to the year end.

Risk Management

The Company’s risk exposure and the impact on the Company’s financial instruments are summarized below:

(a) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, and accounts receivable, net. The Company assesses the credit risk of trade receivables by evaluating the aging of trade receivables based on the invoice date. The carrying amounts of trade receivables are reduced through the use of an allowance account and the amount of the loss is recognized in the Consolidated Statements of Operations and Comprehensive Loss. When a trade receivable balance is considered uncollectible, it is written off against the allowance for expected credit losses.

Subsequent recoveries of amounts previously written off are credited against operating expenses in the Consolidated Statements of Operations and Comprehensive Loss. The Company regularly monitors credit risk exposure and takes steps to mitigate the likelihood of these exposures resulting in actual loss. The Company had no customers whose balance is greater than 10% of total trade receivables as of December 31, 2024.

(b) Liquidity risk

The Company is exposed to liquidity risk, or the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages liquidity risk through ongoing review of its capital requirements. The Company’s objective with respect to its capital management is to ensure it has sufficient cash resources to maintain its ongoing operations.

The significant market risk exposures to which the Company is exposed are foreign currency risk and interest rate risk.

i) Foreign currency risk:

Foreign currency risk is the risk that a variation in exchange rates between the Canadian dollar and U.S. dollar and other foreign currencies will affect the Company’s operations and financial results.

The Company holds cash and cash equivalents in currencies other than their functional currency. The Company does not currently engage in currency hedging activities to limit the risks of currency fluctuations. Consequently, fluctuations in foreign currencies could have a negative impact on the profitability of the Company's operations.

F-51

F-52

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share/unit amounts)

However, as of the year ended December 31, 2024, a 10% change in the value of the U.S. dollar compared to the Canadian dollar would not result in a material impact on unrealized foreign exchange for the Company.

ii) Interest rate risk:

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. In respect of financial assets, the Company's policy is to invest excess cash at floating rates of interest in cash equivalents, in order to maintain liquidity, while achieving a satisfactory return.

Fluctuations in interest rates impact the value of cash equivalents. The Company’s investments in guaranteed investment certificates bear a fixed rate and are cashable at any time prior to maturity date.

The Company does not have significant cash equivalents for the year ended December 31, 2024. The Pelorus Term Loan has a variable interest rate that is tied to the U.S. "prime rate" and SOFR. At December 31, 2024, a 10% change to each of the interest rates would not result in a material impact. The remainder of the Company’s loans payable have fixed interest rates from 7.00% to 12.75% per annum. All other financial liabilities are non-interest-bearing instruments.

24. Commitments and contingencies

Commitments

On November 6, 2024, the Company entered into a definitive agreement to acquire Ratio Cannabis LLC ("Ratio Cannabis"), a dispensary in Ohio. Under the terms of the agreement, the Company will acquire all of the assets of Ratio Cannabis for total consideration to the sellers of $10,300 will be comprised of $5,000 million in cash, $1,320 in Company common shares and a seller’s note for $3,980 million bearing 6% interest with a two-year maturity. 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 Company’s Consolidated Balance Sheets or Consolidated Statements of Operations and Comprehensive Loss. At December 31, 2024, 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, except for the proceedings described below.

Pure X Litigation

On August 9, 2023, AEY Capital LLC (“AEY”), a licensed subsidiary of TerrAscend, filed a lawsuit in Oakland County Circuit Court (the "Oakland Court") against Pure X, LLC (“Pure X”) seeking damages in the amount of $14,969 (the “AEY Claim”). The AEY Claim alleged breach of contract, quantum meruit/unjust enrichment, account stated and statutory conversion. AEY’s alleged damages were related to Pure X’s failure to pay for various cannabis products sold by AEY. This matter was settled between the parties and dismissed with prejudice by the Oakland Court on June 28, 2024.

25. Subsequent events

The Company has evaluated subsequent events and determined that no events or transactions met the definition of a subsequent event for purposes of recognition or disclosure in the Consolidated Financial Statements.

AI assistant

TerrAscend — Annual Report 2024

47415_rns_2025-03-06_c43d7b04-5755-48a6-b637-9b43fa1e5aa6.pdf

Consolidated Statements of Cash Flows (Continued)

TERRASCEND CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of operations

2. Summary of significant accounting policies

(a) Basis of presentation and measurement and going concern

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reclassification

(b) Functional and presentation currency

(c) Basis of consolidation

Voting Interest Entities

Variable Interest Entities

(d) Cash, cash equivalents and restricted cash

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(e) Accounts Receivable

(f) Inventory

(g) Property and equipment and long-lived assets held for sale

(h) Leases

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(n) Business combinations

(o) Investments

(p) Non-controlling interests

(q) Income taxes

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(u) Convertible preferred stock and detachable warrants

(v) Warrant liability

(w) Embedded derivative liabilities

(x) (Loss) earnings per share

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(y) Discontinued operations

(z) Use of significant estimates and judgments

i) Inventory

ii) Revenue recognition

iii) Share-based payments

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ix) Control, joint control or level of influence

x) Employee Retention Tax Credit

xi) Variable Interest Entity

xii) Current Expected Credit Losses

(aa) New standards, amendments and interpretations adopted

(ab) New standards, amendments and interpretations not yet adopted

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Consolidation

4. Accounts receivable, net

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Acquisitions

2023 Acquisitions

AMMD

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Peninsula

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Blue Ridge

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Herbiculture

TERRASCEND CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Contingent consideration

TERRASCEND CORP

TerrAscend Annual Report 2024