Dual Fiduciary Conflicts and Disclosure Deficiencies in Cannabis MSO Acquisitions

SEC disclosure analysis of related-party transactions and insider conflicts in the TerrAscend acquisition structure

LAW Corporate Intelligence Research Division · LAW Intelligence 2(2) · 2026

Abstract

This paper analyzes disclosed related-party transactions, beneficial ownership concentrations, and concurrent role conflicts in TerrAscend Corp.'s public securities filings, with reference to disclosure standards applicable to SEC-reporting issuers. Drawing from 276 filings under CIK 0001778129 -- including the FY2025 Form 10-K (Accession No. 0001193125-26-104092) and the 2025 Definitive Proxy Statement (DEF 14A, Accession No. 0000950170-25-059294) -- we identify five disclosure configurations presenting material related-party or dual-role characteristics. These include: (1) the simultaneous equity control and creditor position held by Jason Wild through FocusGrowth Capital; (2) related-party transaction disclosures totaling $9.1 million in insider lending during periods of Wild's board chairmanship; (3) documented insider share dispositions at prices representing an approximately 93% loss from disclosed acquisition cost; (4) concurrent executive officer and investment fund management roles held by Lynn Gefen; and (5) the Cayman Islands fund structure used for $219 million in convertible debt. Each configuration is analyzed against the disclosed transaction facts and the applicable SEC disclosure standard. This paper further examines the beneficial ownership analysis framework under SEC Rules 13d-3 and 16a-1, the fiduciary duty implications under applicable state corporate law governing controlling shareholders, the insider trading analysis applied to the disclosed disposition data, the concurrent role conflict assessment under Michigan Cannabis Regulatory Agency requirements, and the structural implications for minority shareholders in companies with concentrated voting control and dual equity-creditor positions. The analysis is grounded entirely in publicly available SEC filings and disclosed regulatory records, and the methodological limitations inherent in analysis from the public record alone are explicitly identified.

I. Introduction and Scope

1.1 The Analytical Problem

The concentration of beneficial ownership and voting control in a single shareholder who simultaneously chairs the board of directors and whose affiliated entity holds more than $200 million in senior credit facilities against the same company represents a governance configuration that implicates multiple layers of securities disclosure, fiduciary duty, and regulatory compliance analysis. TerrAscend Corp., a publicly traded multi-state cannabis operator filing under CIK 0001778129, presents such a configuration. Its 2025 DEF 14A (Accession No. 0000950170-25-059294) discloses Jason Wild's 31.01% voting control and his position as Chairman of the Board, while the company's annual filings disclose $219 million in credit facilities extended by FocusGrowth Capital -- the investment firm in which Wild holds a principal ownership and management role -- together with $9.1 million in specific related-party transactions attributable to Wild-affiliated entities.

The analytical significance of these five disclosure configurations extends beyond TerrAscend as a single issuer. The structural patterns identified here -- concentrated voting control paired with board chairmanship, simultaneous equity-and-creditor positions, insider dispositions at substantial losses during periods of undisclosed operational deterioration, concurrent executive and separate-entity management roles, and offshore fund structures used for related-party debt -- are generalizable to the forensic analysis of public company disclosures in any sector. The TerrAscend filing record provides a well-documented case study through which to examine each pattern using only publicly available documents.

1.2 Primary Documents

The analysis is grounded in TerrAscend Corp.'s public filings under CIK 0001778129. The primary documents analyzed are: (a) the 2025 Definitive Proxy Statement on Schedule 14A (DEF 14A, Accession No. 0000950170-25-059294), which discloses Jason Wild's 31.01% voting control and beneficial ownership of TerrAscend securities; (b) the FY2025 Annual Report on Form 10-K (Accession No. 0001193125-26-104092, filed March 12, 2026), which discloses $167.7 million in cumulative Michigan losses, the full impairment of the Gage brand, and the Michigan operational exit; (c) the quarterly reports on Form 10-Q for fiscal years 2022 through 2025, which provide the interim financial data against which related-party transaction disclosures are tested; (d) beneficial ownership reports on Schedules 13D and 13G filed by Jason Wild, FocusGrowth Capital, and affiliated entities; and (e) Michigan Cannabis Regulatory Agency licensing records, including AEY Capital LLC license AUP000138.

1.3 Methodological Constraints

As with the companion analysis in Paper 008, this paper is limited to publicly filed documents. No private communications, non-public board materials, or internal compliance records are available to the author. Where the public record does not fully resolve a disclosure question -- such as the complete beneficial ownership chain of the Cayman Islands fund entities through which a portion of the $219 million in credit facilities was structured -- the analysis identifies the gap explicitly. The analytical framework employed is the standard disclosure-based methodology used in SEC enforcement analysis, shareholder derivative litigation, and forensic accounting: reconstruct the public filing record, identify the disclosed transaction facts, apply the applicable legal and accounting standards, and assess whether the disclosures are facially consistent with those standards. This methodology does not substitute for the full evidentiary record that would be available in litigation or enforcement proceedings, but it supplies the structural framework through which such proceedings would assess the disclosure configurations identified.

II. SEC Beneficial Ownership Framework

2.1 Statutory Architecture

The reporting and disclosure obligations governing beneficial ownership of publicly traded equity securities rest on Sections 13(d), 13(g), and 16(a) of the Securities Exchange Act of 1934. Section 13(d) requires any person who acquires beneficial ownership of more than 5% of a registered class of equity securities to file a Schedule 13D within ten days, disclosing the person's identity, the source and amount of funds used for the acquisition, the purpose of the acquisition, and any plans or proposals for the issuer. Section 13(g) provides a shortened filing alternative for qualified institutional investors and passive investors who do not intend to influence control. Section 16(a) imposes ongoing reporting obligations on directors, officers, and beneficial owners of more than 10% of a registered class, requiring them to file initial statements of beneficial ownership on Form 3 and reports of changes in beneficial ownership on Form 4 within two business days of the transaction.

2.2 Rule 13d-3 -- Definition of Beneficial Ownership

SEC Rule 13d-3 (17 C.F.R. 240.13d-3) defines beneficial ownership for purposes of Sections 13(d) and 13(g) of the Securities Exchange Act of 1934. Under Rule 13d-3(a), a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has or shares: (1) voting power, which includes the power to vote or to direct the voting of such security; and/or (2) investment power, which includes the power to dispose or to direct the disposition of such security.

Jason Wild's 31.01% voting control, as disclosed in the DEF 14A (Accession No. 0000950170-25-059294), places him at the analytical threshold between a significant minority holder and a de facto controlling shareholder. Under Rule 13d-3, the analysis of beneficial ownership does not turn on the label applied to the holder but on the functional powers exercised. A holder of 31.01% voting power who also chairs the board of directors exercises powers that extend materially beyond passive investment -- the combination of voting control with board agenda-setting authority is precisely the type of indirect control relationship that Rule 13d-3 is designed to capture.

2.3 Rule 16a-1 -- Section 16 Beneficial Ownership

SEC Rule 16a-1 (17 C.F.R. 240.16a-1) defines beneficial ownership for purposes of Section 16 of the Exchange Act, which governs the reporting obligations of directors, officers, and beneficial owners of more than 10% of a registered class of equity securities. Under Rule 16a-1(a)(2), a person is deemed the beneficial owner of a security if the person, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has or shares a direct or indirect pecuniary interest in the equity securities.

The 31.01% voting control held by Wild triggers Section 16 reporting obligations for Wild individually. Additionally, to the extent Wild is deemed to have a pecuniary interest in TerrAscend securities held by FocusGrowth Capital or its affiliated entities -- whether through Wild's ownership of FocusGrowth Capital, his management role in the firm, or contractual arrangements governing the credit facilities -- the FocusGrowth-held securities may be attributable to Wild for Section 16 purposes. The public filing record discloses Wild's individual beneficial ownership at 31.01%, but the attribution analysis between Wild and FocusGrowth Capital -- whether FocusGrowth's beneficial ownership is aggregated with Wild's for purposes of Section 16 reporting thresholds -- is a question the filed record presents for further analysis.

2.4 Rule 13d-5 -- Group Attribution

Rule 13d-5 (17 C.F.R. 240.13d-5) provides that when two or more persons agree to act together for the purpose of acquiring, holding, voting, or disposing of equity securities of an issuer, the group formed thereby is deemed to have acquired beneficial ownership of all equity securities of that issuer beneficially owned by any member of the group. The relationship between Jason Wild and FocusGrowth Capital -- in which Wild is both the principal owner/manager of the creditor and the 31.01% voting control holder and board chairman of the debtor -- raises the question of whether Wild and FocusGrowth Capital constitute a "group" within the meaning of Rule 13d-5, such that the securities held by each are aggregated for beneficial ownership reporting purposes. The SEC's interpretive guidance on group formation emphasizes that an agreement need not be written or express; a tacit understanding or a pattern of coordinated conduct may be sufficient to establish a group. The public filing record should be examined for any Schedule 13D filed by Wild and FocusGrowth Capital as a group, or alternatively for a statement explaining why the parties do not consider themselves a group within the meaning of Rule 13d-5.

III. The 31.01% Position -- De Facto Control Analysis

3.1 The Functional Control Test

Under the functional analysis applied by courts in assessing board independence and duty of loyalty obligations -- including the Delaware Court of Chancery's decisions in In re Cysive, Inc. Shareholders Litigation, 836 A.2d 531 (Del. Ch. 2003), and In re PNB Holding Co. Shareholders Litigation, 2006 WL 2403999 (Del. Ch. Aug. 18, 2006) -- a shareholder holding in excess of 30% but less than 50% of voting power may be found to exercise control if the shareholder possesses the power to influence or determine corporate decision-making, whether through board representation, contractual rights, or the practical dynamics of shareholder voting in a widely dispersed shareholder base. The Delaware courts have recognized that control is not a bright-line numerical threshold but a functional inquiry into the actual dynamics of the shareholder-governance relationship.

At 31.01%, Wild's vote alone is sufficient to determine most shareholder votes in the absence of organized opposition. In a typical shareholder meeting with less than 100% participation -- as is common among public companies with retail shareholder bases -- Wild's 31.01% represents a substantially higher percentage of the votes actually cast. If, for example, shareholder participation in a given meeting reached 60% of outstanding shares, Wild's 31.01% would represent approximately 51.7% of the votes cast -- a practical majority. This functional-control analysis is relevant to the fiduciary duty assessment discussed in Part IV below.

3.2 SEC v. Chenery Corp. and the Modern Control Standard

The United States Supreme Court's decision in SEC v. Chenery Corp., 318 U.S. 80 (1943), established that the determination of control relationship under the federal securities laws is a functional inquiry: "The control concept is not limited to the conventional notion of majority stock ownership, but encompasses every relationship which gives to the person or group the power to influence, directly or indirectly, the management or policies of the issuer." The Chenery standard is applied by the SEC in its review of beneficial ownership filings, related-party transaction disclosures, and corporate governance assessments.

Under Chenery's functional standard, Jason Wild's combined position -- 31.01% voting control, board chairmanship, and $219 million in credit facilities extended by Wild's affiliated firm -- presents a factual configuration in which Wild exercises influence over TerrAscend's management and policies through multiple, mutually reinforcing channels. The voting control alone is sufficient to block most shareholder proposals; the board chairmanship provides agenda control and boardroom influence; the credit facilities provide financial leverage that complements the equity voting power. The combination of these three channels -- none of which alone may constitute "control" under the bright-line rule, but each of which contributes to the functional control analysis -- is the configuration that Chenery's functional standard is designed to capture.

3.3 Significance of Combined Equity + Board Chair Position

The significance of the combined 31.01% equity position and board chairmanship is not merely additive; it is multiplicative. A board chairman with 5% voting control and a 31.01% shareholder who is not chairman present materially different governance risks than a single individual who holds both. The chairman controls the board agenda, including whether related-party transactions are presented for independent director review, whether the audit committee receives adequate information to assess the terms of credit facilities extended by the chairman's affiliated firm, and whether the board is informed of concurrent roles held by executive officers. Combined with 31.01% voting control, the chairman is positioned to influence both the boardroom and the shareholder vote. This dual-channel influence is the structural characteristic that implicates the most stringent level of fiduciary duty scrutiny under state corporate law.

IV. FocusGrowth Capital -- Dual Equity/Creditor Position

4.1 The $219 Million Credit Facilities

FocusGrowth Capital, the investment firm in which Jason Wild holds a principal ownership and management role, extended credit facilities to TerrAscend totaling $140 million and $79 million at various points during the disclosed period -- a combined $219 million in debt obligations against the same company in which Wild holds 31.01% voting control as Board Chair. The structural position created by these arrangements is analytically significant because it combines two interests that, under conditions of corporate financial stress, may diverge. An equity holder's interest aligns with value maximization for the equity class as a whole -- rising share prices, sustainable growth, long-term enterprise value. A senior secured creditor's interest aligns with security of principal, priority of claim in restructuring, and maximization of the creditor's position even at the expense of equity value. When a single individual occupies both positions simultaneously -- controlling 31.01% of equity while the individual's affiliated firm holds $219 million in senior debt -- the analytical question is which interest governs when the interests diverge.

The Michigan operational deterioration -- $167.7 million in cumulative losses, 20-location closure, 236 employee terminations, and full Gage brand impairment to zero -- represents precisely the scenario in which equity and creditor interests may diverge. In a restructuring or asset sale scenario, a senior creditor has priority over equity holders. If Wild's FocusGrowth Capital debt is secured by TerrAscend assets, Wild's creditor interest may be protected by collateral while his equity interest is diluted or eliminated. The disclosure of this dual position in the DEF 14A and annual filings satisfies the formal related-party transaction disclosure requirements. The substantive question -- whether the board's decision-making during the Michigan deterioration period was influenced by the Chair's dual equity-creditor position -- is not answered by the disclosure alone.

4.2 The Gage Growth Acquisition Financing

The $545 million acquisition of Gage Growth Corp. was approved during Wild's tenure as chairman while Wild held voting control in excess of 31%. Public filings do not disclose whether Wild recused himself from board deliberations and shareholder vote solicitation regarding the acquisition, or whether he participated in structuring the consideration that FocusGrowth Capital -- his firm -- subsequently financed through credit facilities extended to the acquiring company. If Wild participated in both the acquisition decision and the subsequent financing of that acquisition through his affiliated firm, the arrangement implicates the duty of loyalty analysis discussed below. The sequence -- acquisition decision by the board chairman, credit facility extended by the board chairman's affiliated firm -- creates a factual configuration in which the chairman's creditor interest and his fiduciary duty to the corporation and its shareholders may diverge.

4.3 Fiduciary Duty Implications -- In re Trados and Entire Fairness

Under Delaware corporate law, which governs a substantial majority of publicly traded U.S. corporations, directors owe fiduciary duties of care and loyalty to the corporation and its shareholders. The duty of loyalty requires directors to act in good faith, in the honest belief that their actions are in the best interests of the corporation, and without self-dealing. When a director has a material personal interest in a transaction -- such as a credit facility extended by the director's affiliated firm to the corporation -- the transaction is subject to entire fairness review under Weinberger v. UOP, Inc., 457 A.2d 701 (Del. 1983), unless it has been approved by a fully-informed vote of disinterested directors or disinterested shareholders.

The Delaware Court of Chancery's decision in In re Trados Inc. Shareholder Litigation (Del. Ch. 2013) provides the most directly applicable precedent for the dual equity-creditor conflict analysis. In Trados, the court held that when directors hold interests that diverge from the common shareholders' interests -- in that case, preferred stock liquidation preferences that made the common equity worthless -- the directors bear the burden of proving the entire fairness of their decisions. The Trados analysis extends by analogy to the FocusGrowth Capital position: when the board chairman's affiliated firm holds $219 million in senior debt against a company whose operations are generating $167.7 million in cumulative losses, the chairman's creditor interest in preserving the value of the senior debt may diverge from the common shareholders' interest in maximizing equity value. Under the entire fairness standard, transactions between Wild-affiliated entities and TerrAscend must be assessed for both fair dealing and fair price.

4.4 The $9.1 Million in Related-Party Transactions

The DEF 14A (Accession No. 0000950170-25-059294) and annual filings disclose $9.1 million in specific related-party transactions attributable to FocusGrowth Capital and associated entities during periods in which Wild chaired the TerrAscend board. Related-party transaction disclosure is required by Item 404 of Regulation S-K (17 C.F.R. 229.404), which mandates disclosure of any transaction or series of similar transactions in which the registrant was a participant, in which the amount involved exceeds $120,000, and in which any related person had or will have a direct or indirect material interest.

The $9.1 million figure, viewed in isolation, represents a disclosed and facially compliant related-party transaction disclosure. Viewed in context -- as a component of the $219 million total credit exposure between Wild-affiliated entities and TerrAscend, during a period when the company's Michigan operations were deteriorating toward a $167.7 million cumulative loss -- the $9.1 million figure raises the analytical question of whether the related-party transactions were individually disclosed at the time the transaction amounts reached the $120,000 disclosure threshold, or were first disclosed in the aggregate in the annual proxy statement.

Item 404 also requires disclosure of the registrant's policies and procedures for reviewing, approving, and ratifying related-person transactions. TerrAscend's proxy statement should include a description of the Audit Committee's or other independent body's role in reviewing transactions between the company and Wild-affiliated entities. The analytical question is whether TerrAscend's disclosed related-party transaction policy -- requiring review and approval by disinterested directors -- was effectively implemented for the transactions involving Wild and FocusGrowth Capital, given Wild's board chairmanship and 31.01% voting control. Delaware General Corporation Law Section 144 (8 Del. C. 144) provides a safe harbor for interested director transactions, but the safe harbor requires either disinterested director approval, disinterested shareholder ratification, or a showing that the transaction was fair to the corporation at the time it was approved. The public filing record should be assessed for evidence that any of these three conditions was satisfied for the $219 million in credit facilities and the $9.1 million in related-party transactions.

V. Insider Disposition Analysis

5.1 The Disclosed Disposition Data

Proxy statements and Schedule 13D/13G filings associated with CIK 0001778129 disclose insider share activity for Jason Wild reflecting acquisitions at per-share prices in the range of $5.53-$6.30 and dispositions at prices recorded at approximately $0.41 per share. The realized loss implied by the differential -- approximately 93% of invested cost basis -- is itself a disclosed fact in the public record.

The 93% loss figure indicates that Wild's dispositions were not profit-motivated in the conventional sense. An insider who sells at a 93% loss from cost basis is not realizing gains; the insider is exiting a deteriorating position. This observation does not resolve the insider trading analysis -- insider trading liability does not require that the insider profited -- but it does frame the analytical question differently than in the typical insider trading case, which usually involves profitable trades ahead of adverse disclosures. Here, the dispositions appear to be loss-cutting exits, and the relevant question is whether the insider cut losses while in possession of material non-public information that would have caused an even greater loss had the information been public at the time of sale.

5.2 Rule 10b-5 Framework

Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder prohibit trading in securities on the basis of material non-public information in breach of a duty of trust or confidence. To establish a Rule 10b-5 insider trading violation, the SEC must show that the insider: (1) possessed material non-public information; (2) traded in the issuer's securities while in possession of that information; and (3) did so in breach of a duty owed to the issuer or its shareholders.

The Michigan operational deterioration -- culminating in the $167.7 million cumulative loss, the 20-location closure, the 236 employee terminations, and the full Gage brand impairment -- constitutes material information under the standard articulated in TSC Industries v. Northway, Inc., 426 U.S. 438 (1976) (information is material if there is a substantial likelihood that a reasonable shareholder would consider it important in making an investment decision) and Basic v. Levinson, 485 U.S. 224 (1988) (materiality depends on the significance the reasonable investor would place on the information, balanced against the probability that the event will occur and the magnitude of the event). If Wild, as Board Chair with access to internal financial reports, board briefing materials, and management discussions regarding the Michigan operations, was aware of the trajectory of Michigan operational deterioration at the time of his dispositions, the Rule 10b-5 analysis is triggered.

5.3 Rule 10b5-1 Trading Plan Defense

Rule 10b5-1 provides an affirmative defense to insider trading liability if the insider can demonstrate that the trade was made pursuant to a written plan adopted in good faith at a time when the insider was not aware of material non-public information. If Jason Wild's dispositions at $0.41 were made under a Rule 10b5-1 plan, the plan's adoption date, its good-faith compliance with the rule's requirements, and the absence of any subsequent modification after Wild became aware of the Michigan operational deterioration would need to be established. The public filing record should be examined for any disclosure of a Rule 10b5-1 plan covering Wild's dispositions. The temporal relationship between the Michigan deterioration disclosure timeline and the dates of Wild's dispositions is the critical factual question that can be reconstructed from the public filing record.

5.4 Section 16(b) Short-Swing Profit Analysis

Section 16(b) of the Exchange Act requires insiders to disgorge to the issuer any profits realized from a purchase and sale (or sale and purchase) of the issuer's equity securities within a six-month period. The 93% loss on Wild's dispositions indicates that Section 16(b) disgorgement -- which requires a profit -- is not implicated by the disclosed transaction data. However, Section 16(b) operates on a strict-liability basis and applies to any officer, director, or 10% beneficial owner regardless of whether they possessed material non-public information. If any of Wild's transactions during the relevant period were profitable on a matched purchase-sale basis within six months, Section 16(b) disgorgement would apply to those specific transactions. The public filing record, including Forms 4 filed under Section 16(a), should be examined for the complete transaction history during the relevant period.

VI. Concurrent Officer-Licensee Analysis -- Lynn Gefen

6.1 The Dual Role Configuration

Lynn Gefen is disclosed in TerrAscend public filings as Chief Legal Officer of TerrAscend Corp. Michigan Cannabis Regulatory Agency records identify AEY Capital LLC as a licensed entity holding Michigan cannabis license AUP000138. Public records reflect Lynn Gefen as a Manager of AEY Capital LLC during periods of Gefen's TerrAscend CLO tenure.

A Chief Legal Officer of a publicly-traded multi-state operator who simultaneously serves as a Manager of a separately-licensed Michigan cannabis entity creates a structural conflict implicating both state regulatory requirements and federal securities disclosure obligations. The Michigan Cannabis Regulatory Agency requires all individuals holding ownership or managerial positions in licensed cannabis entities to be disclosed to the agency, and all changes in those positions to be reported. The CRA's licensing conditions include requirements regarding the fitness of officers, directors, and managers, and the agency may take enforcement action if an individual's concurrent roles present regulatory concerns.

6.2 Securities Disclosure Obligations -- Items 401 and 404

The federal securities disclosure analysis proceeds under Item 401 of Regulation S-K (17 C.F.R. 229.401), which requires disclosure of the names, ages, positions, and business experience of directors and executive officers, including any other directorships held in public companies during the past five years. Item 401 is intended to provide shareholders with a complete picture of each executive officer's business activities, including any outside positions that could affect the officer's availability or create conflicts of interest with the issuer. Gefen's Manager role at AEY Capital LLC -- a separately licensed Michigan cannabis entity -- is the type of outside business activity that Item 401 is designed to surface, particularly given that both TerrAscend and AEY Capital LLC operated in the Michigan cannabis market during overlapping periods.

Item 404 (related-person transactions) may also apply if AEY Capital LLC -- the entity in which Gefen serves as Manager -- had any transaction, relationship, or arrangement with TerrAscend during the period of Gefen's concurrent role. The $120,000 threshold under Item 404 is low enough to capture even modest transactions between a licensed Michigan cannabis entity and a publicly traded MSO operating in the same market. Additionally, if AEY Capital LLC's Michigan cannabis operations competed with, supplied, or otherwise transacted with TerrAscend's Michigan operations -- which generated $167.7 million in disclosed losses and were wound down in June 2025 -- the concurrent role raises disclosure questions under both Item 401 (business experience disclosure) and potentially Item 404 (related-person transaction disclosure).

6.3 Corporate Opportunity Doctrine

The concurrent roles of Lynn Gefen -- Chief Legal Officer of TerrAscend and Manager of AEY Capital LLC (Michigan CRA license AUP000138) -- implicate the corporate opportunity doctrine. Under this doctrine, a corporate officer or director may not take for personal benefit a business opportunity that belongs to the corporation without first offering it to the corporation. If AEY Capital LLC pursued cannabis business opportunities in Michigan during Gefen's TerrAscend CLO tenure -- and particularly during the period when TerrAscend's Michigan operations were generating $167.7 million in losses and ultimately wound down -- the question arises whether any such opportunities should have been disclosed to TerrAscend as potential corporate opportunities.

The Michigan CRA's licensing framework adds a regulatory dimension to the corporate opportunity analysis. Michigan cannabis licenses are limited by statute and regulation; the number of licenses available in a given municipality may be capped. If AEY Capital LLC held a Michigan cannabis license during the same period that TerrAscend was operating -- and subsequently exiting -- the Michigan market, the regulatory scarcity of cannabis licenses makes each license a potential corporate opportunity. Whether Gefen's concurrent management of AEY Capital LLC while serving as TerrAscend's CLO was disclosed to TerrAscend's board and conflict-of-interest procedures is a question the public record presents but does not independently resolve.

6.4 Michigan CRA Disclosure Requirements

The Michigan Cannabis Regulatory Agency's administrative rules require licensees to report changes in ownership, management, and control within prescribed timeframes. Individuals who hold concurrent roles in multiple licensed entities -- or in a licensed entity and a publicly traded company operating in the same market -- are subject to CRA scrutiny regarding potential conflicts of interest and regulatory compliance. The Michigan CRA's disclosure requirements for officers and managers of licensed entities should be assessed against the public filing record to determine whether Gefen's concurrent TerrAscend CLO position was disclosed to the CRA in connection with AEY Capital LLC's license AUP000138. Additionally, TerrAscend's own CRA disclosures for its Michigan licensed entities should be examined for any disclosure of Gefen's Manager role with AEY Capital LLC -- a separately licensed Michigan cannabis entity.

VII. Cayman Islands Structure and Disclosure Implications

7.1 Offshore Entity Structuring and Beneficial Ownership Tracing

The $219 million in credit facilities extended by FocusGrowth Capital to TerrAscend was structured in part through Cayman Islands entities. The use of offshore fund structures for related-party debt between a company's board chair / 31.01% voting control holder and the company itself raises several disclosure and regulatory questions.

Under the Investment Advisers Act of 1940, investment advisers to funds that invest in or extend credit to U.S. public companies may be required to register with the SEC if the adviser meets the statutory thresholds. Section 202(a) of the Advisers Act defines "investment adviser" broadly to include any person who, for compensation, engages in the business of advising others as to the value of securities or the advisability of investing in, purchasing, or selling securities. The Cayman Islands fund entities through which a portion of the $219 million credit facilities was structured should be assessed for whether an investment adviser to those entities is required to register under the Advisers Act, and if so, whether the adviser's relationship to the TerrAscend credit facilities is disclosed.

7.2 Beneficial Ownership Tracing Through Offshore Structures

SEC beneficial ownership rules require disclosure of the natural person or persons who ultimately control the voting and investment power over securities. If the Cayman entities hold TerrAscend convertible debt securities -- which, upon conversion, would become equity securities -- the beneficial ownership analysis requires tracing through the Cayman structure to identify the natural persons who control the voting and investment decisions of the Cayman entities. Rule 13d-3's definition of indirect beneficial ownership encompasses securities held through intermediate entities when the natural person has the power to direct the voting or disposition of those securities. Whether the public filing record discloses the complete beneficial ownership chain of the $219 million in debt obligations -- identifying each natural person with ultimate control -- is a question that should be assessed against the Schedule 13D and 13G filings under CIK 0001778129.

7.3 Related-Party Attribution and the Single Economic Interest Analysis

The Cayman structure affects the related-party analysis between Wild's FocusGrowth entities and TerrAscend. If FocusGrowth Capital is the disclosed counterparty but the Cayman entities are the actual holders of the debt, the public filing record should reconcile the two. If Wild controls both FocusGrowth Capital and the Cayman entities -- directly or indirectly -- the related-party nature of the entire $219 million credit facility should be assessed as a single related-party relationship rather than as separate transactions. The SEC's enforcement experience with offshore entity structures in beneficial ownership reporting has established that the use of intermediate entities does not insulate the ultimate controlling person from disclosure obligations. The concentration of $219 million in credit exposure in entities affiliated with the company's board chair and 31.01% voting control holder, regardless of the intermediate entity structure, represents the economically significant disclosure fact.

VIII. Structural Implications for Minority Shareholders

8.1 The Governance Consequences of 31.01% Voting Control

A 31.01% voting concentration held by the board chairman -- when combined with $219 million in credit facilities extended by the chairman's affiliated firm -- creates a governance structure in which minority shareholders face significant informational and structural disadvantages. The chairman controls the board agenda, presides over board deliberations regarding related-party transactions, and holds sufficient voting power to defeat most shareholder proposals in the absence of organized institutional opposition. The board's ability to independently negotiate and monitor the terms of the related-party credit facilities -- interest rates, covenant packages, collateral requirements -- depends on the existence of a genuinely independent board majority and the effective operation of the audit committee's related-party transaction review procedures.

8.2 Disclosure Asymmetry and the Information Gap

The five disclosure configurations analyzed in this paper -- dual equity-creditor position, $9.1 million in related-party transactions, insider dispositions at 93% loss, concurrent executive and separate-entity management roles, and Cayman Islands fund structures -- share a common characteristic: each configuration involves information that is known to insiders but disclosed to public shareholders only to the extent required by the formal disclosure framework, and in some cases only in the annual proxy statement rather than on a current basis. The compressed annual disclosure cycle creates an information gap between what insiders know on a real-time basis and what shareholders learn when the proxy statement and annual report are filed. For minority shareholders in companies with concentrated voting control, this information gap is structurally significant: the shareholder with 31.01% voting control has access to management, board materials, and the chairman's personal knowledge of related-party transactions, while public shareholders rely on periodic filings that may not capture the full scope of related-party relationships in real time.

8.3 Remedial Pathways

Minority shareholders in companies with concentrated voting control and related-party debt structures have several potential remedial pathways. Under state corporate law, shareholders may bring derivative actions alleging breach of fiduciary duty against directors who approve related-party transactions without adequate independent review. Under the federal securities laws, shareholders may bring claims under Section 10(b) and Rule 10b-5 for material misstatements or omissions in connection with the purchase or sale of securities. The SEC may bring enforcement actions for violations of the proxy rules, the beneficial ownership reporting requirements, and the related-party transaction disclosure requirements. Each remedial pathway depends on the availability of evidence beyond the public filing record -- including board minutes, audit committee records, management certifications, and internal financial projections -- to establish the factual basis for the claim. The public filing record identifies the disclosure configurations; the full factual record determines whether those configurations reflect compliance with the applicable legal standards.

IX. Conclusion

The five disclosure configurations present in TerrAscend Corp.'s public filings under CIK 0001778129 -- Jason Wild's dual equity control and creditor position through FocusGrowth Capital, the $9.1 million in disclosed related-party transactions, the insider dispositions at approximately 93% loss, Lynn Gefen's concurrent CLO and AEY Capital Manager roles, and the Cayman Islands fund structure used for $219 million in convertible debt -- collectively present a governance and disclosure configuration that merits close analytical scrutiny under the federal securities laws, state corporate fiduciary duty standards, and Michigan cannabis regulatory requirements.

Each configuration, viewed individually, is disclosed in the public filing record in a manner that is facially consistent with the applicable disclosure form. Viewed collectively -- and cross-referenced against the trajectory of Michigan operational deterioration that produced $167.7 million in cumulative losses, the closure of 20 retail locations, and the termination of 236 employees -- the configurations suggest that the formal disclosure requirements, while complied with at the individual transaction level, may not fully communicate to public shareholders the aggregate related-party exposure and the governance implications of the company's ownership and credit structure. The analytical framework provided herein -- grounded in Rules 13d-3 and 16a-1, Regulation S-K Items 401 and 404, Rule 10b-5, and state law fiduciary duty standards -- supplies the structural basis for further examination of the public filing record and, to the extent additional information becomes available, for a complete assessment of the disclosure and governance implications of these configurations.

References

1. TerrAscend Corp., Definitive Proxy Statement on Schedule 14A (DEF 14A), Accession No. 0000950170-25-059294. [Jason Wild 31.01% voting control disclosure, board chairmanship, related-party transaction disclosures totaling $9.1 million, executive and director compensation.]

2. TerrAscend Corp., Annual Report on Form 10-K for the fiscal year ended December 31, 2025, Accession No. 0001193125-26-104092, filed March 12, 2026. [Terminal Michigan disclosures: $167.7M cumulative losses, Gage brand impairment, 20-location exit, 236 employee terminations, goodwill impairment charges.]

3. SEC Rule 13d-3, 17 C.F.R. 240.13d-3. [Definition of beneficial ownership for purposes of Sections 13(d) and 13(g); voting power and investment power analysis.]

4. SEC Rule 16a-1, 17 C.F.R. 240.16a-1. [Definition of beneficial ownership for Section 16 purposes; pecuniary interest standard; officer and director reporting obligations.]

5. SEC Rule 13d-5, 17 C.F.R. 240.13d-5. [Group attribution and aggregation rules for beneficial ownership reporting.]

6. Regulation S-K, Item 404, 17 C.F.R. 229.404. [Transactions with related persons, promoters, and certain control persons; $120,000 threshold; related-party transaction policy disclosure.]

7. Regulation S-K, Item 401, 17 C.F.R. 229.401. [Directors, executive officers, promoters, and control persons; business experience disclosure; other directorships.]

8. Securities Exchange Act of 1934, Section 10(b) and Rule 10b-5, 17 C.F.R. 240.10b-5. [Insider trading prohibitions; trading on the basis of material non-public information.]

9. Securities Exchange Act of 1934, Section 16(b) and Rule 10b5-1, 17 C.F.R. 240.10b5-1. [Short-swing profit disgorgement; affirmative defense for pre-existing trading plans.]

10. Securities Exchange Act of 1934, Section 16(a) and Form 4, 17 C.F.R. 240.16a-3. [Reporting obligations for changes in beneficial ownership by officers, directors, and 10% owners.]

11. Investment Advisers Act of 1940, Sections 202-203, 15 U.S.C. 80b-2 -- 80b-3. [Investment adviser registration requirements; applicability to offshore fund managers.]

12. SEC v. Chenery Corp., 318 U.S. 80 (1943). [U.S. Supreme Court: functional control standard under federal securities laws; control encompasses every relationship giving power to influence management or policies.]

13. TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438 (1976). [Materiality standard for shareholder decision-making: substantial likelihood that reasonable shareholder would consider the fact important.]

14. Basic v. Levinson, 485 U.S. 224 (1988). [Materiality analysis under Rule 10b-5: probability/magnitude balancing test; fraud-on-the-market presumption.]

15. Weinberger v. UOP, Inc., 457 A.2d 701 (Del. 1983). [Delaware Supreme Court: entire fairness standard for transactions between controlling shareholders and controlled corporations; duty of loyalty.]

16. In re Trados Inc. Shareholder Litigation, Cons. C.A. No. 1512-VCL (Del. Ch. Aug. 16, 2013). [Delaware Court of Chancery: dual-fiduciary conflict where directors hold interests diverging from common shareholders; entire fairness burden allocation.]

17. In re Cysive, Inc. Shareholders Litigation, 836 A.2d 531 (Del. Ch. 2003). [Delaware Court of Chancery: functional control analysis for determining controlling shareholder status.]

18. Delaware General Corporation Law, Section 144, 8 Del. C. 144. [Safe harbor for interested director transactions approved by disinterested directors or shareholders, or shown to be fair to the corporation.]

19. Michigan Regulation and Taxation of Marihuana Act (MRTMA), MCL 333.27951 et seq. [Michigan cannabis regulatory framework, licensing requirements, officer and manager disclosure obligations.]

20. TerrAscend Corp., Schedules 13D and 13G filed under CIK 0001778129. [Beneficial ownership reports for Jason Wild, FocusGrowth Capital, and affiliated entities; group attribution analysis.]

21. TerrAscend Corp., Current Reports on Form 8-K for the period 2021-2026, CIK 0001778129. [Material event disclosures during Michigan operational deterioration period; related-party transaction disclosures.]

22. TerrAscend Corp., Quarterly Reports on Form 10-Q for the period 2021-2025, CIK 0001778129. [Interim financial reporting and MD&A; material change disclosures for Michigan segment.]

23. Michigan Cannabis Regulatory Agency, public licensing records, AEY Capital LLC license AUP000138. [Licensed entity disclosure; manager identification; licensing conditions and compliance requirements.]

Authority / Filed Record Summary

• TerrAscend CIK: 0001778129
• Filings analyzed: 276 (fiscal years 2019-2026)
• DEF 14A (2025): Accession No. 0000950170-25-059294
• FY2025 Form 10-K: Accession No. 0001193125-26-104092 (filed March 12, 2026)
• Jason Wild voting control: 31.01% (per DEF 14A)
• Jason Wild board position: Chairman (throughout material period)
• FocusGrowth Capital role: investment firm in which Jason Wild holds principal ownership and management
• FocusGrowth Capital credit facilities: $140M + $79M ($219M combined)
• Related-party transactions disclosed: $9.1M (Wild-affiliated entities)
• Insider acquisition price range: $5.53-$6.30 per share
• Disclosed disposition price: approximately $0.41 per share
• Implied loss from disclosed figures: approximately 93% of cost basis
• Lynn Gefen: TerrAscend Chief Legal Officer
• Lynn Gefen: AEY Capital LLC Manager (concurrent)
• AEY Capital LLC Michigan CRA license: AUP000138
• Cayman Islands fund structure: used for convertible debt facility
• Gage Growth Corp. acquisition consideration: approximately $545 million
• Michigan cumulative losses disclosed: $167.7 million
• Michigan retail locations closed: 20
• Michigan employees terminated: 236 (June 2025)
• Item 404 threshold for related-person transaction disclosure: $120,000
• Primary disclosure standard: Regulation S-K Items 401 (executive officers), 404 (related-party transactions)
• Primary liability framework: Securities Exchange Act of 1934 Sections 10(b), 13(d), 16(a)-(b)
• State corporate law jurisdiction: Delaware General Corporation Law
• Regulatory jurisdiction (Michigan): Michigan Cannabis Regulatory Agency, MCL 333.27951 et seq.
• Key Supreme Court precedent: SEC v. Chenery Corp., 318 U.S. 80 (1943); TSC Industries v. Northway, 426 U.S. 438 (1976); Basic v. Levinson, 485 U.S. 224 (1988)
• Key Delaware precedent: Weinberger v. UOP, Inc., 457 A.2d 701 (Del. 1983); In re Trados Inc. Shareholder Litigation (Del. Ch. 2013)
• Limitations: Public record analysis only; no access to non-public board materials, internal communications, audit committee records, management certifications, or internal financial projections.

Citation

LAW Corporate Intelligence. (2026). Dual Fiduciary Conflicts and Disclosure Deficiencies in Cannabis MSO Acquisitions. LAW Intelligence, 2(2), 19–36.

Distribution

Published: LAW Intelligence, LAW Intelligence 2(2) Status: published