TPCO Archives - Green Market Report

Debra BorchardtNovember 15, 2021
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TPCO Holding Corp. also known as The Parent Company (NEO: GRAM.U) (OTCQX: GRAMF) announced its financial numbers for the third quarter ending September 30, 2021, with an eye-popping charge of $570 million. The Parent Company’s revenue for the quarter was $39.7 million and the adjusted EBITDA loss for Q3 2021 was $16.2 million.

TPCO reported that its sales in the third quarter dropped by 26.7 % from the second-quarter revenue of approximately $54.2 million and blamed the decline on a decrease in bulk wholesale flower and bulk wholesale oil prices during the third quarter.  Wholesale revenue fell to $26.9 million versus $42.3 million in the second quarter and this was attributed to the decrease in whole flower pricing during the quarter. The direct-to-consumer revenue grew 7.6% sequentially to $12.8 million.

“Over the last several quarters we have executed on our strategic initiative to drive growth in the higher quality, direct-to-consumer revenue we generate by expanding our coverage in the California market through our omnichannel platform,” said Troy Datcher, Chief Executive Officer of The Parent Company. “While our performance was impacted by the continued bulk wholesale flower and oil pricing declines that were seen across the California market, we expect that as we continue to expand the direct-to-consumer line of our business we will reduce our exposure to these pricing fluctuations. Additionally, we remain well-positioned with our access to high-quality indoor-grown cannabis, which continues to command a higher price point in the market.”

Operating expenses in the quarter were $31.6 million, cash expenses included general and administrative costs of $9.9 million, salaries and benefits of $9 million, and sales and marketing expenses of $4.6 million. Non-cash expenses included stock-based compensation of $3.6 million and depreciation & amortization of $3.3 million.

Impairment Charge Details

TPCO said that the charge was based on the softening of the California cannabis market. As part of the impairment assessment, TPCO’s future forecasts considered changes in cash flow estimates due to lower flower and oil prices realized during the third quarter of 2021. While the Company remains optimistic that cannabis legalization will occur, our expected future cash flows reflect the current tax and regulatory environment. While the company insisted that the challenges it faced were not unique to the company and that the entire California market was experiencing these issues, few other companies have registered a charge of this magnitude.

“Furthermore, the Company would like to highlight that of the consideration paid for the Qualifying Transactions, $232,719,246 related to non-cash contingent consideration. This amount is potential additional consideration issuable, if and when, the stock price reaches certain thresholds. During the nine months ended September 30, 2021, the Company recorded a gain on contingent consideration of $220,997,087 which is reflected in the statement of operations.”

The charge won’t affect the company’s cash position which is a healthy $206.7 million as of September 30, 2021. 


Debra BorchardtJuly 2, 2021
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Glass House Brands Inc. (NEO: GLAS.A.U ) has called off its previously announced conditional agreement to accept a $50 million strategic investment from The Parent Company, whose official name is TPCO Holding Corp (OTC: GRAMF). Glass House said that it was a mutual agreement and that the Strategic Investment will not be completed at this time. Glass House said in its statement that it will consider future partnership opportunities with The Parent Company after the purchase and retrofit of the 5.5 m square foot greenhouse cultivation facility located in Ventura County, California.

TPCO Holding Corp. confirmed that the private placement offering by Mercer Park Brand Acquisition Corp. has been terminated by the parties effective today  Mercer Park Brand Acquisition Corp. recently merged with Glass House.

“In addition to our supply of award-winning, in-house cannabis, we remain well-positioned with sufficient access to both high-quality, low-cost indoor and outdoor-grown cannabis for use in our portfolio of branded products that are sold through our wholesale and direct-to-consumer channels,” said Steve Allan, Chief Executive Officer of The Parent Company. “Glass House is building a robust cultivation footprint in California, and we look forward to working with their team in the future on potential collaborations as we broaden our reach across the State. Looking ahead, we will continue to strategically deploy our capital on high-growth investment opportunities that will solidify our leadership position and offer strong value for our shareholders.”

Glass House also said that it didn’t expect the termination of the investment to affect the current purchase and development plans for the Camarillo Greenhouse Facility, its acquisition of seventeen retail licenses, or the pre-transfer construction currently occurring concerning four of those retail locations, or its ongoing land use permitting concerning recently won licenses in Isla Vista and Santa Ynez, California.

Glass House said it expects to complete the purchase of the Camarillo Greenhouse facility this quarter and is currently negotiating with several banks and other lenders for property secured financing, the majority of which is expected to be used for the retrofit.

On Monday, July 5, Glass House is set to begin trading on the NEO exchange in Canada under the name GH Group, Inc. or Glass House Brands. The subordinate, restricted, and limited voting shares and warrants of Glass House were approved for listing on the NEO Exchange under the symbols “GLAS.A.U” and “GLAS.WT.U”.

In 2020, Glass House reported that it grew revenue 185% year-over-year to $53 million and generated positive adjusted EBITDA, driven by its expanded cultivation and distribution footprint, improved supply chain and production efficiencies, and enhanced consumer brand profile. Including the assets of the Southern California Greenhouses and proposed Element 7 retail licenses, the combined company expects to generate full-year 2022 revenue and adjusted EBITDA of approximately $326 million and $104 million, respectively.

 


Debra BorchardtJune 28, 2021
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TPCO Holding Corp. also known as The Parent Company (OTCQX: GRAMF) is buying a West Hollywood, CA dispensary named  Calma West Hollywood in a deal valued at $11.5 million. It is expected to close in the third quarter of 2021. The transaction is made up of $8.5 million in cash and $3.0 million in shares of The Parent Company.

Calma is located in the Los Angeles metropolitan area, with a population of approximately 18.7 million people and a cannabis retailer density of approximately one store for every 194k people in the region. The 3,250 square foot dispensary is one of only ten stores in the West Hollywood area that is licensed for both delivery and storefront retail.

“We are thrilled to be expanding our retail presence in the iconic West Hollywood region and look forward to continuing to provide our clients with the exceptional selection and retail experiences they’ve come to expect from us,” said Steve Allan, Chief Executive Officer of The Parent Company. “Strategically positioned in a high-traffic, high-population region of Los Angeles, this acquisition enables us to expand our reach to a broader potential audience of consumers and patients with both in-person retail and delivery options.”

TPCO said in a statement that with more than 3.6 million visitors per year, West Hollywood is situated in the core of the Los Angeles region, surrounded by cultural destinations and tourist attractions in every direction. The acquisition of Calma increases its current California retail footprint to four, with two operating locations in San Jose and one in Bellflower. To ensure Calma remains a staple in West Hollywood, the Calma founders will remain involved with the operations of the business. The deal remains subject to regulatory approvals, including approval by the City of West Hollywood.

85% of the equity of Calma will be obtained by TPCO upon approval by the City of West Hollywood. The transfer of the remaining 15% equity of Calma is expected to occur in 2022. Closing of the Calma transaction is subject to standard closing conditions as well as regulatory review and approval.

“The Calma team is thrilled for the next phase of its growth as part of The Parent Company,” said Cobby Pourtavosi, Founder of Calma. “The Parent Company shares our relentless belief in prioritizing consumer experience and will be a contributing member of the West Hollywood community for years to come.”

 Mr. Allan added, “As we continue to execute on our omnichannel expansion strategy, we will look to evaluate and identify additional strong retail and delivery operators in strategic locations to expand our reach across the state.”

 

 

 

 


StaffMarch 16, 2021
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TPCO Holding Corp.  also known as The Parent Company (OTCQX: GRAMF), formerly Subversive Capital Acquisition Corp., announced financial results for the fourth quarter and year ended December 31, 2020, along with the filing of its Business Acquisition Report in connection with its Qualifying Transactions in respect of each of CMG Partners, Inc. and Left Coast Ventures.,  and SISU Extraction LLC  completed on January 15, 2021. The company said it would separately file its Annual Information Form (“AIF”) before the end of March 2021.

The company’s unaudited consolidated pro forma revenues for the fourth quarter were $40.2 million, a 40% increase versus $28.7 million in the fourth quarter of 2019. The unaudited consolidated pro forma EBITDA loss for the fourth quarter was $93.4 million versus a loss of $18.5 million in the fourth quarter of 2019. The company said that the fourth quarter 2020 EBITDA loss included various transactions, non-recurring, and approximately $70.5 million of non-cash expenses.

2020 Financial Highlights

The company also reported that its unaudited consolidated pro forma revenues for the year ended 2020 were $188.7 million, a 76% increase over 2019’s $107.2 million. The unaudited consolidated pro forma EBITDA loss for the year ended 2020 was $126.1 million compared to a loss of $136.1 million in 2019.

TPCO said it had $337.9 million of unaudited consolidated pro forma cash available on December 31, 2020, to execute on its growth strategy.

Steve Allan, The Parent Company’s CEO, said, “We are excited to have closed 2020 with momentum forming the largest vertically integrated cannabis company in California by revenue, vertically integrated footprint, brand portfolio and balance sheet post our transaction close in January. This year is pivotal for The Parent Company as we work through the complex integration process to lay the foundation for future growth and acquisitions. Our team has been diligently working to integrate the newly combined businesses over the last two months and we expect synergies will be realized in our financial results in the back half of 2021. We are optimizing our brand portfolio, planning to launch the first of our value-tier products near the end of this quarter, and expanding our omnichannel footprint in the coming weeks to reach more consumers.”

“California is the largest and most influential cannabis market globally, and we believe The Parent Company is best positioned to consolidate and become one of the leaders in this cannabis market,” continued Allan. “Our vertically integrated supply chain, brand portfolio, unrivaled consumer access, and one of the healthiest balance sheets in cannabis will allow us to reshape the industry starting with California. We have a long runway for growth, especially as we execute on our consolidation strategy, and believe we can create meaningful long term shareholder value.”


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