TPCO Holding Corp. (NEO: GRAM) (OTCQX: GRAMF), which does business as The Parent Company, is still hemorrhaging money but not quite as fast as it has the past two years.
TPCO posted a $16.5 million loss for the first quarter of 2023, a solid improvement from the $735 million it managed to burn through in the 24 months before that.
Net sales were down almost 10% from the fourth quarter of 2022, however, to $18 million from $19.9 million, and down year-over-year by almost 20%, from $22.4 million in Q1 2022.
Those “strong first quarter results” are due to “momentum we have generated over the past year,” CEO Troy Datcher said in a press release, leaning on a company restructuring from last year and an upcoming merger that he said will buoy TPCO into the black.
“We are just beginning to see the improvement in our profitability as a result of the successful implementation of our strategic plan, as we generated record gross profit and gross margin in the first quarter of 2023,” Datcher said. “This demonstrates the value of our omnichannel retail platform and its ability to deliver improved margins.”
The year, Datcher said, is “off to a great start,” and cited the new launches of several product lines and a licensing agreement with musician Carlos Santana for his cannabis line Mirayo.
Perhaps most importantly, however, is the upcoming merger with Gold Flora Corp., which TPCO projected will generate $20 million-$25 million in savings. The all-stock deal was announced in February and has yet to close.
Additionally, TPCO said it already saved $21 million between January 2022 and March 2023 from “annualized payroll savings through the optimization of its workforce,” and that merging with Gold Flora will bring even more production and cost efficiencies.
TPCO has already begun contracting with Gold Flora to supply cannabis flower, vape pens, and pre-rolls, and has also started shifting all of its product research and development onto Gold Flora’s plate, the company reported.
“Integration planning is already underway to realize the substantial synergies through our combined platform. Together, we are executing on additional cost-saving measures that will best utilize our proven brand expertise and their premium cultivation and optimized production capabilities to drive efficiency and fuel margin expansion,” Datcher said.