The Parent Company Expands California Retail Footprint
SAN JOSE, Calif.,–The Parent Company or TPCO Holding Corp. (NEO: GRAM.U) (OTCQX: GRAMF), today announced that it has signed a definitive agreement to acquire 100% of the equity of Calma West Hollywood, an operating dispensary located in West Hollywood, California, for a total consideration of $11.5 million. The Agreement remains subject to regulatory approvals, including approval by the City of West Hollywood.
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. 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 The Parent Company’s 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 operations of the business.
“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.”
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.”
“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.”
Under the terms of the Agreement, The Parent Company has agreed to acquire 100% of the equity of Calma for a total consideration of $11.5 million, comprised of $8.5 million in cash and $3.0 million in equity of The Parent Company. Upon the initial closing anticipated to take place in Q3 2021, 85% of the equity of Calma will be obtained by the Company 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.
Forward Looking Statements
This press release may contain forward-looking information within the meaning of applicable securities legislation which reflects The Parent Company’s current expectations regarding future events. The words “will”, “expects”, “intends” and similar expressions are often intended to identify forward looking information, although not all forward-looking information contains these identifying words.
Specific forward-looking information contained in this press release includes, but is not limited to, statements concerning the execution and closing of the Calma transaction. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond The Parent Company’s control, which could cause actual results and events to differ materially from those that are disclosed in or implied by such forward looking information. Such risks and uncertainties include, but are not limited to: changes in general economic, business and political conditions, changes in applicable laws, the U.S. and Canadian regulatory landscapes and enforcement related to cannabis, changes in public opinion and perception of the cannabis industry, reliance on the expertise and judgment of senior management, as well as the factors discussed under the heading “Risk Factors” in The Parent Company’s Annual Information Form dated March 25, 2021, which is available on SEDAR at www.sedar.com. The Parent Company undertakes no obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
Caution Regarding Cannabis Operations in the United States
Investors should note that there are significant legal restrictions and regulations that govern the cannabis industry in the United States. Cannabis remains a Schedule I drug under the U.S. Controlled Substances Act, making it illegal under federal law in the United States to, among other things, cultivate, distribute or possess cannabis in the United States. Financial transactions involving proceeds generated by, or intended to promote, cannabis-related business activities in the United States may form the basis for prosecution under applicable U.S. federal money laundering legislation.
While the approach to enforcement of such laws by the federal government in the United States has trended toward non-enforcement against individuals and businesses that comply with medical or adult-use cannabis programs in states where such programs are legal, strict compliance with state laws with respect to cannabis will neither absolve The Parent Company of liability under U.S. federal law, nor will it provide a defense to any federal proceeding which may be brought against the Company. The enforcement of federal laws in the United States is a significant risk to the business of The Parent Company and any proceedings brought against the Company thereunder may adversely affect the Company’s operations and financial performance.
(This information is primarily sourced from The Parent Company. Highly Capitalized has neither approved nor disapproved the contents of this news release. Read our Disclaimer here).
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