The Parent Company Announces Divesture of Wholesale Extraction Division
Exits bulk wholesale business division to further accelerate pathway to long-term profitability
Secures preferred supply arrangement with buyer to enjoy multi-year strategic benefit to The Parent Company's supply chain despite no longer directly owning SISU
Buyer confirms continued operations and employment of SISU staff, an important employer to the Emerald Triangle area and member of the California cannabis community
SAN JOSE, Calif., Nov. 2, 2022 /CNW/ - TPCO Holding Corp. ("The Parent Company" or the "Company") (NEO: GRAM) (OTCQX: GRAMF), a leading consumer-focused California cannabis company, today announced that it has completed the divesture of its wholesale extraction division, SISU Extraction, LLC ("SISU") (the "Agreement"). The decision to divest SISU was driven by the Company's previously announced cost savings initiatives, which are focused on reducing costs, driving efficiencies, and accelerating its path to sustainable, long-term profitability.
The Agreement will ensure ongoing service for existing clients as well as continuation of employment for SISU employees, while avoiding any potential shut down related expenses to the Company. In addition, under the terms the of Agreement the purchaser has agreed to enter into a multi-year strategic supply agreement for both cannabis oil and flower brokerage services. Financial terms of the Agreement have not been disclosed.
"We are committed to making the difficult choices that are necessary for us to emerge as the leader in the California cannabis market," said Troy Datcher, Chief Executive Officer, and Chairman of The Parent Company. "Given the underperforming wholesale market, this decision will allow us to focus on our profitable omni-channel retail business and brand-building activities closer to the consumer experience, while preserving our balance sheet and avoiding any additional costs related to potentially shutting down our wholesale extraction division.
Troy Datcher continued, "It was important we identified a buyer that would continue operations not only so we could establish a strategic supply relationship, but also to ensure that the good people at SISU would remain employed during challenging economic times. SISU is an important part of the California cannabis community and I look forward to continuing to work with the SISU team to deliver innovative and high-quality products for our consumers."
The Parent Company is a leading consumer-focused, vertically integrated cannabis company with eleven retail locations, four delivery hubs and a curated product portfolio including Monogram by Shawn "JAY-Z" Carter, Caliva, Mirayo by Santana, Fun Uncle and Deli.
The Parent Company is committed to leveraging its status to help build a more equitable cannabis industry. Its social equity venture fund aims to eliminate systematic barriers to entry and provide minority entrepreneurs with meaningful participation, growth, and leadership opportunities in the multibillion-dollar legal cannabis industry.
Shares of The Parent Company common stock are traded on NEO Exchange under the ticker symbol "GRAM" and on the OTCQX under the ticker symbol "GRAMF."
For the latest news, activities, and media coverage, please visit www.theparent.co or connect with us on Instagram, LinkedIn, and Twitter.
References to information included on websites do not constitute incorporation by reference of the information contained at or available through such websites, and you should not consider such information to be part of this press release.
This press release contains 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", "believes" 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 related to the continuation of employment and service for SISU employees and customers, the multi-year supply relationship as between The Parent Company and SISU as well as the associated financial impact of the divesture. 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 conditions including the impact of increasing inflation, the continued significant price compression in flower and distillate oil in the California market, competition in both our wholesale and omni-channel retail channels, 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 Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 31, 2022 and in the Company's periodic reports subsequently filed with the SEC and in the Company's filings 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.
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.
SOURCE TPCO Holding Corp.
Investor Contact: Rob Kelly, MATTIO Communications, [email protected]
Share this article