Vertically integrated cannabis operators TPCO and Gold Flora to merge

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Two vertically integrated cannabis companies in California are consolidating.

TPCO Holdings, which operates as The Parent Co., and Gold Flora are merging in an all-stock deal, according to a Tuesday news release.

Gold Flora shareholders will own 51% of the combined business and The Parent Co.’s will own the remaining 49%.

The combined company will be called New Parent and will operate as Gold Flora Corp.

Subject to approval, New Parent is expected to trade on Canada’s Neo Exchange and the over-the-counter markets.

Shares of TPCO Holdings currently trade as GRAMF on the OTC markets.

Gold Flora will also have access to a $5 million line of credit from The Parent Co at a 10% annual interest rate, secured by Gold Flora assets.

If the merger doesn’t go through, Gold Flora will have to pay the outstanding balance. If the merger is completed, the debt will be forgiven.

Once the deal is completed, New Parent’s California footprint will include:

  • 20 stores.
  • 12 house brands.
  • Three distribution centers.
  • One manufacturing facility.
  • Six cultivation facilities.

The merger will also streamline operations and generate annualized savings of $20 million and $25 million, according to the release.

TPCO’s Troy Datcher will serve as New Parent’s board chair and Gold Flora’s Laurie Holcomb as CEO.

In January, TPCO announced a cost-cutting restructuring.

“This is a monumental moment, and I want to sincerely thank the team at The Parent Company that has executed on the significant improvements we have made over the last year to prepare our company for today and the potential strategic partnership opportunities,” Datcher said in a statement.

The proposed merger, one of the first in the cannabis industry in 2023, comes after a down year in marijuana M&As.

Only $3.2 billion changed hands in such deals in 2022, down from a cannabis industry-record $10.3 billion in M&As the previous year.