The Parent Company posts 3Q revenue of $39.7M as it strengthens California retail footprint and premium cannabis offerings

TPCO Holding Corp (The Parent Company (OTCQX:GRAMF, NEO:GRAMU)) delivered $39.7 million in revenue in its third quarter in a sign that its retail push throughout California is paying off.

The premium cannabis company highlighted sequential direct-to-consumer revenue growth of 7.6% to $12.8 million compared to $11.9 million in its second quarter, while it posted gross profit of $6.1 million, an improvement over the $1.3 million it saw in 2Q 2021.

San Jose-based The Parent Company (OTCQX:GRAMF, NEO:GRAMU) ended the quarter with $206.7 million in cash, with $49.2 million used for acquisitions and capital investment since closing its qualifying transactions.

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During the three-month period ended September 30, 2021, The Parent Company completed a number of growth initiatives, such as expanding its California retail footprint with a new delivery hub in San Diego via Caliva’s direct-to-consumer platform, and completing two more retail acquisitions in West Hollywood and Ceres.

The firm also launched the first light strain of its Monogram brand and its Fun Uncle Cruisers vapes with live resin, improving its value vape offering.

The Parent Company’s retail locations now reach over 80% of the state of California’s total population, according to the company.

“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 new CEO Troy Datcher in a statement.

“My focus since joining in September has been on accelerating the pace of our in-state expansion, increasing our operational efficiencies, and attracting talent to further strengthen our team. Our store presence has more than tripled since the beginning of 2021, now at over 80% coverage of the state’s adult population upon closing our signed acquisitions, we believe there is a significant opportunity for us to emerge as the preferred choice for Californian consumers looking to access high-quality cannabis products.”

Reducing exposure to price fluctuations

Net sales in Q3 came in at $39.7 million, a decrease of approximately 26.7% compared to the previous quarter’s $54.2 million, driven by a decrease in bulk wholesale flower and bulk wholesale oil prices during the third quarter. Wholesale revenue was $26.9 million compared to $42.3 million for 2Q 2021.

The group posted an adjusted EBITDA loss of $16.2 million for the quarter.

Datcher acknowledged that while the firm’s overall performance was impacted by the continued bulk wholesale flower and oil pricing declines that were seen across the California market, it expects to reduce exposure to 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,” Datcher added.

Social equity program investments

The group’s Social Equity Ventures program made its first investments, backing dispensary Josephine and Billie’s and the Peakz Company.

“I strongly believe that the cannabis industry represents a tremendous opportunity to elevate the economic prospects of so many individuals, especially people of color, who continue to be disproportionately targeted by current cannabis policies,” Datcher told shareholders.

“I look forward to future investments in the program as we have a robust pipeline of additional opportunities that we are currently reviewing.”

Contact Angela at [email protected]

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Story by ProactiveInvestors