Los Angeles, CA--California-based Gold Flora Corporation has completed an all-stock merger with The Parent Company, creating an extensive portfolio encompassing cultivation, distribution, product brands, and a solid retail and delivery footprint.
The company will continue to operate under the Gold Flora Corporation name in the new corporate structure. Laurie Holcomb has been appointed CEO of the newly merged company, while Troy Datcher is set to take on the role of Chairman of the Board.
A Balanced Board of Directors
The Board of Directors for the merged company will feature seven directors, with nominations split between the two parent companies. Gold Flora nominees include Laurie Holcomb, Michael W. Lau, Heather Molloy, and Jeffery Sears, while The Parent Company put forward Troy Datcher, Al Foreman, and Mark Castaneda.
Speaking on the merger in a news release, CEO Holcomb expressed optimism about the union of the two companies, noting the creation of a "true market leader" in the California cannabis industry. She further detailed ongoing strategic integration planning and identified opportunities for “maximizing combined synergies” and cost savings.
"We are now further poised to drive enhanced value to our customers and shareholders," Holcomb said, per the news release. "I speak for the entire leadership team when I share how excited we are for the future and eagerly anticipate all we can achieve together."
All-Stock Merger Details
The merger followed a court-approved plan under British Columbia’s Business Corporations Act. The company transitioned from British Columbia into Delaware, and Gold Flora, LLC's issued and outstanding membership units were acquired through the merger.
Post-merger, former holders of common shares of The Parent Company and Gold Flora now own approximately 49% and 51% of the outstanding common equity of Gold Flora, respectively. The company shares will continue trading on the NEO Exchange under the ticker symbol GRAM.
Trading is expected to resume on the NEO Exchange on July 10. However, shares of Gold Flora will trade on the OTCQX once an application is filed with and approved by OTC Markets.
Enhancing Presence in California's Cannabis Market
Before the merger, The Parent Company, TPCO Holding Corp, and Gold Flora aimed to bolster their standing in California's bustling cannabis market. CEO Holcomb expects this merger to foster the development of more consumer brands and a broader consumer reach.
Even amid the pandemic and ensuing economic challenges, the two companies' combined scale, Holcomb says in the report, provides a unique advantage within the California market. The merged entity boasts a pro forma revenue of $116.4 million for the nine months ended Sept. 30, 2022, with a gross margin of 33%. The company also anticipates annualizing between $20 million and $25 million in cost savings.
As Gold Flora Corporation begins its new journey, the California cannabis industry watches closely, anticipating the new strategies and innovations this merger will bring.
California’s cannabis market: Booming but complex industry
California is the most populous state in the U.S. and has the largest cannabis market, both legal and illicit. According to BDSA, legal cannabis sales in California reached 5.7 billion U.S. dollars in 2020 and are projected to grow to 6.6 billion U.S. dollars by 2025.
However, the illicit market is still dominant, with 8.7 billion U.S. dollars in sales in 2019. The legal market faces many challenges, such as high taxes, limited licenses, expensive regulations, local bans, competition from new operators and illicit supplies, and difficulties for small-scale farmers. Despite these obstacles, California’s cannabis industry is diverse and innovative, offering consumers various products, brands, and delivery options.