Jay-Z's Cannabis Co. The Parent Co. Is Buying A West Hollywood Dispensary For $11.5M

TPCO Holding Corp. GRAM (OTCQX: GRAMF), which does business as The Parent Company, will buy the West Hollywood-based dispensary for $11.5 million.

What happened 

The vertically-integrated cannabis company confirmed Monday it has signed a definitive agreement to buy 100% of Calma West Hollywood’s equity. The agreement is still pending standard regulatory authorizations, including the City of West Hollywood’s approval. 

Under the deal, The Parent Company will compensate the acquisition with $11.5 million, consisting of $8.5 million in cash and $3.0 million in equity of The Parent Company. 

The initial closing is projected to take place during the third quarter when 85% of Calma's equity will be acquired by the company upon authorization of the City of West Hollywood. The remaining 15% is expected to be transferred next year. Closing the transaction is subject to usual closing conditions and necessary authorizations. 

Under the deal, the Calma founders will stay engaged in the company’s operations of the business to ensure that “Calma remains a staple in West Hollywood.” 

Why it matters 

This purchase advances The Parent Company’s California outreach, bringing the total number of operating locations in the state to four. In addition to newly acquired Calma, the company’s two other locations are in San Jose (its headquarters) and one in Bellflower. 

Calma is based in the Los Angeles metropolitan area, with a population of some 18.7 million people and a cannabis retail density of around one store per every 194,000. What’s more, the city attracts more than 3.6 million visitors per year.

The acquired 3,250 square foot dispensary is one of only 10 stores in West Hollywood with licenses for both delivery and storefront sales. 

"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," Steve Allan, CEO of The Parent Company stated. "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."

Price Action 

The Parent Company’s shares were trading 1.75% higher at $5.83 per share at the time of writing.

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