Jay-Z-backed parent company revenue exceeds demand for hot weed

Shawn “Jay-Z” Carter, founding partner of Reform Alliance, a newly formed organization to reform the US criminal justice system, appears at the Reform Alliance launch event in New York, New York, United States, on January 23, 2019. REUTERS / Mike Segar

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Aug 16 (Reuters) – California pot producer TPCO Holding Corp (GRAMu.NLB), better known as the parent company, topped quarterly revenue estimates on Monday as demand for weed-infused products increased during the pandemic.

The Jay-Z-backed company also said that Troy Datcher, managing director of Clorox Co (CLX.N), will replace Steve Allan as managing director, without giving a reason for the change.

Formed earlier this year with the merger of a blank check company and three California cannabis companies, TPCO sells edibles, vape concentrates and other pot-related products.

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The cannabis industry saw a sales boom during the pandemic as people turned to marijuana for relaxation and entertainment, while hopes of a US federal legalization of weed have also benefited the industry.

TPCO tried to take advantage of the surge in demand by expanding its wholesale distribution network, which now spans more than 450 dispensaries in California.

It also announced on Monday the purchase of a consumer delivery center in Sacramento for an undisclosed amount, a move that is expected to help expand its reach to about 70% of California’s population.

Net sales for the quarter were $ 54.2 million, more than Refinitiv IBES ‘estimate of $ 50.7 million, driven by strong growth in the direct-to-consumer and wholesale business of the society.

TPCO said it plans to focus on higher margin product categories, with the aim of boosting direct sales to consumers.

Its good results were mirrored by multi-state cannabis operator Ayr Wellness Inc (AYRa.CD), which raised its annual outlook after posting more than triple revenue growth in the second quarter.

Ayr also announced that it will acquire Cultivauna LLC, the owner of Levia-branded cannabis-infused water-soluble salts and tinctures, for $ 20 million in cash and stock.

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Report by Arunima Kumar in Bangalore; Editing by Devika Syamnath and Aditya Soni

Our Standards: Thomson Reuters Trust Principles.

Barbara M. Stokes