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THE PARENT COMPANY
 
 

The Largest Vertically Integrated Omnichannel Cannabis Platform in California.






 

TPCO Holding, the Largest Cannabis SPAC in History, Announces Transaction with Shawn “JAY-Z” Carter, Roc Nation, Caliva and Left Coast Ventures

Newly formed vertically integrated cannabis company TPCO Holding Corp. (The Parent Company), will be the largest in California

Shawn “JAY-Z” Carter will join The Parent Company as Chief Visionary Officer to guide brand strategy and The Parent Company Social Equity Ventures, a corporate venture fund investing in Black-owned and minority-owned cannabis businesses

Entertainment powerhouse Roc Nation signs exclusive cannabis partnership with The Parent Company

$36.5mm in equity commitments from existing and new shareholders provides sufficient cash to satisfy closing conditions

Transaction expected to close in January 2021

Conference call and webcast available for replay

November 24, 2020 11:14 AM Eastern Standard Time

TORONTO--(BUSINESS WIRE)--Subversive Capital Acquisition Corp. (NEO: SVC.A.U, SVC.WT.U; OTCQX: SBVCF) ("SCAC"), a special purpose acquisition company (SPAC), today announced it has entered into definitive transaction agreements (the “Agreements”) with global icon, entrepreneur and MONOGRAM founder, Shawn “JAY-Z” Carter, entertainment powerhouse Roc Nation, CMG Partners Inc. (Caliva), California’s most trusted cannabis brand and leading direct-to-consumer platform, and Left Coast Ventures, Inc. (Left Coast Ventures), a predominant cannabis and hemp company with low-cost manufacturing and a diversified portfolio of brands, to form TPCO Holding Corp. (The Parent Company) (the “Transaction”). SCAC is the largest SPAC in both cannabis and Canadian history and will seek to redefine the industry with a mission to both consolidate the California cannabis market and create an impactful global company.

Subversive Capital Acquisition Corp., the Largest Cannabis SPAC in History, Announces Transaction with Shawn “JAY-Z” Carter, Roc Nation, Caliva and Left Coast Ventures to Form The Parent Company

Shawn “JAY-Z” Carter, who will become The Parent Company’s Chief Visionary Officer following closing of the Transaction, said: “Although we know we can’t fully redeem the injustices created by the ‘war on drugs’, we can help shape a brighter and inclusive future. The brands we build will pave a new path forward for a legacy rooted in equity, access, and justice. We’re creating something people can trust and we’re investing in our future, our people, and our communities.”

SCAC’s Chairman, Michael Auerbach, said: “California is the most powerful cannabis economy in the world, and we have a unique opportunity to consolidate the market with The Parent Company. With its advanced infrastructure, industry leading operational efficiencies, proven strategy of brands, and cultural influence, The Parent Company is expected to be best positioned for the inevitable end of cannabis prohibition in the United States.”

Steve Allan, who will become The Parent Company’s CEO following closing of the Transaction, said: “In addition to building the most influential portfolio of cannabis and hemp brands in the world, The Parent Company’s vertical operational platform has been designed for growth and future mergers and acquisitions, forging a path to redefine the cannabis industry in California.”

The Parent Company Investment Highlights

  • Proven Business Model with Attractive Valuation – Merger of two top California operators, Caliva and Left Coast Ventures, will create a fully vertically integrated platform with cultivation, manufacturing, brands, retail and delivery to support further brand development and an aggressive M&A strategy. Caliva and Left Coast Ventures expect combined pro forma revenues of $185 million in 2020 and $334 million in 2021. These acquisitions together constitute SCAC’s “qualifying transaction”.
  • Progressive Operational Platform – Both Caliva and Left Coast Ventures have deep California roots that will allow The Parent Company to own its supply chain, enabling the company to leverage scale and profitably produce and distribute a broad portfolio of cannabis products for every consumer segment. The vertically integrated, omnichannel strategy is designed to maximize gross profit and EBITDA margins, scale consumer reach, generate proprietary consumer data, and beat the illicit market on price, quality, and convenience.
  • Omnichannel Platform – Caliva has built and validated a scalable omnichannel business offering customers convenient express or scheduled delivery, and in-store or curbside pick-up, all through a single user-centric e-commerce platform, Caliva.com. This omnichannel e-commerce platform, offering both a robust portfolio of high-margin owned brands as well as third-party brands, is designed to allow The Parent Company to rapidly scale its direct-to-consumer reach to all Californians. Coupled with the powerful sourcing and low-cost manufacturing capabilities at both Left Coast Ventures and Caliva, this omnichannel platform will seek to offer consumers across California compelling pricing and convenience while remaining profitable for The Parent Company.
  • Exclusive Brand Partnerships and Leading Cultural Influence – Brand strategy and marketing playbook led by Shawn “JAY-Z” Carter and Roc Nation, leveraging unparalleled cultural influence of leading artists and entertainers to build the most valuable and scalable brand IP in cannabis.
  • Unrivaled Consumer Reach  Caliva currently reaches over 50% of consumers in California through their existing platform for delivery. The Parent Company is expected to have the greatest consumer reach of any cannabis company in California reaching 75% of consumers in the state by the end of 2021 and almost 90% by the end of 2022 through scaling of its omnichannel platform.
  • Strong Balance Sheet – SCAC currently holds approximately $575 million in cash-in-trust, which would make The Parent Company one of the most well-capitalized cannabis companies in the United States assuming no redemptions. The Parent Company expects to pursue an aggressive M&A strategy to accelerate growth, market share gains, and profitability.
  • Industry-Defining Social Impact  Led by Shawn “JAY-Z” Carter, The Parent Company will fund The Parent Company Social Equity Ventures with an initial target of $10 million and an annual contribution of at least 2% of its net income to invest in minority-owned and Black-owned cannabis businesses and contribute to the effort to rectify the wrongs of prohibition through initiatives that are working toward meaningful change in the criminal justice system. These initiatives will include bail reform, industry vocational training, job placement, expungement clinics, and Social Equity application support.
  • Experienced Management Team – The Parent Company will be led by an experienced executive team with deep knowledge of the combined companies, the cannabis industry, and the consumer packaged goods, technology and financial industries. Following the closing of the Transaction, The Parent Company will be led by:

- Steve Allan as CEO
- Brett Cummings as CFO, President of Left Coast Ventures
- Dennis O’Malley as COO, President of Caliva
- Shawn “JAY-Z” Carter as Chief Visionary Officer

The Parent Company’s Board of Directors is expected to include:
- Michael Auerbach, Founder and Chairman of SCAC

Subversive Capital Acquisition Corp., a special-purpose company that’s growing in the cannabis business, said it acquired two California companies and named Shawn “Jay-Z” Carter as its chief visionary officer.
Subversive is buying Caliva, a cannabis brand with direct-to-consumer sales, and Left Coast Ventures Inc., a producer of cannabis and hemp products. The deals will create a new holding company and include US$36.5 million of equity commitments from new and existing shareholders.
The holding company, which will be called TPCO Holding Corp., expects revenue from the combined entities to be US$185 million in 2020 and US$334 million next year. The deals’ aim is to “both consolidate the California cannabis market and create an impactful global company.” The new company aims to reach 75 per cent of California consumers and Jay-Z will run its brand strategy and work on a related project to reform criminal justice.
The cannabis industry has seen a flurry of transactions as more U.S. states open up even though marijuana remains illegal on the federal level. With efforts to decriminalize it nationally, investors are trying to establish companies that can emerge as the cannabis equivalent of a Budweiser or a Coca-Cola.
Jay-Z, a top-selling rapper who has started his own music label, clothing line and chain of sports bars, may help the brands develop the necessary cachet. Subversive described his post as a newly created position that focuses on the company’s strategic agenda and leading growth initiatives. He previously launched his own line of cannabis with Caliva and served as its chief brand strategist.
“Although we know we can’t fully redeem the injustices created by the ‘war on drugs,’ we can help shape a brighter and inclusive future,” Jay-Z said in a statement. “The brands we build will pave a new path forward for a legacy rooted in equity, access, and justice.”
Drug laws, particularly for marijuana, have long been blamed for disproportionately incarcerating Black people. TPCO will seek to establish US$10 million in funding and dedicate 2 per cent of its annual net income to invest in cannabis businesses owned by Black people and other minorities and initiatives to promote justice reforms.
 
 
 
https://www.subversivecapital.com/
contact@subversivecapital.com