2 NR's in one day ? Negotiations to Acquire Strategic Property in California and Provides Nevada Sales Update
Sales from Company's Nevada Operations Tracking Strong with a Compound Weekly Growth Rate of 15%; Positive Cash Flow Forecasted During the First Half of 2020
LAS VEGAS, Nov. 4, 2019 /PRNewswire/ - Flower One Holdings Inc. ("Flower One" or the "Company") (CSE: FONE) (OTCQX: FLOOF) – Nevada's largest cultivator, producer, and full-service brand fulfillment partner, announced today that sales from its current operations are tracking strong with a compound weekly growth rate of 15% since the first official sale out its flagship greenhouse facility on August 5, 2019. The Company is projecting to reach positive cash flow during the first half of 2020.
Flower One's continued success with the rapid execution of its Nevada operations is allowing the Company to pursue measured expansion into California where it has commenced negotiations to purchase a 50-acre site, with an option to purchase up to an additional 150 acres adjacent to the initial site. The target property is located in an approved cannabis cultivation and production zone. More importantly, the site is at the advanced pre-development stage, with the majority of permitting work complete and all required utilities available and installed on site. In addition, Flower One believes the site includes some of the most favorable tiered tax structures in the State of California for any cannabis cultivation and production facility. These tax agreements provide the Company with a major strategic lever to combine these tax-efficient economics with its proven operational cost-efficiencies to be a leading low-cost, large scale operator in the California cannabis market. For strategic and proprietary reasons, the Company is not able to disclose details about the exact location of the property.
Subject to Flower One concluding such negotiations successfully, the advanced state of readiness of this site may allow Flower One to have a meaningful presence in the California cannabis market two years earlier than originally expected. The Company has prepared plans that would allow construction of Phase I, which would include a production facility, to begin by Q1 2020. The early commissioning of such a production facility would see the Company generate revenue in California well in advance of its first harvest, through the purchase of existing, locally-sourced biomass.
"Our Nevada operations, at 455,000 square-feet today, represents one of the most advanced high-tech cannabis cultivation and production facilities anywhere in the world," said Ken Villazor, President and CEO of Flower One. "This, along with the Company's clear sightline to positive cash flow, positions Flower One very well in its pursuit to become an industry leader in the U.S. cannabis sector. Strategically, we can now place some measured attention to our plans to expand into California. This property acquisition will put Flower One in a position to execute in California at scale and at an industry leading pace, which is exactly what we have done in Nevada. California is the largest cannabis economy in the world, with 39 million residents, 250 million visitors annually with 2019 cannabis revenues exceeding $3 billion dollars and expecting to rise to $7.2 billion dollars by 20241. It is a natural extension of our business based on our team's extensive experience building and operating large-scale CPG fulfillment in the State of California".
"Flower One has existing relationships with top California brands such as Kiva, Cookies and Old Pal. In fact, nine of our current 14 brand partners have their roots in California, and they represent the leading brands in cannabis today. This strong connectivity to major California cannabis brands, coupled with this strategic property acquisition, perfectly aligns with our business development and growth strategy for the U.S cannabis market. We are excited and looking forward to supporting cannabis brands and consumers with consistent, safe, high-quality cannabis at scale in California, arguably the most important cannabis market in the world".
The Flower One team includes best-in-class greenhouse, cultivation, production facility designers, builders, engineers and operators, including the General Contractor, the Dennis Group, who is under an exclusive partnership with Flower One. The California design is based on the Company's successful and proven 455,000 square-foot cannabis cultivation production facility in Nevada, the largest of its kind in the state. The Flower One team delivered this facility, from construction to first harvest in less than 14 months. Today, this facility is one of the most technology-driven cannabis operations in North America with yields exceeding original estimates by 85% and at an industry-leading cash cost of US $0.45/gram.
Flower One's planned California facility under the current Conditional Use Permit amendment would allow for the initial facility to be up to 700,000 square-feet, of which 500,000 square feet would be available for cultivation. Based the Company's existing facility design in Nevada, such a California facility would produce approximately 400,000 pounds (182,000 kilograms) of high-quality flower and trim annually.
| 1Arcview Market Research, Echelon Partners |