Flowr Corporation, a vertically integrated Canadian cannabis company, is preparing to begin
trading on the TSXV Wednesday under the ticker "FLWR." The company recently closed an oversubscribed offering,
raising $27.31 million.
Flowr's go-public route is via a reverse takeover of The Needle Capital Corp., which allows the company to go public without
filing an IPO. Flowr also hopes to list on a U.S. exchange in the future.
Flowr Bets On Ultra-Premium Quality Cannabis
More than 100 cannabis producers are licensed in Canada, according to the country’s
government. Flowr positions itself as a large-scale grower of ultra-premium, non-irradiated product.
“Many of the large producers need to irradiate all of their product to pass Health Canada inspection and that hurts the flavor
and smell of the flower. That’s why we believe that the low-quality, irradiated product will become
commoditized," Flowr Chairman Steve Klein and CEO Vinay Tolia said in a joint email to Benzinga.
"But there are only a few cultivators like Flowr that can grow high-end, non-irradiated flower, so we expect it to be in short
supply based on the demand for it for many years to come."
Large-Scale Production
Flowr plans to use the proceeds from its latest offering to fund the development of its facility in Kelowna, British
Columbia.
The 85,000 square-feet facility is 20-percent complete, according to Flowr. It uses proprietary designs and patent-pending
growing systems. The company expects the facility to reach the full capacity of 12,000 kilograms, or 26,500 pounds
annually.
The size of the facility will allow Flowr to grow high-quality cannabis at a large scale, the executives said.
" ... We expect Flowr to grow many more grams of product per square foot of production space than other producers,” Klein and
Tolia said. The company plans to have the highest yield in the industry and grow two or three times more cannabis per square foot
of space than other producers, they said.
“If you look at the public company numbers, very few companies are growing at a profit," Klein and Tolia said. "We expect
Flowr's high yields per foot as well as superior quality to make Flowr the most profitable LP in Canada."
Flowr is building a 50,000-square-feet research and development facility at its Kelowna campus. The R&D facility is funded
through a partnership with Scotts Miracle-Gro Co (NYSE: SMG)’s subsidiary Hawthorne Gardening.
Plans For Beverage Partnerships, International Expansion
In addition to providing high-quality cannabis for medical or recreational use, Flowr Corp. is also looking at other ways to
capture more market share in the recreational cannabis space. With
full legalization coming to Canada Oct. 17, companies are rushing to take advantage of the new market.
Earlier this year, Molson Coors Brewing Co (NYSE: TAP) signed a deal with Hydropothecary Corp (OTC: HYYDF) to develop a cannabis-infused, non-alcoholic beverage. Another brewer,
Constellation Brands, Inc. (NYSE: STZ),
recently boosted its stake in Canopy Growth Corp (NYSE: CGC) by $4 billion to 38 percent of the company and plans to use exposure
to the Canadian cannabis industry to develop cannabis-based beverages.
Diageo plc (NYSE: DEO) and
Anheuser Busch Inbev NV (ADR) (NYSE: BUD) are
also reportedly eyeing the sector.
In comments to Benzinga, Tolia and Klein said Flowr is “exploring an alliance with a smaller but very popular drink
company.”
The executives said they expect that large companies will be interested in Flowr as a cross-industry partner.
Flower is about to expand its presence outside Canada, Klein and Tolia said: the maturity of the Canadian cannabis industry
allows the company to explore opportunities in other countries that are taking steps toward legalization in regions such
as Europe and South
America.
Javier Hasse contributed to this report.
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