Flora Growth Applauds Update to Colombian Cannabis Regulations that Substantially Increases Revenue Potential; Executes International Cannabis Supply Agreement
July 26 2021 - 7:05AM
Business Wire
- Colombian legislative update now allows for the sale and export
of raw cannabis materials, namely dried flower, to international
markets
- New regulations position Colombia’s cultivators as leaders to
supply the global cannabis market; dried cannabis flower continues
to account for an estimated 50% of demand in major international
markets, including US, Germany, and Australia (1)
- New regulations allow for the manufacturing, sale, and export
of ingestible cannabinoid products in Colombia, increasing near
term revenue potential for Flora’s Kasa Wholefoods division
- Flora capitalizes on law change, signing a supply agreement
with an international distributor based in South Africa to provide
raw and finished medical cannabis products
- Update allows for the promotion and advertising of cannabis
brands and products in Colombia, increasing access to the growing
Colombian cannabis market
Flora Growth Corp. (NASDAQ: FLGC) (“Flora” or the
“Company”), a leading all-outdoor cultivator and manufacturer of
global cannabis products and brands, is pleased to announce that
following an extensive consultation process, the President of
Colombia has accepted and signed into effect the revisions related
to the existing Colombian cannabis laws. The reformed legislation
is aimed at improving access to cannabis products for Colombians
and positions Colombia as the leader to supply the global cannabis
market.
Colombian Cannabis Cultivation
Located near the equator, select regions of Colombia have the
ideal climate for the cultivation of cannabis 365 days a year. The
country also boasts one of the world’s largest cut-flower
industries, resulting in a labor force with substantial
agricultural experience that can produce a high-quality cannabis
product at low-cost. This combination of geographic factors and
legislative updates positions Colombia as a major player in the
international cannabis market due to its low-cost structure.
Flora’s Colombian cultivation facility, Cosechemos, has
maximized this cultivation potential by achieving a production cost
below $0.06 per gram of dried flower. This represents a 60% lower
production cost than its closest competitor(2). With over 12.5
hours of natural sunlight, natural water springs onsite, and over
247 acres of licensed all-outdoor organic cultivation, Flora Growth
is uniquely positioned to benefit from this legislative update
across a number of verticals.
Legislative Update Signifies Increased Revenue
Potential
The new regulations are expected to allow Flora to increase
near-term and long-term revenue, optimize its global supply chain
of premium brands and products, and maximize economics both
domestically and abroad. The following points highlight the impact
of this legislative change:
- Currently in the global cannabis market, dried flower accounts
for over 50% of the sales demand. Through this legislative update,
Colombian cultivators like Flora, have gained access to this
massive segment of the global market that was previously
inaccessible. With a production cost that is substantially lower
than its North American peers, Flora is able to market a
high-quality product at below North American prices.
- By allowing the manufacturing, sale, and export of cannabinoid
ingestible products, near-term revenues opportunities are created.
Flora’s food and beverage division, Kasa Wholefoods, anticipates
amplified revenue growth and intends on leveraging existing
relationships to distribute CBD versions of its portfolio,
including the recently announced US$10M distribution agreement with
Tropi, Colombia’s largest food and beverage distributor with
130,000 points of distribution across the country.
- By removing marketing restrictions on cannabis products
locally, Flora is expected to be able to drive increased awareness
across its portfolio of products and additional sales through its
1,500+ points of distribution within Colombia.
- By permitting the sale of cannabinoid medical products through
drugstores as “custom formulas”, access to cannabis products is
substantially increased within the domestic Colombian market.
Custom formulas are pharmaceutical products prescribed and prepared
by pharmacists to meet the unique needs of a patient and are
intended to complement medical prescriptions. This change favors
Flora Lab, which holds licenses to produce custom formulas and has
existing relationships with drugstore chains throughout
Colombia.
“We would like to thank the Colombian government and all of the
parties involved with passing this legislation. As we quickly move
to ramp up production at Cosechemos, we believe that Colombia will
become a global player in the regulated cannabis market. We believe
this will result in an increased positive economic impact to our
community, while also benefiting Flora and its shareholders,” said
Luis Merchan, President and CEO of Flora. “We’re also very pleased
to now be able to bring new and existing wellness products to
market. We have a loyal and passionate following and are very eager
to meet the demand that we’ve been receiving but haven’t been able
to deliver on previously because of the regulations.”
Flora Targets International Cannabis Markets
As an immediate impact of this law change, Flora has signed a
Letter of Intent (“LOI”) with an international distributor to
supply its dried flower and derivatives. The Company expects to
ship its premium cannabis products upon completion of its first
commercial harvest and obtaining necessary import licenses.
The cannabis products will be distributed by Kiricann, with
operations in South Africa with and distribution agreements in
Germany and the EU. Kiricann imports and distributes medical CBD
(Cannabidiol) while working with patients and wellness
practitioners to educate about the authorization and use of medical
cannabis and the benefits of CBD.
Flora anticipates signing additional supply agreements in the
coming months as the global cannabis market begins to appreciate
the low-cost, high-quality product that is cultivated within
Colombia. This includes assessing the opportunity to ship its
low-cost cannabis flower to pending acquisition Koch & Gsell,
for use in its market-leading cannabis pre-roll brand (Heimat),
which generated over US$7.6M in trailing twelve-month revenue.
“This legislative update immediately accelerates Flora’s ability
to generate revenue through the sale of our cannabis flower to
international markets, as noted by our first international supply
agreement. Having the ability to export our high-margin,
high-quality cannabis flower - in addition to selling cannabinoid
ingestible products - will meaningfully impact our growth and
revenue generation,” said Jason Warnock, Chief Revenue Officer of
Flora. “We are very excited to leverage our existing product
portfolio and distribution channels to quickly deliver these new
products to Colombians and our international partners.”
About Flora Growth Corp.
Flora is a cannabis company that leverages natural,
cost-effective cultivation practices to supply cannabis derivatives
to its diverse business divisions of cosmetics, hemp textiles, and
food and beverage. As the operator of one of the largest outdoor
cultivation facilities, Flora strives to market a higher-quality
premium product at below market prices. By prioritizing natural
ingredients and value-chain sustainability across its portfolio,
Flora creates premium products that help consumers restore and
thrive. Visit www.floragrowth.ca or follow @floragrowthcorp on
social for more information.
Footnotes
(1) Grandview Industry Analysis, Legal
Marijuana Market Size, Share & Trends Analysis Report. (2) See
investor presentation, Slide 12. Source: Company Filings.
Cautionary Statement Concerning Forward-Looking
Statements
This document contains forward-looking statements. In addition,
from time to time, we or our representatives may make
forward-looking statements orally or in writing. We base these
forward-looking statements on our expectations and projections
about future events, which we derive from the information currently
available to us. Such forward-looking statements relate to future
events or our future performance, including: the impact of
legislative changes in Colombia both in Colombia and
internationally; the size of markets for cannabis and cannabis
products; our financial performance and projections; our growth in
revenue and earnings; and our business prospects and opportunities.
You can identify forward-looking statements by those that are not
historical in nature, particularly those that use terminology such
as “may,” “should,” “expects,” “anticipates,” “contemplates,”
“estimates,” “believes,” “plans,” “projected,” “predicts,”
“potential,” or “hopes” or the negative of these or similar terms.
In evaluating these forward-looking statements, you should consider
various factors, including: our ability to change the direction of
the Company; our ability to keep pace with new technology and
changing market needs; and the competitive environment of our
business. These and other factors may cause our actual results to
differ materially from any forward-looking statement.
Forward-looking statements are only predictions. The
forward-looking events discussed in this document and other
statements made from time to time by us or our representatives may
not occur, and actual events and results may differ materially and
are subject to risks, uncertainties and assumptions about us. We
undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of uncertainties and
assumptions, or the forward-looking events discussed in this
document and other statements made from time to time by us or our
representatives not occurring, except as may be required by
applicable law.
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version on businesswire.com: https://www.businesswire.com/news/home/20210726005350/en/
Investor Relations: Evan Veryard
evan.veryard@floragrowth.ca
Public Relations: Cassandra Dowell +1 (858) 264-6600
flora@cmwmedia.com
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