Transaction Highlights
Terms and License Agreement:
- Flowr acquires 19.8% of Holigen.
- Enters into an exclusive termed IP licensing agreement which is
expected to significantly accelerate the completion of Holigen’s
construction and licensing projects.
- Cash payment of C$6 million.
Massive Scale: Holigen is in the final stages of obtaining a
license for one of the most significant cultivation facilities in
the developed world which includes an outdoor cultivation license
allowing a potential 500,000 kgs of annual capacity on 65
hectares.
Low Production Costs: Large scale outdoor production in Portugal
could produce one of the lowest cost cultivation opportunities in
the world given Portugal’s climate and workforce in combination
with Flowr’s cultivation expertise.
Global Distribution: Holigen is in the final stages of obtaining
a license in Portugal allowing export of low-cost cannabis
products, providing direct access to EU markets as well as global
exports.
Growing Network: Holigen is forming partnerships with major
distributors serving Germany, Poland, UK and Ireland and has strong
ties to the largest medical cannabis distributor in Australia with
distribution channels across 35 countries.
Opportunity: Currently 22 countries in Europe have medical
cannabis programs. By 2028, Europe’s medical cannabis market
is projected to grow to over C$84 billion and Australia’s cannabis
market to over C$11 billion (Source: Prohibition Partners)*****
“We believe this is a transformative transaction that
establishes Flowr as a global player in the cannabis industry,”
said Vinay Tolia, Co-CEO of The Flowr Corporation. “We’re
using our financial strength and industry-leading cultivation
expertise to gain exposure to the rapidly expanding European and
Australian markets through Holigen.”*****
The Flowr Corporation (“Flowr” or “the Company”)
(TSX.V: FLWR; OTC: FLWPF), a Canadian Licensed Producer of
premium cannabis products, announced today it has acquired a 19.8%
interest in Holigen Limited (Holigen). Flowr will provide,
among other things, its cultivation, facility design and
construction IP for use by Holigen in the construction of its
facilities in Portugal and Australia and for obtaining its final
licenses in those territories.
Significant Cultivation Facilities, Potential Low-Cost
Production
Holigen is a European-based cannabis company in the process
of developing large-scale cannabis cultivation facilities and Good
Manufacturing Process (GMP) compliant production facilities that
are expected to provide finished medical cannabis products,
pharmaceutical ingredients, and plants and seeds to medical
cannabis markets globally. Holigen is in the final stages of
obtaining one of the largest cultivation licenses in the developed
world for outdoor and greenhouse facilities on 72 hectares (7.8
million square feet) in Portugal. This project has been
designated a Project of National Interest by the Portuguese
government, which ensures special handling and prioritization by
government agencies and access to low cost financing.
Benefitting from Portugal’s climate, cost-effective land and
labour, and the high crop yields it expects to generate by
employing Flowr’s cultivation IP, Holigen could be among the lowest
cost producers in the world.
“The combination of Holigen’s strong management team and
incredible assets along with our cultivation, design and
construction IP will create what we believe will be a worldwide
leader in production” said Tom Flow, Co-CEO of Flowr.
Licensing Near Completion, GMP Certification Expected
Holigen expects to complete its licensing process for its first
site in Portugal by mid-2019 and expects to be one of the few
licensed producers in Europe that will produce products in
GMP-compliant facilities.
Holigen has applied for licenses to cultivate, manufacture,
distribute, import and export medical cannabis and derived products
at two sites. These applications were considered compliant
with local regulations by the health authorities in Portugal
(INFARMED). Both sites are pending inspections to complete
the licensing process. Holigen anticipates licenses to be
granted for site 1 by Q2 2019 and site 2 by early 2020. Its
Australian facilities have already achieved GMP certifications with
respect to the relabeling and release of products. As the
fit-out of the facility progresses, Holigen expects to arrange
further GMP inspections.
In Australia, Holigen has strong ties to the country’s largest
distributor of medical cannabis and holds the following medical
cannabis licenses: Cultivation, R&D and Manufacturing from the
Office of Drug Control and Drug Control Section Australia
(Therapeutic Goods Administration) and GMP License from the
TGA. Holigen is in the process of obtaining a New South Wales
Schedule 8 pharmaceutical manufacturing license, which is the
remaining license it requires.
Development Details
Holigen currently is developing four cultivation facilities in
Portugal and Australia along with production and R&D
facilities. These sites include:
- A 65 hectare (seven million square foot) outdoor cultivation
site in Portugal that is expected to be partly operational in the
second quarter of 2019 and fully operation in the first quarter of
2021 with potential production of more than 500,000 kg
annually;
- A 294,000 square foot greenhouse facility in Portugal that is
expected to begin operating in the first quarter of 2020 with
potential production of 110,000 kg annually;
- An indoor facility in Portugal expected to begin production in
mid-2019 with a potential capacity of approximately 3,500 kg
annually and the potential capacity to extract up to 49 tons of
dried product;
- Approximately 90,000 square feet of planned GMP-compliant
production facilities integrated into the Portuguese cultivation
centers; and,
- A 2.4 hectare site in Sydney suitable for cultivation and
manufacturing, which includes a 3,500 square foot indoor
cultivation facility with a potential capacity of over 1,000 kg
annually.
“We are delighted to be working with Flowr to develop these
valuable properties and licenses into one of the leading cannabis
franchises in Europe and Australia,” said Pauric Duffy, Holigen’s
Co-Founder. “In addition to developing the cultivation
facilities, we are hard at work developing medical cannabis brands
in our key markets, preparing to leverage the distribution
partnerships we are forming, and evaluating alternative product
lines like infused beverages.
“Flowr has the high quality, high yield growing technology and
experience that we believe will quickly allow Holigen to execute on
the very significant licenses we hold and are obtaining in both
Portugal and Australia,” said Peter Comerford, Holigen’s
Co-Founder. “With the partnerships we are developing, we believe we
will be positioned perfectly within the Australian government’s
ambitious strategy for significant export of medicinal cannabis
announced in January. With the licenses we are obtaining,
combined with Flowr’s proven cultivation technology, we believe
this transaction places both companies in a unique position to act
as a true medicinal cannabis multinational.”
Holigen is led by Messrs. Duffy and Comerford and employs an
operational team that includes seasoned pharmaceutical engineers
led by Aldo Vidinha. These proven leaders have experience
building sizable companies and facilities around the world and in
the medical, manufacturing and pharmaceutical industries.
The closing of the transaction is subject to satisfaction of
certain customary closing conditions (including any required stock
exchange approval).
About Flowr
The Flowr Corporation (TSX.V: FLWR; OTC: FLWPF), through its
subsidiaries, holds a cannabis production and sales license granted
by Health Canada. With a head office in Markham, ON and a
production facility in Kelowna, BC, Flowr builds and operates
large-scale, GMP-designed cultivation facilities utilizing its own
patented growing systems. Flowr’s investment in research and
development along with its sense of craftsmanship and a spirit of
innovation is expected to enable it to provide premium-quality
cannabis that appeals to the adult-use recreational market and
addresses specific patient needs in the medicinal market.
For more information, visit www.flowr.ca Follow Flowr on
Twitter: @FlowrCanada; Facebook: Flowr Canada; Instagram:
@flowrcanada; and LinkedIn: The Flowr Corporation.
On behalf of The Flowr Corporation:
Vinay Tolia
Co-Chief Executive Officer
Forward-Looking Information
This press release includes forward-looking information within
the meaning of Canadian securities laws regarding Flowr, Holigen
and their respective businesses, which may include, but are not
limited to: the transactions described herein, the production
capacity of Holigen, the cost of production of Holigen, the IP
licensing agreement accelerating the completion of Holigen’s
construction and licensing projects, the scale of Holigen,
including with respect to Holigen having one of the most
significant cultivation facilities in the development world,
Portugal providing Holigen with the climate and workforce, in
combination with Flowr’s cultivation expertise, to produce one of
the lowest cost cultivation operations, the status of Holigen’s
licensing process, including the timing of receipt of all required
licenses, Holigen being able to export low-cost cannabis and having
direct access to EU markets and global markets, the partnerships
Holigen is forming with distributors in Germany, Poland, the UK and
Ireland, the transaction proving to be transformative for Flowr,
the use of Flowr’s financial strength and industry leading
cultivation expertise gaining it exposure to the European and
Australian markets through Holigen, Holigen’s facilities, Holigen
seeking to have GMP compliant facilities, Holigen’s facilities
producing finished medical cannabis products, pharmaceutical
ingredients, plants and seeds to the medical cannabis market
globally, the combination of Holigen and Flowr creating a worldwide
leader in production, the dates for inspections and final granting
of licenses for Holigen’s facilities and properties, Holigen
seeking additional GMP inspections in the future, the completion
and operational dates for Holigen’s facilities and properties,
including the timing thereof, the production capacity of such
facilities and properties, the extraction of dried flower at
Holigen’s facilities, the relationship between Flowr and Holigen
creating a leading cannabis franchise in Europe and Australia,
Holigen working to develop medical cannabis brands, leveraging its
distribution partnerships, and evaluating alternative product
lines, such as infused beverages, the partnership between Flowr and
Holigen allowing Holigen to execute on the licenses it holds and is
obtaining, Holigen being perfectly positioned within the Australian
government’s export strategy, the transaction placing both
companies in a unique position to act as a true medical cannabis
multinational, Flowr’s investment in research and development along
with its sense of craftsmanship and spirit of innovation enabling
it to provide premium-quality cannabis that appeals to the
adult-use market and addresses specific patient needs in the
medicinal market and other factors. Often, but not always,
forward-looking information can be identified by the use of words
such as “potential”, “plans”, “is expected”, “expects”,
“scheduled”, “intends”, “contemplates”, “anticipates”, “believes”,
“proposes” or variations (including negative and grammatical
variations) of such words and phrases, or state that certain
actions, events or results “may”, “could”, “would”, “might” or
“will” be taken, occur or be achieved. Such statements are based on
the current expectations of Flowr’s management and are based on
assumptions and subject to risks and uncertainties. Although
Flowr’s management believes that the assumptions underlying these
statements are reasonable, they may prove to be incorrect. The
forward-looking events and circumstances discussed in this press
release may not occur by certain specified dates or at all and
could differ materially as a result of known and unknown risk
factors and uncertainties affecting Flowr, including risks relating
to the failure to obtain regulatory approvals, the failure to
complete the transaction described herein, including as a result of
certain conditions not being satisfied, risks relating to the use
of Flowr’s or Holigen’s products, risks relating to the markets in
which Flowr and Holigen operate and/or distribute their respective
products, possible failure to realize the anticipated benefits of
the transaction described herein, risks associated with the license
agreement described herein, including Holigen’s breach of such
agreement or the infringement of third party IP rights, the
reliance on information provided by Holigen about its business and
plans, risks associated with the transaction, including the
inability of Holigen to complete its licensing process or construct
its facilities or properties as a result of a lack of funding,
the production capacity of Holigen being less than expected,
thus impacting revenues and earnings, the cost of production of
Holigen being more than expected, resulting in lower earnings, the
IP licensing agreement not accelerating the completion of Holigen’s
construction and licensing projects, the scale of Holigen not being
as significant as described herein, Holigen not having one of the
most significant cultivation facilities in the development world,
or competitors being able to construct and operate comparable
facilities and properties, Portugal and Flowr failing to provide
Holigen with the climate, workforce and cultivation expertise, as
applicable, to produce one of the lowest cost cultivation
operations, Holigen’s licensing process being delayed or not
completed, Holigen not being able to export low-cost cannabis and
not having direct access to EU markets and global markets, which
would materially impact revenues and earnings, Holigen failing to
form partnerships with distributors in Germany, Poland, the UK and
Ireland, the transaction not proving to be transformative for
Flowr, Flowr’s financial strength and industry leading cultivation
expertise and partnership with Holigen not enabling Flowr to gain
exposure to the European and Australian markets, risks associated
with Holigen’s facilities, Holigen not being able to construct and
license GMP compliant facilities, which could impact the ability to
sell products where such compliance is required, Holigen’s
facilities not producing finished medical cannabis products,
pharmaceutical ingredients, plants and seeds that can be
distributed globally, the combination of Holigen and Flowr failing
to create a worldwide leader in production, the dates for
inspections and final granting of licenses for Holigen’s facilities
and properties being delayed and/or not being completed,
Holigen failing to complete, or failing to achieve the operational
dates for, its facilities and properties, the production capacity
of such facilities and properties not being achieved, which could
materially impact the value of Holigen, the inability to extract
dried flower at Holigen’s facilities, the relationship between
Flowr and Holigen failing to create a leading cannabis franchise in
Europe and Australia, Holigen’s inability to develop medical
cannabis brands, leveraging its distribution partnerships, or
evaluating alternative product lines, such as infused beverages,
the partnership between Flowr and Holigen not benefiting Holigen in
executing on the licenses it holds and is obtaining, Holigen
failing to participate in the Australian government’s export
strategy or being delayed in participating in such opportunity,
Holigen and Flowr not being in a unique position to act as a true
medical cannabis multinational, Holigen’s inability to grow the
amount of cannabis described herein, which could adversely impact
revenues, the fact that the facilities described herein may not
include all the elements described in this press release, which
could adversely impact the partnership described herein, Flowr not
being able to sustain its competitive advantage in cultivation and
being unable to remain at the forefront of industry innovation,
whether as a result of failed construction of the facilities
described herein or otherwise, Flowr not being able to meet demand
or fulfill purchase orders, which could materially impact revenues
and its relationships with purchasers, Flowr requiring additional
financing from time to time in order to continue its operations or
assist Holigen with its licensing and construction projects, and
such financing may not be available when needed or on terms and
conditions acceptable to the Company, new laws or regulations
adversely affecting the Company’s business and results of
operations, results of operation activities and development of
projects, project cost overruns or unanticipated costs and
expenses, the inability of Flowr’s products to be high quality, the
inability of Flowr to produce and distribute premium, high quality
products, the inability to supply products or any delay in such
supply, Flowr’s securities, the inability to generate cash flows,
revenues and/or stable margins, the inability to grow organically,
risks associated with fluctuations in exchange rates (including,
without limitation, fluctuations in currencies), the cannabis
industry and the regulation thereof, the failure to comply with
applicable laws, risks relating to partnership arrangements,
possible failure to realize the anticipated benefits of partnership
arrangements, product launches (including, without limitation,
unsuccessful product launches), the inability to launch products,
Flowr not being able to provide premium quality cannabis that
appeals to the adult-use market and addresses specific patient
needs in the medicinal market, the failure to obtain regulatory
approvals, economic factors, market conditions, risks associated
with the acquisition and/or launch of products, the equity and debt
markets generally, risks associated with growth and competition
(including, without limitation, with respect to Flowr’s and
Holigen’s products), general economic and stock market conditions,
risks and uncertainties detailed from time to time in Flowr’s
filings with the Canadian Securities Administrators and many other
factors beyond the control of Flowr. Although Flowr has
attempted to identify important factors that could cause actual
actions, events or results to differ materially from those
described in forward-looking information, there may be other
factors that cause actions, events or results to differ from those
anticipated, estimated or intended. No forward-looking information
can be guaranteed. Except as required by applicable securities
laws, forward-looking information speaks only as of the date on
which it is made and Flowr undertakes no obligation to publicly
update or revise any forward-looking information, whether as a
result of new information, future events, or
otherwise.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this press release.
- ends -
Jim Walsh
The Flowr Corporation
+1-607-275-7141
jwalsh@flowr.ca
Bruce Dunbar
The Flowr Corporation
+1-917-756-4065
bdunbar@flowr.ca
For Investors Only: Bram Judd
The Flowr Corporation
+1-250-277-2539 ext. 1520
bram@flowr.ca
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