COLOMBIA’S decision to allow for the export of medical cannabis flowers will be a major boost to the country’s domestic producers – and patients worldwide – including one of its newest players Flora Growth.
Luis Merchan, President and CEO told BusinessCann: “Growing cannabis at an exceptionally low-cost is going to allow us to give access to medical cannabis to the people who need it.
“Our vision as a company is to give access to premium pharma-grade cannabis to all – the opioid crisis has been very damaging to millions of people worldwide – and cannabis presents a very healthy alternative; one that helps patient in a very meaningful way.”
Flora Growth has adopted a two-pronged approach to its cannabis business which starts in Colombia with its 100 hectare cannabis farm – one of largest in the country.
Pivot To Medical Cannabis
Secondly, it also manufactures a number of brands and products across multiple industries. It currently sells into 15 countries and recently delivered its first products to the UK.
Mr Merchan continued: “We are in the consumer packaged goods market and we are also in the pharmaceutical-grade cannabis market and we will continue to play in those as the consumer opportunities and markets guide us.”
Currently its revenues are primarily derived from the manufacture of supplements and cosmetics, creams, and phytotherapeutics.
But this will change as the medical market builds. The ability to export dried flowers opens up international markets and he believes that within 18 months over two-thirds of its revenues will come from its cultivation facility.
It believes this approach will allow it to quickly deliver on opportunities particularly in North America and Europe – as cannabis enters the mainstream.
He said: “It is important for us to pursue our strategy in a number of markets, especially those close to lowering their barriers or that have done so, and where the regulation are still not very clear.
“In those markets we establish distribution channels and we start testing the supply chain in order to ensure we are doing things the right way.”
For example, it exports to the UK its topical CBD products, but its juices and chocolates have no CBD which means it does not yet have to tackle the onerous Novel Food process – although in time, when things become clearer, it will.
“We want to make sure we abide by the rules and regulations and we test the supply chain and as we see things improve then we’ll look to expand our distribution with CBD and, where legal, THC products,” he added.
European Ambitions With $22m Swiss Deal
Flora Growth is one of around a dozen or so Colombian companies to achieve international GACP standards, it is also pursuing adherence to the National Organic Program.
Whilst its Colombian extraction lab is being constructed to EU-GMP standards, its minority share in Hoshi International allows it access to an accredited facility in Portugal and a new facility in Malta.
Its long-term vision will be supported by its recent $22m share-based purchase of Swiss company Koch & Gsell and its leading Heimat brand of hemp and tobacco cigarettes.
This will boost Flora’s CPG revenues to the tune $7.6m a year. It will also give it a pathway into Luxembourg and Belgium, a shot at the Swiss recreational trial and a foothold Europe as the barriers to recreational use fall.
Mr Merchan said: “It is a tech, a knowledge-base and a portfolio of products that can be used all over the world, and by using hemp manufactured in Colombia we will be able to significantly boost margins.”
NASDAQ Listing Completed
Flora listed on the Canadian NASDAQ exchange in May this year following a successful pre-IPO fund-raise which netted over $30m from over 10,500 investors.
In doing so, it became one of the the first cannabis cultivators to list on the exchange without using a SPAC, reverse merger or dual listing.
It recently unveiled plans to moves it headquarters to Miami and through its Kasa Wholefoods division announced an initial one-year deal to supply food products to Colombia distributor, Tropi, said to be worth in the region of $10m a year.
Its brand portfolio includes: Mind Naturals, Almost Virgin, and Mambe. Its first results will be announced to the market on August 19, with Mr Merchan saying that with no long-term debt it’s on the road to profitability.
On Friday, fellow Colombian producer Clever Leaves hosted President Iván Duque Marquez who signed the new decree allowing its licensed cannabis companies to export cannabis flower – as first reported last week in BusinessCann.
Game-Changer
Mr Merchan said: “This will be game changer. Germany, the US and Canada; they cannot compete with the geographical advantage, the economic advantage, and the know-how, and skilled labour, we have developed for many years.”
Flora Growth’s 100 hectare site in Bucaramanga is being developed as demand grows: “We only grow what we need. We have no inventory or overhang.
“Around 15% of this has been developed and around an acre is being added a week. We haven’t spent hundreds of millions of dollars waiting for the demand to come – we will scale as the opportunities arise.”
He added: “We will cultivate cannabis as we can – as the market commoditises. We do two things well; that is to produce cost-efficiently and at the best quality. The companies who find the best convergence between these two will dominate the market – on a global scale.”
