We all saw the legal cannabis market’s explosive kickoff in 2018 and 2019. It was an era of multi-billion-dollar valuations for those with the biggest grow operations and most licenses.
Then we saw it all radically shift in 2020, away from the “bigger is better” plays into what it should’ve been about all along: FUNDAMENTALS.
Today’s market has wisened up, only rewarding serious players with solid financials, expansive market reach, and strong leadership.
Those who meet these criteria have a real chance of gaining investor traction in a market still projected to grow to $176 billion by 2030 at a CAGR of 23.9%.1
Between now and 2030, there’s plenty of runway for the cannabis industry to run through the four common phases of any industry’s life cycle2:
Introduction > Growth > Maturity > Decline
In the case of cannabis, for far too long, it was stuck in the Growth phase. But now we’re finally seeing signs of a coming Mature market—and one of the biggest signals was the increase in consolidations.3
- TerraVida Holistic Centers and Verano Holdings merged4
- HEXO Corp. purchased Zenabis for $235 million5
- Plus, Curaleaf raised approximately $300 Million to boost its position and purchase assets.6
However, by far, the biggest deal was the staggering $7.6 billion acquisition of GW Pharmaceuticals by Jazz Pharmaceuticals.7
So, how did GW Pharma warrant such a big payday?
Because it had the financials, leadership and extensive market reach driven by its flagship asset, Epidiolex—a cannabis-based medication that treats certain rare types of childhood-onset epilepsy.
Naturally, GW Pharma’s success has sent investors in search of the next cannabis company with the fundamentals, team and product to break out … and that company is Flora Growth Corp. (NASDAQ:FLGC).
Flora Growth (NASDAQ:FLGC) is a REAL Contender
Strong Leadership: Led by a proven team with decades of industry-leading experience across consumer packaged goods (CPG) brands and managing global eCommerce, retail, and distribution, including former Macy’s and Amazon execs,8 and from esteemed research institutions such as Vanderbilt University and Betty Ford.
Rapid Revenue Growth and M&A: Ever since its successful IPO in May 2021, Flora Growth’s revenue has been rapidly growing. In Q3 2022, revenue rose by a staggering 414% from the same period last year (and by 510% for the nine-month period ending September 30). For FY 2022, the company predicts $35-$35 million in revenue, meaning 300-400% growth year over year. Flora also achieved this without substantial capital, raising only $80M9 versus most others who raised hundreds of millions, if not billions.10
HUGE Portfolio of Assets: Over 600 products across 16,500+ points of distributionxΩç v in the US, LATAM, and Europe, with category-leading brands like JustCBD, which already boasts over 300 products, 14,000 points of distribution, and over 300,000 customers, having generated audited revenues of US$28 million in FY 2020.11 The No Cap Hemp acquisition is anticipated to add about 75 SKUs to Flora’s product line12 in addition to proprietary IP and novel consumption formats
Ultra Low-Cost Production: Colombia offers favorable regulations, optimal growing conditions, seasoned workers, a currency advantage, and ultimately a MAJOR cost-per-gram advantage. It costs Flora only $0.06/gram, +98% less than Tilray, ~97% less than Sundial and Aphria, ~93% less than Aurora, and even 60% less than their next closest competitor Clever Leaves.
Global Expansion: Flora Growth (NASDAQ:FLGC) has successfully entered 13 countries through its collection of products, multiple cannabis sales agreements and GMP-compliant and certified facilities allowing for access to both medical and recreational markets. It now has offices in the UK and partnerships in the EU to advance its brand and commercial sales.
Cannabis Research: Flora Life Sciences Division was formed to identify scientific gaps in cannabis research and work to translate that to new data-backed pharmaceutical cannabis products, to further expand and improve upon the rapidly growing portfolio of consumer wellness products.
The Flora Growth Story So Far
Flora Growth is a next-generation cannabis company that stands out due to a unique three-pillar business model involving wholesale, brands and life sciences.
It’s a business model that makes Flora Growth (NASDAQ:FLGC) a strong play for direct cannabis company investors and “pick-and-shovel” investors looking to put money into the tools and services that lead to a finished cannabis product.
But can Flora Growth really be another multi-billion-dollar buyout target like GW Pharma?
Flora Growth has teamed up with molecular biologist Dr. Annabelle Manalo-Morgan to bring new cannabis-based medicines to the market.
This led to scientific clinical trials being initiated globally, focusing on the use of cannabinoids in patients suffering from chronic pain and Fibromyalgia, which affects 4 million US adults13 and nearly 1 in 20 people globally,14 with the primary research sites located in the US and the UK.15
Flora Growth (NASDAQ:FLGC) appointed Dr. Annabelle Manalo-Morgan as the Lead Scientific Advisor to further its research and development of unique product formulations and to educate individuals on the benefits of cannabinoid and plant-based medicine.
Dr. Annabelle Has Seen Firsthand Just How
Powerful Cannabis-Related Medicine Can Be
Dr. Annabelle created a new CBD formulation for her young son Macario, who suffered up to 200 seizures a day and was forced to take seven different prescription medications. She began giving Macario the CBD Oil formulation daily and stopped the other medicines he was taking.
Six years later, he is a happy, healthy, energetic first grader.
Now Flora Growth (NASDAQ:FLGC) is submitting Manalo-Morgan’s CBD compound for further testing and expects to fast-track traditional NHS timelines by running phase trials in parallel (in vitro, in vivo, pilot in human, safety/efficacy, etc.).16 These clinical trials could begin as soon as Q4 2022.
Dr. Annabelle and her CBD compound are just two of the many factors working in Flora Growth’s favor.
This is a company that has quickly become a …
Leading All-Outdoor Cultivator, Manufacturer, & Distributor of Global Cannabis Products & Brands
Flora Growth (NASDAQ:FLGC) is built to upend what it means to be a “cannabis company.”
With multiple lines of revenue and a presence in multiple countries, Flora Growth is developing a diverse collection of brands and services to broadly address the different expressions of cannabis and plant-based derivatives.
For example, Flora Growth is building robust wholesale and distribution channels, a suite of consumer goods brands, and research and laboratory divisions to support institutional and individual consumers.
Here are six powerful reasons why Flora Growth (NASDAQ:FLGC) could be the next big breakout in the cannabis industry.
Reason #1 – The Best Location in the World to Grow Cannabis
When it comes to growing cannabis you would be hard-pressed to find a location that offers all the benefits that Colombia does.
This country has favorable cannabis-growing government regulations, low-cost cultivation, optimal year-round growing conditions (including approximately 12 hours of sunlight a day), and an experienced workforce that is 1/10th the cost of US workers.
Considering all of this, it is little wonder that Flora Growth (NASDAQ:FLGC) chose to house its grow and processing operations, Cosechemos, in Bucaramanga, Colombia.
Cosechemos is a 247-acre cannabis cultivation operation and a 10,500-square-foot extraction facility with a state-of-the-art laboratory focused on delivering natural, high-quality cannabis flower and derivatives to be sold through wholesale and retail channels.
Flora Growth recently completed the construction of its new laboratory17 specializing in the manufacturing of compound formulations using cannabis derivatives and conventional master formulas.
Flora Growth (NASDAQ:FLGC) has the ability to produce 43.6 tonnes of low-cost THC with production costs of just $0.06 cents per gram of dried flower!18
When you compare it to industry giants like Clever Leaf or Aurora, which both reported over $1.00 per gram, Flora is saving 1,000-6,000% on every gram of quality flower it produces.
This is because Colombia, responsible for 15% of the global supply of cut flowers,19 has a highly skilled agricultural workforce that is a fraction of the cost of US workers.
And Bucaramanga provides natural water springs, regular 12-hour light cycles and consistent wind thanks to its ideal location atop a 360-degree view mountain.
In January, Flora Growth (NASDAQ:FLGC) produced the first batch of crude oil through Cosechemos. It also initiated the EU-GMP certification process for the ability to produce oils, distillates and isolates for medical application.20
Flora Growth has already established a strong reputation for the quality of its manufacturing practices. It holds 3 GMP certifications for Cosmetics, Phytotherapeutics, and Dietary Supplements.21
Flora is currently manufacturing and distributing more than 63 over-the-counter (OTC) products registered with INVIMA, which are sold across 2,500+ distribution channels.
With the Cosechemos facility ramping up production and Flora Growth (NASDAQ:FLGC) being able to produce high-quality flower for such a low cost, it has an immediate marketplace advantage.
In fact, many of its so-called competitors are becoming customers!
Here is how Flora Growth compares to the competition right now:
Looking at the chart above, it’s easy to see how significant the cost savings per gram are for Flora Growth’s cultivation. However, when looking at revenues and P/S Ratio figures, it might not be as easy to see how the company stacks up financially.
Reason #2 – Rapidly Growing Revenue and Flurry of M&A
Since its successful IPO listing on NASDAQ in May 2021, Flora Growth (NASDAQ:FLGC) has wasted no time getting to business, and it’s easy to see how sharp the trajectory is going upward.
- Total revenue for Q3 2022 was $10.8 million, a 414% increase from Q3 2021
- Total revenue for the nine-month period ending September 30, 2022 was $25.7 million, a 510% increase year-over-year
- Gross Profits increased to $5.0 million in Q3, up more than 8x year-over-year
- Cash on hand as of September 30, 2022 was approximately $5.9 million
- Guidance of $35-45 million in 2022, which would realize projected revenue growth of 300-400% year over year
YES, you read that right: Their guidance for 2022 is $35-45 Million, which includes revenue contributions from its various operating divisions, including wholesale cannabis revenues from Cosechemos, and profits from recently acquired Vessel Brand and its other lucrative brands.
Perhaps one of the biggest boosts to Flora Growth’s 2022 guidance comes from recently acquired JustCBD, which generated audited revenues of US$28 million in 2020 across multiple categories, including gummies, tinctures, vape cartridges, creams, and pet wellness, among others.28
That’s why Flora Growth’s ownership structure now includes a strong institutional presence. Here is the structure:
- 9.29% insiders
- 9.10% institutions
- 10.03% of float held by institutions
- Number of institutions holding shares – 37 (including Morgan Stanley and Highbridge Capital)
All of this support led to Flora Growth’s favorable cash position, and its ability to drive forward with a series of acquisitions that are truly the milestones of an empire in the making. Versus other companies, raising hundreds of millions to achieve similar revenue profiles, Flora has only raised $80M since inception with no debt and still has cash in the bank.
Reason #3 – Building the Ultimate Global Brands Empire
While the cultivation side of the business is very promising, Flora Growth (NASDAQ:FLGC) has been VERY active in M&A, putting together a huge house of brands that includes 600+ products and 16,500+ points of distribution in Latin America and the US with sales across 13 countries.Flora Growth
JustCBD alone brought into the portfolio over 300 products and a seamless omnichannel approach that includes a direct-to-consumer business with over 300,000 customers and a network of over 14,000 distribution points across the United States and internationally.
In another deal nearly equal in value (US$30M), Flora Growth acquired Vessel Brand, a team of exceptional brand builders with a proven track record of launching brands and capturing market share in the rapidly expanding U.S. cannabis landscape.29
At the time of the acquisition, Vessel had achieved a trailing 12-month revenue of US$6.6 million and year-over-year growth of 90%.30
In May, Flora Growth launched the Vessel brand into the lucrative Canadian market, a market which the company estimates will be worth C$5.9 billion this year.
Subsequently, Flora signed a deal with the Ontario Cannabis Store and launched Vesselbrand.ca, a direct-to-consumer online store.
In September, Flora added the No Cap Hemp brand to its portfolio, hastening the addition of premium flower, prerolls, and smokeables to Flora’s expanding product lineup as well as JustBrand’s. The No Cap Hemp brand will be distributed into Flora‘s approximately 14,000 points of distribution, and JustBrands will further develop and expand their flower and smokeable line.
No Cap Hemp is anticipated to add about 75 SKUs to Flora’s product line. Flora Labs’ manufacturing capabilities should be complemented by No Cap’s gas infusion technology.
These three acquisitions are just an example of the growing portfolio of brands in the Flora Growth arsenal, and its clearly not done growing and expanding its market reach.
Reason #4 – Expansive Global Reach
Flora Growth (NASDAQ:FLGC) is steadily expanding its presence globally.
For instance, JustCBD is set to open four brick-and-mortar locations in Germany and the Czech Republic in Q1 2022, with up to 50 additional stores planned in 2023. These stores are partnered with Greenyard and allow for additional distribution through Poland, Austria, Switzerland, Ukraine, Georgia and Estonia.31
In March 2022, Flora Growth (NASDAQ:FLGC) also announced a distribution agreement with Israel-based DNO Group to distribute the company’s Mind Naturals brand in the Hong Kong region.32
These were just the most recent of a series of announcements and transactions designed to expand Flora Growth’s reach around the world. Additional announcements have included:
- Vessel brand signed a distribution agreement with JustCBD partners, Florida-based Speedy Distribution, which services over 1,000 stores in the US, and increased Flora Growth’s existing customer base to over 500,000 customers.33
- Signing an agreement with Artos Ltd. (“Artos”) to sell approximately 3,600 kg of dried high-THC cannabis flower to Israel. Artos has a network of over 4,000 distribution points generating over $50 million in revenue.34
- Launched sales of Mind Naturals skincare brand through Walmart.com and Coppel, a nationwide department store chain in Mexico with 1,253 stores.35
- Acquired Franchise Global Health, a prominent pharmaceutical and medical cannabis distributor with principal operations in Germany.36
Reason #5 – World-Class IMPORTANT Research
Since last October Flora Growth (NASDAQ:FLGC) has been ramping up its research through the Flora Life Sciences Division, which is identifying scientific gaps in the cannabis industry and working to fill those gaps with pharmaceutical cannabis products backed by scientific data.37
Flora Growth (NASDAQ:FLGC) started by bringing on the Dr. Annabelle Manalo-Morgan as Lead Scientific Advisor to oversee the division and signing an agreement to begin clinical trials globally.38
The Human Pilot Study, which was initiated in the UK with an internationally recognized clinical research group based at the University of Manchester, is focused on the use of cannabinoids in patients suffering from Fibromyalgia or chronic pain, with the primary research sites located in the US and the UK.
Flora Life Sciences expects to fast-track traditional NHS timelines by running phase trials in parallel (in vitro, in vivo, a pilot in humans, safety/efficacy, etc.), focusing on pain and inflammation illnesses – casting a wide net for cannabis applications.
Then in May, Flora Growth signed a deal with Dr. Annabelle to acquire her Masaya brand and patent-pending CBD formulations.39
Masaya’s 100% THC-free pure, potent CBD oil formulation has been used by thousands of consumers and has a long track record of positive testimonials.
Masaya will become a part of Flora Growth’s (NASDAQ:FLGC) growing portfolio of brands. The products will be initially sold in the US, but the company also intends to distribute the brand and its formulations worldwide.
Moreover, the original patent-pending formulation, Masaya Pure,40 is intended to be used in Flora’s current clinical trials with the University of Manchester.
Reason #6 – Exceptional Leadership Team
Leading the way for Flora Growth (NASDAQ:FLGC) is an incredibly deep talent pool of Executives and Directors with a wide range of applicable expertise that is fully equipped to bring the company success, including:
If you aren’t yet convinced of the massive potential this company offers, here are 4 reasons to consider investing in Flora Growth (NASDAQ:FLGC).
Low-Cost Production – Colombia offers Flora Growth one of the lowest per-gram production costs in the entire sector along with favorable regulations, optimal growing conditions and seasoned workers.
Rapid Revenue Growth and M&A – Growing revenues 414% in Q3 2022 over Q3 2021, and acquiring strategic assets have allowed Flora to confidently project 2022 guidance of $35-45 million which represents year-over-year revenue growth of 288-400%.
Global Brand Expansion – Over 600+ products and 70+ medical cosmetic licenses and 16,500+ points of distribution in LATAM and the US! Multiple cannabis sales agreements and GMP-compliant and certified facilities have resulted in access to 13 countries to date.
The People – Flora Growth (NASDAQ:FLGC) is led by a proven team that shares decades of industry-leading experience building CPG brands and managing global eCommerce, retail, and distribution.
Remember, word is JUST STARTING to get out about this undervalued gem and it won’t be long before the market catches on.