Less than a month after debuting on the Nasdaq stock exchange, Colombia-based breeder Flora Growth is connecting its cannabis pipeline to Europe through a manufacturing and distribution partnership with Hoshi International.
Headquartered in Toronto but with 95% of its business in Colombia, globally motivated Flora Growth made a € 2 million ($ 2.4 million) strategic investment to become a preferred supplier to Hoshicap Portugal – a subsidy of Toronto-based Hoshi International – the company announced on June 7th.
Courtesy Flora Growth | floragrowth.de
Luis Merchan became CEO of Flora Growth in December as the company was working towards a public listing.
The investment will give Flora access to extraction facilities in Malta and Portugal to process its Colombian cannabis derivatives and distribute them across Europe through Hoshi channels. The transaction is the first of many steps Flora intends to take to bring its seven brands and over 300 products to market worldwide, President and CEO Luis Merchan told Cannabis Business Times. Flora’s growing practices for supplying cannabis derivatives also include businesses in cosmetics, hemp textiles, and food and beverages.
The Portuguese license allows the cultivation and import of cannabis produced through Good Agricultural and Collection Practices (GACP) – World Health Organization guidelines for medicinal plants – and also allows the export of the Good Manufacturing Practice (GMP) certified indoor medicinal cannabis processing facility. and outdoor areas across Europe.
In Malta, Hoshi is closing its GMP facility to manufacture, process and package cannabis products, including oil derivatives, for distribution throughout the European Union (EU). Hoshi’s Maltese Branch has been granted a preliminary medical cannabis license which includes cultivation, processing and import / export under the Maltese Law on the Production of Cannabis for Medical and Research Use.
“These assets, the cultivation in Portugal as well as the plant in Malta, opened the door for us to complete the supply chain to the European Union,” said Merchan. “That is very important to us because the market in the European Union is important. Obviously, the No. 1 economy (in Europe), Germany, is very attractive and open to the import of cannabis derivatives. And having a partner like Hoshi as a critical partner and preferred distributor for the European Union was a piece of cake. “
Merchan said Portugal and Malta offer favorable regulatory frameworks and low labor and energy costs. In addition, Hoshi’s analytical test labs in Malta will enable Flora to build a unified import and distribution center that will open the doors to sought-after markets like Germany, he said.
With a population of around 750 million and healthcare spending of over 2.1 trillion euros, Europe has the potential to become the largest world market for medical cannabis products, according to Hoshi. This includes non-EU members such as the United Kingdom (UK), which competes with Germany and France among the continent’s largest economies.
According to Hoshi, which should have EU cultivation licenses for both practices by the first quarter of 2022, this potential, high-growth market has yet to be fully developed due to the lack of a legal infrastructure for the supply of medical devices in GMP and GACP quality.
As part of the Flora-Hoshi partnership, Flora Hoshi will provide access to its library of tested and proven outdoor genetics for later cultivation in his Portuguese facility. Hoshi also has import distribution agreements in the Czech Republic, Germany, Poland and the UK
“By partnering with Flora Growth, Hoshi can now accelerate a number of well-established initiatives to sell high quality GACP flowers in the EU market,” said Hoshi CEO John Aird in a press release from Flora announcing the partnership. “We look forward to working with the Flora team and not only accessing their high-end genetics and outdoor grown cannabis, but also helping Flora deliver more finished products to their customers in the EU and worldwide. “
Courtesy Flora Growth | floragrowth.de
Flora Growth grows 100 hectares of cannabis near the equator in Bucaramanga, Colombia, year round.
Founded in 2019, Flora uses natural, low-cost growing practices with an all-outdoor grow operation covering approximately 100 hectares (247 acres) of cannabis in Bucaramanga, Colombia. About 500 miles north of the equator, Flora’s farm produces year-round yields with more than 12 hours of natural sunlight per day and a constant 3 mph breeze at 1,500 meters above sea level, Merchan said. In addition, the Flora-Farm has six natural spring water resources to further reduce operating costs.
These natural conditions allow flora to grow dried cannabis flowers for 6 cents a gram (about $ 25 to $ 30 a pound), he said.
“We cultivate in one of the best regions in the world when it comes to growing flowers,” said Merchan, a Colombian born and raised dual citizen, but who has specialized in retail and consumer goods in the United States throughout his leadership career, including his role as Vice President of Workforce Strategy and Operations at Macy’s Inc.
“The problem with growing and growing cannabis in [the U.S. and Canada] is the storm, right? ”he said. “If you do it outdoors, you can only cultivate part of the year. If you want to do this year round, you have to build massive infrastructures for indoor growing, and that immediately increases your growing costs in the long run. “
When Flora debuted on the Nasdaq on May 11, the company went public in the United States (IPO) as the first known cannabis grower to be listed without the use of a special purpose vehicle (SPAC), reverse merger, or dual listing. Flora completed a pre-IPO capital increase of $ 30 million in 2020 and raised an additional $ 16.6 million after the IPO was completed.
Merchan said Flora had sufficient funds in advance of listing to complete the deal with Hoshi, but the completion of the IPO allowed the company to increase its liquidity position, which opens the door to free completion of the Hoshi partnership as well as many other deals that works in the and will be shared with investors and publicly as soon as they become a reality.
“[Expanding to Europe has] has always been part of our overall long-term strategy, ”said Merchan. “We founded Flora Growth with the vision of becoming a global player in the cannabis industry. Europe is a very attractive economy due to its acquisition power, but also due to the favorable regulatory environment in some countries of the European Union. So we knew all along that this would be an important step in the direction of our expansion and sales. ”