Keep an Eye on Nasdaq-Bound Flowr Corp
One rarely discussed cannabis stock, Flowr Corp (OTCMKTS:FLWPF, CVE:FLWR), also known as The Flowr Corporation, has been on a tear, up 115% since early December.
While there has been no specific recent news about the company, buzz has been growing about about this mostly unheard-of cannabis penny stock.
A grower of ultra-premium cannabis, The Flowr Corporation has the distinction of producing the highest output per square foot in the entire legal cannabis industry.
It has also put in the paperwork to graduate from the over-the-counter market to the Nasdaq. Flowr Corp stock has only been public since the second week of October 2018, meaning its current anonymity will likely be short-lived.
Flowr Corp Overview
Whereas most legal marijuana producers grow high-quality cannabis, The Flowr Corporation, which was founded by MedReleaf Corp co-founder Tom Flow, has targeted the ultra-premium medicinal and recreational cannabis market, meaning it has very little competition.
Not only that, but premium products have a much higher price point. (Source: “Discover Flowr,” The Flowr Corporation, last accessed March 11, 2019.)
What’s even more interesting is that the company grows 300–450 grams (10.6–15.8 ounces) per square foot, which is much higher than the industry average of 150 grams (5.3 ounces) per square foot.
At the company’s 85,000-square-foot flagship facility in Kelowna, British Columbia, Canada, Flowr Corp produces around 7,600 kilograms (16,755 pounds), but that is expected to jump to around 12,000 kilograms (26,450 pounds) once it is completed this year.
Thanks to its enhanced yield and additional expansion plans, Flowr expects production in Kelowna to reach a total capacity of 60,000 kilograms (132,277 pounds) annually in 2021. (Source: “There’s Cannabis, and Then There’s Flowr,” The Flowr Corporation, last accessed March 11, 2019.)
Just because most people haven’t heard of Flowr Corp doesn’t mean it’s not on the radar of some of the biggest industry players. In April 2018, Flowr and Hawthorne Gardening Company, a subsidiary of Scotts Miracle-Gro Co (NYSE:SMG), announced a strategic research and development alliance.
The partnership will result in a 50,000-square-foot facility at Flowr’s Kelowna campus, dedicated to advanced cannabis research. (Source: “The Flowr Corporation and Hawthorne Gardening Company Look To The Future,” The Flowr Corporation, April 16, 2018.)
The one-of-a-kind center will open in early 2019 and house laboratories, indoor and greenhouse grow suites, and training and genetic breeding areas.
|Flowr Corp Stock Information|
|Market Cap||$457.5 million|
|Shares Outstanding||86.5 million|
|50-Day Moving Average||$3.49|
|200-Day Moving Average||$3.09|
(Source: “FLWPF Key Statistics,” Yahoo! Finance, last accessed March 11, 2019.)
Flowr had the misfortune of going public when the broader markets were selling off, which also bled over to the December swoon. But FLWPF stock has rebounded better than most.
Since bottoming in early December, Flowr Corp stock has advanced 115%. Since the start of 2019, it has increased by 51.6%.
Chart courtesy of StockCharts.com
What’s behind the strong gains in 2019? The grower of ultra-premium quality cannabis has made a number of announcements that point to significant growth.
The Flowr Corporation Applies for Nasdaq Listing
If people haven’t heard of The Flowr Corporation yet, they will if the stock starts trading on the Nasdaq.
On February 5, Flowr Corp announced that it had submitted an application to list its common shares on The Nasdaq Capital Market and filed a Form 40-F Registration Statement with the U.S. Securities and Exchange Commission (SEC). (Source: “Flowr Applies For Nasdaq Listing,” The Flowr Corporation, February 5, 2019.)
Flowr Corp stock will continue to trade on the TSX Venture Exchange.
The company will announce a Nasdaq trading date once all regulatory formalities are satisfied.
Co-CEO Vinay Tolia commented, “A NASDAQ listing is an important step forward for Flowr because we believe it will broaden our access to international investors as we become a truly global company.” (Source: Ibid.)
Flowr Corp to Launch Cannabis Clone & Seed Sales in Q2
Flowr said it will begin selling cannabis cultivars (both seed and clone form) in the second quarter of 2019. (Source: “Flowr to Launch Cannabis Clone and Seed Sales in Second Quarter,” The Flowr Corporation, January 31, 2019.)
“This is an exciting and potentially very big market for Flowr that is a natural extension of our high yield, high quality approach to cultivation,” said Flow.
The company expects its highly efficient cultivation process will allow it to produce more than 3.2 million high-quality clones on an annualized basis once its initial cultivation facility is completed. The Flowr Corporation expects this will be by the end of the third quarter of 2019. (Source: Ibid.)
Flowr Signs Medical Supply Agreement With Shoppers Drug Mart
In early January 2019, Flowr Corp announced it had entered an agreement to supply medical cannabis to Shoppers Drug Mart on a purchase-order basis. The term of the supply agreement is three years, with a two-year renewal term. (Source: “FlowrRx Products Now Available Exclusively Through Shoppers Drug Mart Online Site,” The Flowr Corporation, January 9, 2019.)
Shoppers, a division of Loblaw Companies Ltd (OTCMKTS:LBLCF, TSE:L), is Canada’s leading drug store retailer, with roughly 1,300 pharmacist-owned locations.
Flowr believes the agreement will help increase its sales of medical cannabis products in Canada. Currently, FlowrRx products are available to patients registered via the company’s web site and in select clinics.
Deloitte has estimated that the Canadian market for medical cannabis products could reach CA$1.8 billion (US$1.35 billion) in sales in 2019. (Source: “A society in transition, an industry ready to bloom: 2018 cannabis report,” Deloitte, last accessed March 11, 2019.)
The Flowr Corporation Expands Into Global Markets
In December 2018, Flowr announced it had expanded into global markets by acquiring a 19.8% interest in large-scale Portuguese and Australian cannabis producer Holigen Limited. (Source: “Flowr Expands into Global Markets by Acquiring 19.8% Of Large-Scale Portuguese and Australian Cannabis Producer Holigen,” The Flowr Corporation, December 20, 2018.)
Holigen is in the final stages of obtaining a license for one of the largest cultivation facilities in the developed world. This includes an outdoor cultivation license, which will allow a potential annual capacity of 500,000 kilograms (1.1 million pounds).
Holigen’s growing network of partnerships serves Germany, Poland, the U.K., and Ireland. It also has strong ties to the largest medical cannabis distributor in Australia, with distribution channels in 35 countries.
There are currently 22 countries in Europe that have medical cannabis programs. By 2028, Europe’s medical cannabis market is expected to grow to $62.6 billion and Australia’s cannabis market is expected to grow to more than $8.2 billion. (Source: Ibid.)
Flowr Corp Announces Third-Quarter Results
On November 28, Flowr announced its financial results for the third quarter ended September 30, 2018. This was its first reported results since going public in October. (Source: “The Flowr Corporation Announces Results for the Third Quarter and Nine Months Ended September 30, 2018,” The Flowr Corporation, December 20, 2018.)
Results for the third quarter do not include any sales of cannabis products since the company only received its sales and production license in August 2018. It did grow cannabis, though.
In its third quarter, Flowr Corp produced 221,872 grams (489.1 pounds) of dried cannabis. Over the first nine months of 2018, the company produced 358,768 grams (790.9 pounds).
The company reported a third-quarter net loss of $5.6 million and a year-to-date loss of $11.8 million. It ended the third quarter with around $40.0 million in cash.
- Completed close to $65.0 million of fundraising activities throughout the last two years.
- Began cultivation in its Kelowna facility, harvesting almost 791 pounds in 2018.
- Received its sales license from Health Canada.
- Entered supply agreements with provincial authorities in Ontario, Nova Scotia, and British Columbia—representing more than 50% of Canada’s total population.
- Purchased or agreed to purchase several parcels of land adjacent to its Kelowna facilities. The company plans to expand capacity by using this land to build additional cultivation facilities.
Subsequent to the End of the Third Quarter
In early October, Flowr began fulfilling initial purchase orders from its provincial partners and made several restocking shipments after products sold out.
The company also formed a partnership with Ace Valley and launched several stock keeping units (SKUs) in British Columbia and Ontario. (Source: Ibid.)
As I mentioned before, not many people have heard about The Flowr Corporation. That may be because the legal marijuana industry is pretty crowded.
Nevertheless, this overlooked penny stock is most certainly one you’ll want to keep your eye on. Flowr Corp is poised to become one of the biggest cannabis producers in Canada.