The Flowr Corporation

Producing Premium Quality Cannabis for the Canadian Medical and Recreational Markets

This profile is part of a paid investor education campaign.*

Overview

The Flowr Group (Okanagan) Inc., a Health Canada Licensed Producer (LP) of cannabis under the Access to Cannabis for Medical Purposes Regulations (ACMPR), is a leading cultivator founded by MedReleaf (TSX: LEAF) co- founder Tom Flow and a team of industry pioneers, successful start-up executives and top industry scientists.

Flowr is building the most advanced cultivation facilities in the industry which it expects to generate consistently high crop yields, deliver premium and ultra-premium cannabis products, and maximize return on investment.  The company also will be an R&D leader as it was selected by the Hawthorne Gardening Division of The Scotts Miracle-Gro Company (NYSE: SMG) as its exclusive Canadian cannabis R&D partner.

Flowr’s 84,000 square foot flagship facility in Kelowna, British Columbia, is engineered to pharmaceutical industry standards.  This, along with exacting protocols designed by the Flowr team, enables the company to grow cannabis that exceeds Health Canada’s stringent quality standards without using taste-diminishing and smell-altering irradiation.  Without the proper experience and protocols, most other Canadian producers have to use irradiation to kill yeast, mold and bacteria on their flower to meet quality standards. The presence of these pathogens and use of irradiation both negatively affect the pleasurable scents and flavors of cannabis while introducing or enhancing negative scents and flavors.

The Kelowna facility is 20 percent operational (as of August 2018) with the remaining 80 percent slated to come online by early 2019. It is expected to produce up to 14,000 kg of premium, non-irradiated cannabis flower in 2019. With further enhanced yields and planned expansion of production facilities on the campus, Flowr expects to reach a total capacity of 60,000 kg annually in 2022.

The Flowr Group Kelowna BC Map

Leading Flowr’s cultivation program is industry pioneer, company co-founder and Flowr president Tom Flow.  Flow is widely recognized for his cannabis thought leadership and expertise building and operating cannabis cultivation facilities. Flow designed, built and set up SOPs for MedReleaf’s flagship Markham cultivation facility which has continued to be perhaps the most productive facility in the country prior to the Flowr flagship facility.  Long one of Canada’s most efficient and profitable LPs, MedReleaf was acquired by Aurora for approximately C$3 billion. Flow and his team have designed and built a total of 17 cultivation facilities and secured three producer’s licenses under various Canadian regulatory regimes.

In March 2018, Flowr and the Hawthorne Gardening Division of The Scotts Miracle-Gro Company – a world leader in lawn and garden products – announced an exclusive strategic R&D alliance.  After evaluating numerous Canadian LPs, Hawthorne chose to partner with Flowr based on the experience and expertise of the company’s cultivation and R&D teams and the company’s advanced growing capabilities.

Flowr is entering the market with two different brands to meet the growing demand for premium, non-irradiated cannabis in the medicinal and adult use markets: FlowerRx for the medicinal market; Flowr for the premium adult-use market.

Flowr recently was issued a Sales License by Health Canada, allowing it to sell to the medicinal and recreational markets.  The company has reached agreements to be a supplier to the province-controlled exclusive legal retailers of adult-use cannabis in British Columbia, Ontario and Nova Scotia.  Flowr also has agreements with several major medical distributors. The company is also evaluating other market opportunities including export and “white-label” brands.

Company Highlights

  • High quality, non-irradiated cannabis to be produced at scale with a focus on optimizing crop yields and quality to maximize profitability and return on investment.
  • Co-founder Tom Flow is a world renowned cultivation expert and co-founder of MedReleaf (acquired by Aurora Cannabis for C$3 billion).
  • A shortage of high-quality cannabis flower in Canada expected over near term – Flowr’s 60,000 kg targeted capacity will help fill this gap while commanding premium prices.
  • Cultivation facilities designed to support ultra-high yields with each room targeting six harvests and an industry leading ~450 g/SF/year once optimized, resulting in relatively low cost of goods sold.
  • Targeting medical and adult-use markets, all with a focus on high margin, premium cannabis to drive top and bottom line growth.
  • Scotts Miracle-Gro subsidiary is funding construction of a first-of-its-kind R&D facility under an exclusive alliance with Flowr.
  • Obtained Health Canada Sales License and named one of the initial suppliers to the exclusive legal adult use retailers in British Columbia, Nova Scotia and Ontario.
  • Strong management team with 50+ years of industry experience.

The Flowr Group Business Model

According to a public report issued by Clarus, new production in the Canadian cannabis market will be focused on lower quality greenhouse and outdoor product, resulting in a shortage of premium and ultra-premium product.  In anticipation of this shortage, Flowr will focus on developing premium products efficiently, profitably and at-scale for both the medical and recreational markets.

Because it has the advantage of growing cannabis flower that will not require the taste- and scent damaging irradiation to meet Health Canada quality standards, Flowr’s products will provide a superior user sensory experience and command premium prices.

Flowr’s purpose built cultivation facilities also will enable it to achieve a significant advantage in both cost and volume of production.  Flowr expects its cultivation facilities, built with proprietary, patent-pending systems, will deliver yields of 450 grams per square foot by the end of 2022, which is three times more efficient than the estimated industry average of approximately 150 grams per square foot.

By optimizing yield, the Company will produce significantly more cannabis flower on a smaller footprint than other producers, thus generating far high revenue per square foot and keeping costs much lower, leading to higher margins.

Flowr is poised to become the pre-eminent indoor premium cannabis grower in Canada and one of the country’s top LPs. The company’s focus on yield, quality and price point and its team’s ability to cultivate at scale are expected to drive high margins, significant growth and strong return on investment.  Looking further ahead, Flowr is evaluating opportunities in a number of market segments, including export opportunities in Germany, Panama and Jamaica and other delivery form factors (oils, edibles, etc.) in Canada.

Brands

Flowr will offer patients and cannabis consumers distinct brands for the adult-use and medical cannabis markets.

FlowrRx

FlowrRx, featuring premium quality medicinal cannabis that enables patients to live better, fuller lives.  A dedicated Client Services team will provide patients with personalized support while an R&D team develops innovative flower strains and premium products targeted to specific conditions. Patient well-being is considered at every stage of the process – from genetic selection to harvest, trimming and curing techniques. FlowrRx and its team of passionate scientists and leading cultivation specialists are dedicated to advancing the scientific understanding of cannabis.

Flowr

Flowr is the company’s premium recreational adult-use brand featuring an active, West Coast-inspired lifestyle for the cannabis connoisseur and enthusiast market. Through the continuous innovation of procedures and practices, Flowr’s talented team of experts is crafting premium products that deliver unparalleled experiences.

R&D partnership with Scotts Miracle-Gro subsidiary, Hawthorne Gardening Co.

In March 2018, Flowr announced that it had entered into a strategic R&D alliance with Hawthorne Gardening Co., a subsidiary of Scotts Miracle-Gro.  Hawthorne will fund the construction of a 50,000-square-foot R&D facility that is integrated into Flowr’s Kelowna campus.  This facility is North America’s first dedicated cannabis R&D facility focused on advancing cannabis cultivation techniques and systems. The facility will support researchers from both organizations and combine laboratories, indoor and greenhouse grow suites, training areas and genetics breeding areas in a single building.  It is expected to open in early 2019.

The Flowr-Hawthorne alliance will both help Flowr maintain its competitive advantage in cultivation and keep it on the cutting edge of cannabis innovation.

The Flowr Group Facility

 

Management

Steve Klein — Co-founder, Chairman of the Board and Chief Strategist

Steve Klein began his career as a corporate tax attorney at Skadden Arps in New York before leaving in 1992 to co-found Apple Core Holdings, a private investment firm with holdings in hotels, hospitality venues, entertainment, technology, investment funds and cannabis.  Apple Core’s investments include hotels in midtown Manhattan, Bengal Capital, Gotham Hall Events, The Ziegfeld Ballroom, and Zeno Radio. He produced both the award winning Broadway show and Spike Lee film “Passing Strange.”

Klein holds a J.D., Magna Cum Laude, from Boston University Law School and a Master’s Degree in tax law from New York University Law School.  He received his Bachelor of Science in business from the State University of New York in Albany.

Tom Flow — President, CEO and Founder

Tom Flow co-founded and built MedReleaf in 2014, Canada’s most profitable LP, which has agreed to be acquired for C$3.2B.  Flow and his team, many of whom have joined him at Flowr, built 17 facilities ranging from 3,000 to 30,000-square-feet under several Canadian regulatory regimes.  Flow is widely recognized for his cannabis thought leadership and expertise building and operating cannabis cultivation facilities.

Vinay Tolia – Incoming CEO

Vinay Tolia is the co-founder and managing member of derivatives trading hedge fund Bengal Capital Trading LLC.  He is also an early investor/advisor in numerous cannabis companies, including GTI and Bloom Farms. Earlier in his career, Tolia was an investment banker at Peter J. Solomon Company and Midtown Capital.

Alex Dann — CFO

Alex Dann is a bilingual CPA, CA with over 25 years of experience leading financial operations and strategic planning for multinational public companies, primarily in the mining and manufacturing sectors. Dann was most recently CFO of Era Resources Inc., prior to its acquisition by The Sentient Group. He has held senior positions including CFO of Avion Gold Corporation prior to its acquisition by Endeavour Mining Ltd., CFO of Goldbelt Resources Ltd. prior to its acquisition by Wega Mining ASA and Group Controller of Litens Automotive Partnership, a division within Magna International Inc.

Dr. Lyle Oberg — Chief Policy and Medical Officer

Dr. Oberg graduated from University of Alberta School of Medicine in 1983. In 1993, he entered politics and was first elected in June of that year as the MLA for Bow Valley, AB. Under Premier Ralph Klein he held several senior Ministerial portfolios including Minister of Social Services, Minister of Learning, Minister of Infrastructure and Transportation and Minister of Finance where he oversaw a budget of $38 billion and an asset portfolio of $74 billion.

In 2007, Dr. Oberg started the Alberta Investment Management Company (AIMCO), which now has assets in excess of $94 billion. Dr. Oberg left politics in 2008 and became CEO for MultiGen Diagnostics, a DNA sequencing company based in San Diego. Dr. Oberg brings with him a wealth of political, medical and business experience.

Dr. Oberg is currently Chairman of the Board of Siksika Herbz, a late stage Medical Marijuana company, Chairman of the Private Equity Investment Committee for Yorkville Asset Management, Chairman of the Investment Committee for Siksika Resource Development Ltd, Chief Policy and Medical Officer, The Flowr Corporation., Director of Plant Properties REIT and Medical Advisor to Strainprint.


 

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