Canadian cannabis startup forms key partnership

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Marijuana Producer

The Flowr Corporation aims to position itself as a producer of the highest quality medical and recreational cannabis, thanks in part to joint research and development efforts with Scotts Miracle-Gro. It has also signed a supply agreement with Shoppers Drug Mart.

While it harvested its first crops of marijuana in 2018, it will have to ramp up its production in order to compete with more-established and much larger producers. It has also yet to establish its revenue stream.


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THE FLOWER CORPORATION, $4.55, symbol FLWR on the Toronto Venture Exchange (Shares outstanding: 86.7 million; Market cap: $155.5 million; TSI Cannabis Quality Rating (CQR):  ;, has just announced that it has entered into an agreement to supply medical cannabis to Shoppers Drug Mart (wholly owned by Loblaw Cos., symbol L on Toronto). The term of the supply agreement is three years, with a two-year renewal term.

Flowr is a Canadian licensed producer of cannabis products and will supply Shoppers with its FlowrRx brand of premium medical cannabis products. The products initially will be sold online only, as Canadian regulations currently restrict the sale of medical cannabis in retail pharmacies.

Shoppers’ new e-commerce site ( will now be the exclusive direct-to-patient online provider of FlowRx products. Currently FlowrRx products are available online to patients registered via the company’s website and in select clinics.

Flowr operates what is expected to be an 85,000-square-foot cultivation facility in Kelowna, B.C. Over time, the company aims to build out additional facilities and sites adjacent to what it calls its Kelowna Campus.

On April 23, 2018, Flowr began the harvest of its first crop of medical cannabis at the facility. The interior of the Kelowna Campus continues to be under construction and is being completed in stages. Flowr is now operating 16,000 square feet of growing area in the structure. In anticipation of the phased construction of the Kelowna Campus, Flowr has purchased, or has entered into agreements to purchase, several parcels of near or adjacent land.

Meanwhile, Flowr is one of 32 suppliers picked to supply the B.C. Liquor Distribution Board with recreational cannabis.  As well, the Ontario Cannabis Store has entered into supply agreements with 26 licensed recreational producers including Flowr. So far, the other province that Flowr supplies is Nova Scotia.

Flowr also operates a research and development facility dedicated to advancing cannabis cultivation techniques and systems. Its partner in that facility is Scotts Miracle Gro Company (symbol SMG on New York) and that company’s Hawthorne subsidiary.

In December 2018, Flowr acquired a 19.8% interest in European-based Holigen Limited for $6 million. Holigen is currently developing four cultivation facilities in Portugal and Australia along with production and research facilities

In the quarter ended September 30, 2018, Flowr produced 221,872 grams of cannabis, compared to none a year earlier. It hadn’t yet sold any of the cannabis, so it had no revenue. The company lost $5.6 million, or $0.00 a share in the latest quarter, compared to a loss of $467,000, or $0.01 a share.

The company recently raised $15.0 million in a share issue at $1.00 each.

Flowr aims to position itself as a producer of the highest quality medical and recreational cannabis, thanks in part to its research and development with Scotts Miracle-Gro as a partner.

However, startups are inherently risky, especially so in a new market with an evolving regulatory environment and low barriers to entry.

Still, the gap between Flowr’s market cap and its potential sales isn’t as big as it is for many of its competitors. That could also make the company a possible takeover candidate. While that alone is not reason enough to buy the stock, it adds to Flowr’s appeal.

The Flowr Corporation has a 2.5-Leaf Cannabis Quality Rating (CQR). The stock is a speculative buy for aggressive investors who want exposure to the marijuana industry.


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