Canadian cannabis producer The Flowr Corporation is going public on Wednesday on the Toronto Stock Exchange amid increasing investor interest -- and volatility -- in the cannabis sector. The company will start trading under the ticker symbol FLWR.
Flowr raised $27 million ahead of its listing and opted to go public through a reverse stock takeover – a favored method among marijuana businesses. Going public is an "important step toward our goal of becoming one of Canada's top licensed producers," said Flowr CEO Vinay Tolia in a statement announcing the news. "With the transaction behind us, we can increase our focus on executing our business plan."
In the past week, cannabis stocks have seen a lot of activity, most notably with Tilray's 77 percent surge that was followed by a nearly 48 percent drop.
Leading the company's cultivation operations is Flowr President Tom Flow, who co-founded the Canadian medical cannabis company MedReleaf. MedReleaf was acquired by Aurora Cannabis for $2.51 billion in May.
The team is hopeful that their experience in running large-scale cultivation operations will help them when it comes to producing quality cannabis without sacrificing yield.
"The people who are just getting into the game – they haven't had their 10,000 hours," said Tolia in an interview last month. "They're making mistakes – things that these guys have gone through 10 years ago."
The company also has a research and development alliance with Hawthorne Gardening Company, a cannabis-focused subsidiary of Scotts Miracle-Gro.
Flowr plans to produce high-quality cannabis at scale at its flagship cultivation site in Kelowna, British Columbia. The 85,000-square-foot facility is expected to produce more than 13 tons of cannabis annually once it's fully operational in 2019. The company will serve both the medical and adult-use markets.
"Health Canada has very stringent regulations," said Steve Klein, Chairman and Chief Strategy Officer of Flowr. Medical cannabis in the country is commonly irradiated to get rid of contaminants like mold and bacteria. But "an irradiated product tastes and smells dramatically different on an aesthetic level from a non-irradiated product," he said.
While a 2016 study on the effects of cannabis irradiation found that THC and CBD content fared just fine, the research did show some terpene degradation that resulted from irradiation. Terpenes are the aromatic compounds that give different types of cannabis varying scents. Meanwhile, preliminary scientific evidence suggests that terpenes can affect the therapeutic properties of cannabis, too (though like any cannabis research, more studies are needed).
Executives at Flowr say that their proprietary cultivation systems will eliminate the need for irradiating the product, resulting in more flavorful cannabis for its adult consumers.
In my years of reporting on the cannabis industry, everyone from dispensary managers to budtenders have told me that American cannabis consumers want the most THC for their buck. Sure, there are cannabis connoisseurs and weed bros that love to talk "terps," but most could care less about the terpene profile of the plant.
Flow assures me that the consumers in Canada are more discerning.
"[Cannabis] consumers are used to buying high-end product," he said. "They would gladly pay a couple of dollars more for that level of product that they're used to."
