Features

Flowr powered by BC Pink Kush

Published on August 27, 2020 by David Wylie

Some of the most sought after weed in Canada is being grown in the Okanagan.

BC Pink Kush from Kelowna-based Flowr Corporation is helping push the licensed producer to record revenue.

“The fundamental thesis that we’ve been speaking about since we founded Flowr is playing out in the market place,” said Flowr CEO Vinay Tolia in an investors call this week.

“Where we compete and what we are seeing is a clear willingness for consumers to pay up for a higher quality and differentiated product, such as our flagship BC Pink Kush.”

BC Pink Kush from Flowr has been a consistent number 1 selling SKU by the Ontario Cannabis Store to retailers in dollar volume and sales to retailers.

“We believe it’s the highest quality product in that category. Our Pink Kush is different than other Pink Kushes on the market. The strains aren’t created equally. Our expertise is really on the cultivation side.”

The company sold about 420 kilos during the quarter, up 23% over the same period in 2019. The vast majority of those sales were BC Pink Kush.

The number 1 request at the retail level by customers is high THC products (especially over 20%).

Flowr’s BC Pink Kush is a strong indica at about 25% THC.

“People are primarily using the product during the evening to unwind,” said Tolia.

Flowr announced its Q2 2020 results this week; it has seen its net revenue increase this quarter, with $2.3 million.

“We recently had a record harvest of 88 kilos from a single room,” said Tolia.

Nearly 1,200 kilos of BC Pink Kush were harvested in the second quarter of 2020 – in stores now or soon – and that output is poised to increase. They will be releasing additional strains at the end of Q3 and in early Q4. All of Flowr’s 20 grow rooms were in production by mid-April.

Flowr said its BC Pink Kush has not been irradiated in 18 months, calling it “a testament” to their quality.

Flowr has just been approved to sell in Quebec.

Global footprint

Overall, Flowr is increasing its world reach with the biggest outdoor operation in the EU.

Partnered with Terrace Global, they are on track to harvest what is believed to be the largest outdoor THC cultivation project in the EU this fall. About one million square feet was planted with a variety of high-THC cultivars, including BC Pink Kush.

In depth

• Average Flowr branded price per gram in the second quarter was $6.69 reflecting the Company’s positioning in the premium segment.  Overall average price per gram in the second quarter was $5.88, due to bulk sales agreements entered into during the quarter.
• Flowr harvested a total of 1,346 kilos of dried cannabis in the second quarter, up 193% vs the same period in 2019 and a 174% increase sequentially from the first quarter in 2020 as all grow rooms in the facility were being utilized after being fully licensed by Health Canada in February.
• Normalized cash cost per gram was $3.58 in the second quarter, an improvement from $4.91 in the first quarter of 2020, as the Company began benefitting from its automated packaging line. The Company believes more material improvements will be achieved in the third quarter once automation is fully operational and due to allocation of fixed costs over larger production quantities.
• Adjusted EBITDA loss of $2.9 million in the second quarter was a $4.0 million improvement sequentially from the first fiscal quarter in 2020.
• A recent consumer research report by the Brightfield Group highlighted Flowr as the #7 ranked Brand by Awareness in Canada and had Flowr ranked #1 or #2 in a variety of Loyalty, Brand Promotion and Satisfaction scores among the top 10 purchased brands in Canada.

Quote

“We made progress against our key strategic and financial objectives in the second quarter of 2020.  Sales momentum in our flagship BC Pink Kush continues to build.  We have leading market share in Ontario which is evidence that there is strong consumer demand for premium dried flower despite the increasing proliferation of value brands in the sector.  We are very excited by the progress we are making with our partners at Terrace Global in Portugal and continue to expect a sizeable harvest in Q4 2020 in what we believe is the largest outdoor THC cultivation project in Europe to date.  Given the sales trends in our Canadian business we continue to believe we will become cash flow positive in the second half of 2020,” said Vinay Tolia, Flowr’s Chief Executive Officer.

About Flowr

The Flowr Corporation is a Toronto-headquartered cannabis company with operations in Canada, Europe, and Australia.  Its Canadian operating campus, located in Kelowna, BC, includes a purpose-built, GMP-designed indoor cultivation facility; an outdoor and greenhouse cultivation site; and a state-of-the-art R&D facility that is awaiting licensing from Health Canada.  From this campus, Flowr produces recreational and medicinal products.  Internationally, Flowr intends to service the global medical cannabis market through its subsidiary Holigen, which has a license for cannabis cultivation in Portugal and operates GMP licensed facilities in both Portugal and Australia.