COLOMBIA - Agriculture
CEO, Flora Growth
Luis Merchan, President and CEO of Flora Growth Corp., is a New York & Miami -based executive with over a decade of proven experience in enterprise sales management, corporate strategy, merchandising and expense management, and customer experience. During Luis’ term as Flora CEO, the company has added over 10,000 new investors, went public on the Nasdaq in May 2021, and is now organized to support a portfolio of organic cannabis-based products rapidly growing through acquisitions and partnerships.
What is Flora Growth’s story, and what is the company’s business rationale?
Flora Growth stands out as an exceptional cannabis production company, not only because of the size of its production but also for its international reach and strategy—having more than 600 products. Clearly, our growth strategy is different from other international players in the cannabis space. We built the company to be a market leader in the global cannabis industry, not simply one state or country. Our strategy is built on three fundamental growth pillars. The first is our commercial business, which represents several assets, including a 100-ha farm on the outskirts of Bucaramanga, as well as our GMP-built laboratories that not only extract and formulate for our diverse portfolio of brands but are also equipped with the ability to complete white labelling and formulation services for third parties. Our second growth pillar is our house-of-brands, which is anchored by a number of purpose-built CPG companies that meet the demand of critical growth markets. These CPG brands allow us to explore plant-based wellness and lifestyle products that deliver better consumer experiences, give us access to a broad base of potentially cannabis-friendly consumers, and create the opportunity to move quickly and assertively into markets that have varying levels of cannabis regulation. The third growth pillar is our life science research, which allows us to be at the vanguard of health and wellness by exploring formulations and modalities that demonstrate the most efficacy with scientific backing. Our research study with the University of Manchester and various applications for review of patent-pending formulations by government bodies provide the credibility the market will soon demand. Consumers and patients are already sharing the benefits of cannabis and its derivatives with us. This growth strategy provides unparalleled access to the needs of those consumers so we can build better, safer products for them.
How does Flora Growth intend to serve customers around the globe, and how does the company seek to be outstanding in matters of product diversification?
If you look at the cannabis market worldwide, the size of the pie is between USD200 and USD300 billion. Less than 50% of the market is in what you call the “traditional” cannabis space, which includes dry flower and pre-rolls. The other 50% comprises emerging categories. In Colombia, the emerging categories are called industrial uses of cannabis, though worldwide, they have different names. Those industrial uses include edibles, food and beverage, vaping, and other delivery methods and devices, as well as other industries such as textiles. In order to reach the entire market and play on an international scale, we need to ensure we have assets, product categories, and offerings in each of those portions of the pie. We have been able to accomplish that with our diverse portfolio. The second part is that barriers to entry are incredibly different around the globe. When you only focus on active pharmaceutical or psychoactive ingredients, you leave out all these other categories where you can generate meaningful revenue. By having a strategy with products that address different barriers of entry, we can expand our distribution at a rapid pace. Lastly, when it comes to distribution channels, having the appropriate mix between direct-to-consumer and distribution allows us to have the kind of intelligence that will help build meaningful revenue growth not only in the short term but also allow us to understand the products and experiences that consumers may be looking for in the future.
What is the company’s expansion plan and road to market strategy?
We intend to continue to grow Flora into the international-market leader in the cannabis trade. We certainly accomplished all of our goals to date, including expanding our product and brand portfolio with the acquisition of Vessel Brand Inc. in the cannabis consumption technology space and JustCBD, a leader in CBD consumables. These companies have tremendous reach and will continue to expand their impact via their direct-to-consumer relationships and global distribution partners. In terms of geographies, we are already in some of the most sought-after markets globally, including the US, Mexico, Colombia, Germany, and Israel. We intend to further our entry into these markets while evaluating the regulatory framework of other geographies that have a tremendous amount of potential, such as Spain, Portugal, Italy, and France. We will continue to monitor new markets from a profitability and revenue generation perspective and from a product category perspective across each of our growth pillars to ensure we are maximizing our reach on a global scale.
What are the economic and social impacts associated with Flora Growth’s operations?
Flora’s cannabis grow operation is in Bucaramanga, Colombia, and I believe cannabis can become an engine of economic growth in the country. Indeed, the government feels the same way. We support the government in many ways, including helping it create a regulatory framework that can accelerate the potential benefits in terms of economic growth, employment generation, and tax revenues that can come from the cannabis industry. We are employing hundreds of people who support hundreds of families in Colombia. Most importantly, these jobs are diverse. We employ people on the agricultural side at our farm on the outskirts of Bucaramanga. There are about 15 colleagues per cultivated hectare, and we have the capacity to cultivate up to 100ha, making it one of the largest cultivations in the world. We have positions on our scientific and laboratory teams in both the city and at our cultivation facility, where we are initiating research and creating products that are changing people’s lives with the highest quality products and safety standards. There are white-collar jobs in sales, management, distribution, and marketing out of our offices in Bogota. All this comprises a significant contribution in terms of employment and revenues—and these opportunities extend beyond just Colombia as we build a truly global operation in the cannabis industry. Our capital investments, the number of jobs being created, and the potential for exports globally are exponential, and it demonstrates the possibility that the industry can have in Colombia and the impact Colombia can have as a leader in the global cannabis movement.
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