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Flower One Provides Corporate Update and Outlines Approach to Developing a Strategic Portfolio of Brand Partners and Retail Partners

Ryan Allway

January 15th, 2019

News

TORONTO, Jan. 14, 2019 /CNW/ – As Flower One Holdings Inc. (CSE: FONE) (OTCQB: FLOOF) (“Flower One”, the “Company” or “we”) begins 2019, we remain excited by the continued pace of growth and maturity of the cannabis sector in the United States and globally.  While opportunities abound in this market, we firmly believe that remaining sharply focused on executing our growth strategy in Nevada and delivering strong financial performance will yield the greatest return on equity for our valued shareholders.

As noted in our last shareholder update in late November, we made significant progress last year thanks to the tireless efforts of the entire Flower One team. We expect this effort will continue to deliver results as we move through the first half of 2019.  Given the volume and pace of anticipated catalysts for the Company, we wanted to provide a further corporate update on our progress and what lies ahead for Flower One.

A.     Conversion of 400,000 Square Foot Commercial Greenhouse in Nevada

We remain on time, on plan and on budget with the conversion of Flower One’s 400,000 square foot greenhouse and the build out of our 55,000 square foot post-harvest processing, production and custom packaging facility.

The existing 15,000 square foot processing facility tenant improvements are targeted for completion on January 31, 2019, in advance of the first planting. The facility will house new offices, the grow team’s break rooms and bathrooms as well as the areas for the initial phase of planting (the cutting cells, and wetting/pruning lines). In addition to this existing processing facility, the vertical construction has begun on the new 40,000 square foot production and post-harvest building.

Over the past several months, Flower One’s grow team has worked through a methodology to select the cannabis strains that will represent the first full canopy of our greenhouse.  These strains were planted at our wholly-owned subsidiary, NLV Organics (NLVO), which is located a five-minute drive from our greenhouse.   In the coming weeks, we will hit a major operational milestone for the Company as we begin the process of transferring of plant material from NLVO to the greenhouse to formally begin the onboarding of more than 80,000 cannabis plants.

B.      Building a Strategic Portfolio of Brand Partners

The onboarding of plants into Flower One’s greenhouse represents the achievement of a major operational milestone and it indicates we are a few months away from beginning a perpetual harvest cycle.

This greenhouse’s cultivation output, along with Flower One’s current construction of its 55,000 square foot processing and high-volume packaging facility, serve as anchors for the Company’s cornerstone strategy in Nevada which is to enter commercial agreements with a diverse mix of well-established and reputable cannabis Brand Partners looking to enter and gain prominent shelf space with Nevada’s expanding network of cannabis retailers.

Over the past four months, Flower One has held concurrent discussions with numerous cannabis brand companies who have achieved success in other markets.  These successful brands recognize that the cannabis retail landscape in Nevadais unique and growing rapidly.  More specifically:

  1. The State government recently announced the doubling of cannabis retail licenses.  This will result in an expansion to approximately 130 retail stores across the State.
  2. More than 80% of total cannabis sales are concentrated within the Las Vegas area reaffirming that the 55 million tourists who visit Nevada annually make the addressable market significant and important for all cannabis companies looking to build brand equity in the State and in other emerging cannabis markets.
  3. The Nevada cannabis market continues to grow and mature with monthly retail sales recently surpassing $50M per month.1

We have consistently expressed to our potential Brand Partners that Flower One offers them a capital-efficient and timely pathway to enter Nevada’s cannabis market. Our ability to provide seed to retail-ready product and meet the volume requirements of all 130 retail stores in the State is truly unique in the market.  This value proposition is further reinforced by the fact that our scale, precision, automation and technology will result in the following benefits to our Brand Partners:

  1. The ability to supply our Brand Partners’ products providing a steady brand presence on retail shelves.
  2. Offer a diverse mix of product SKUs and delivery platforms from packaged flower, oils, distillates, concentrates, gel caps, vaporizers, edibles, topicals and sublingual delivery platforms because we understand our Brand Partners will want to meet the needs of cannabis consumers as their product knowledge grows and evolves.
  3. Our service offering to the 130 retail operators is paramount. Our scale, production capacity and supply chain management expertise will allow us to provide just-in-time shipment to retail operators allowing them to free-up much needed capital to deploy to the more important, growth-related aspects of their business.  In addition, our matrix of brands and products offerings will serve to create buying efficiencies unique in the Nevada market.

This value proposition has resonated strongly with our potential Brand Partners and the dispensaries that we serve.  We are very excited about what this means in the near-term horizon for Flower One.

Ultimately, we are working to build an optimal portfolio of Brand Partners across the diverse consumer spectrum from value-oriented brands, to mid-tier brands, to the more exclusive luxury brands.  This mix of brands and product offerings is very important to Flower One as we see the need to properly meet consumer expectations and desired experiences across the full pricing and product category matrix.

Unlocking the Full Value of NLV Organics Acquisition

As you know, we completed the acquisition of the assets of NLVO in early November 2018. The ongoing integration of these assets into Flower One continues.  In our efforts to unlock the full potential of these assets, management team and staff to support the overall commercialization efforts of Flower One’s entry into the Nevada market, we have achieved the following over the past few months:

  1. Building of Inventory for Our Brand Partners: By working together with the existing team at NLVO, we have successfully increased the yields across all strains grown in each of our nine grow rooms. As a result, we hold in inventory approximately 3,000 pounds of flower and trim.  This inventory, when deployed to the retail market in Q1/Q2 2019, will provide our anticipated Brand Partners the opportunity to have an immediate presence on the retail shelves of Las Vegas and Nevada dispensaries until Flower One’s greenhouse supply comes online.
  2. Expanded Genetics Bank: The broader the choice of strains we offer to dispensaries and our Brand Partners, the better.  We have now expanded Flower One’s genetics bank by nearly doubling NLVO’s strain inventory to more than 90 strains.  The additional strains are now being tested within the cultivation facility acquired from NLVO.
  3. Retail Reach and Positioning of NLVO’s Product Line:  The varied product line offered by NLVO (packaged flower, vape pens, topicals, concentrates) continues to be well positioned as a luxury brand in the Nevada market.  The positioning and retail reach in the market continues to go well.
  4. Supply of Plant Material for Onboarding of Plants in Greenhouse:  As noted previously, Flower One’s grow team has completed the strain selection process and begun the conversion of grow rooms to meet the significant plant material requirements for the onboarding of plants at the greenhouse.  The first cuttings will be introduced into Flower One’s greenhouse in the coming weeks.
  5. Optimization of Processing Facility: Several of our anticipated Brand Partners are looking to immediately ramp-up production of edibles and other innovative delivery platforms.  Flower One will be reconfiguring and optimizing the existing 25,000 square-foot facility that Flower One acquired from NLVO in order to allow us to immediately begin the required processing, production and packaging requirements of these Brand Partners.

We hope this Corporate Update gives you an indication that 2019 will be an exciting and pivotal year for Flower One.

In closing and on behalf of our Board, Advisory Team, and management, we wish to express our ongoing gratitude to you for being a valued shareholder and for sharing our vision of Flower One as we continue our journey into the U.S. cannabis market.

Sincerely,

Ken Villazor
President and CEO

Cautionary Note Regarding Forward Looking Information

Statements in this news release that are forward-looking statements are subject to various risks and uncertainties concerning the specific factors disclosed here and elsewhere in Flower One’s public documents. When used in this news release, words such as “will, could, plan, estimate, expect, intend, may, potential, believe, should,” and similar expressions, are forward- looking statements.

Forward-looking statements may include, without limitation, statements relating to the execution of the Company’s strategy, the continued growth, maturity and retail sales of the cannabis sector Nevada, the United States and globally, future dividends, volume and pace of anticipated catalysts for the Company, new opportunities, future growth and production, potential return on equity, date of completion of the processing facility, the timing of onboarding of the 400,000 square foot greenhouse, timing of deployment of Flower One’s inventory into the market, future retail presence and potential benefits of retail strategy, potential capabilities of the cultivation and processing facility in Nevada, the ability of the Company to acquire further licenses, future demand for and pricing of cannabis, potential partnering opportunities with cannabis consumer brands and profitability of the cannabis market in Nevada and the United States.

Although Flower One has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those contained in the forward-looking statements, there can be other factors that cause results, performance or achievements not to be as anticipated, estimated or intended, including, but not limited to: dependence on obtaining regulatory approvals; investing in target companies or projects that are engaged in activities currently considered illegal under United States federal law; changes in laws; limited operating history; reliance on management; requirements for additional financing; competition; hindering market growth and state adoption due to inconsistent public opinion and perception of the medical-use and adult-use marijuana industry and; regulatory or political change.

There can be no assurance that such information will prove to be accurate or that management’s expectations or estimates of future developments, circumstances or results will materialize. As a result of these risks and uncertainties, the results or events predicted in these forward-looking statements may differ materially from actual results or events.

Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements in this news release are made as of the date of this release. Flower One Holdings disclaims any intention or obligation to update or revise such information, except as required by applicable law.

NEITHER THE CANADIAN SECURITIES EXCHANGE NOR THEIR REGULATIONS SERVICES PROVIDER HAVE REVIEWED OR ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

_________________________

1 State of Nevada, Department of Taxation. October Marijuana Revenue Statistics News release. Retrieved from https://tax.nv.gov/uploadedFiles/taxnvgov/Content/TaxLibrary/News-Release-October-2018-Marijuana.pdf.

SOURCE Flower One Holdings Inc.

For further information: Investor Relations & Media, NATIONAL Capital Markets, 416.848.9835, ir@flowerone.com; Flower One Holdings Inc., Ken Villazor, President and CEO, 416.913.9642, kvillazor@flowerone.com

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

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