Cannabis Company Flora Growth to Exit Colombian Market and Sell Local Assets Amid Losses and Export Challenges

In a surprising turn after years of investment in the Andean nation, US cannabis company Flora Growth (Nasdaq: FLGC) announced that it will be selling off its Colombian subsidiaries and assets to an unnamed private company for just $800,000 CAD to put an end to the ongoing losses the company has been experiencing in its local operations.

In a statement, the Florida-based company said the exit will be a complete one as it sells off all its Colombian assets, including its 361-acre Cosechemos farm located in Girón, Santander (near Bucaramanga); processing plants in the country; and many of the company’s assets related domestic food, beverage, and consumer products, 

This sale is expected to give the company around $6.1 million USD in reductions to its annual expenses, as well as $3.4 million USD in “divestiture of the Colombian assets,” said Clifford Starke, chief executive officer of Flora Growth, in a statement.

He added that the sale will help the company focus its attention on the United States market.  “The divestiture of our Colombian assets is part of our plan to concentrate on core business divisions — this being a prominent lifestyle brand in the United States and a player in international pharmaceutical distribution focused on therapeutics, starting with medical cannabis,” said Starke.

The sale comes as the company’s first quarter financial results for 2023 show a net loss of $3.9 million USD, despite increasing revenue to $20.1 million USD in the quarter, something  blamed on the company’s operational expenses and export challenges from its Cosechemos farm. 

“With respect to the challenges in exporting cannabis, we did not have the inventory of premium cannabis material required for the fulfillment of pending purchase orders and purchase intent notices in the first quarter,” said Hussein Rakine, a board member of Flora, in a statement. “In addition, the export process from Colombia has proven to take longer and operate with less consistency than we had anticipated.”

The company reported a net loss last year due to high operating expenses, according to Flora’s statements. Its first quarter financial results for 2022 reported a net loss of $7.6 million USD, and its 2022 year-end report had a net loss of $52.6 million USD despite record fourth quarter revenues. 

After the sale with the private company, which is expected to be finalized today, according to the company, Flora Growth will remain in the Latin American market through its Just Brands’ distributor relationships, which it acquired in February 2022.

Photo: Flora Growth executives ringing the closing bell at the Nasdaq in New York in 2021. (Photo credit: Flora Growth)