Toronto-headquartered cannabis company Flowr Corp. is slashing its workforce and pulling out of noncore markets – including Australia, Uruguay and Spain – as part of a strategic review intended to put the business on firmer financial footing.
Flowr is the latest Canadian cannabis company to retreat from some costly and unlucrative international markets, following similar moves by larger rivals Canopy Growth, Aurora Cannabis and others over the past year.
As part of the international pullback, Flowr is selling its subsidiary Terra Nova Business Holdings, which has an unlicensed medical cannabis greenhouse in Portugal.
Flowr also sold Uruguay hemp operator Oransur S.A.
The price of the transactions were not disclosed, but the deals allow Flowr to regain a 10% stake in the respective businesses if certain milestones are reached.
The recreational and medical cannabis producer said it is in the process of selling TCann Pty, which holds medical cannabis licenses in Australia. It’s also in the process of selling the Australian license held by Holigen, a subsidiary.
The strategic review involves a head-count reduction.
“A large portion of the reduction was based upon not backfilling for roles which had become vacant due to natural attrition,” Chief Financial Officer Irina Hossu told Marijuana Business Daily via email.
Eleven roles were affected in Canada, she said.
“All employees, including management, were offered the option of reducing up to 20% of their salaries in return for equity in the company. We had employees across all level participate in the program.
“Outside of the voluntary reductions, there were no further pay cuts. There are no current plans to sell any of our greenhouses.”
According to a news release, the strategic-review committee headed by independent director Joanne Lee aims to:
- Reduce corporate overhead and head count.
- Dispose of noncore assets, including duplicative licenses in the European Union.
- Implement further undisclosed cost savings strategies.
The company also said it is moving key management positions from Toronto to Kelowna and subleasing its Toronto office.
Flowr, however, is still deciding whether to keep its headquarters in Toronto or move it out West.
“We will still have some management and employees based out of Toronto as is a large portion of our board, therefore we are in the processing of determining whether to move our HQ to Kelowna or keep in Toronto,” Hossu noted.
“A decision has not been made yet.”
Flowr is also sub-subleasing three-quarters of its facility in Kelowna in addition to the outdoor area under its lease.
Flowr said it is refocusing its strategy on ultra-premium and premium dry flower for the Canadian and European markets.
The cannabis company struck a deal with marketing firm Zerotrillion that will allow Flowr to pay Zerotrillion for its services with common shares.
Flowr lost 28.1 million Canadian dollars in the nine months ended Sept. 30, 2020, on revenue of CA$5.9 million.
Earlier this month, Flowr filed a short form base shelf prospectus enabling it to raise up to CA$100 million over a 25-month period.
Flowr’s shares trade on the TSX Venture exchange under the ticker symbol FLWR.
Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at [email protected].