Earlier this month, Roth Capital initiated coverage on Flora Growth Corp. (Nasdaq: FLGC) with a Buy Rating and a $10 price target. The broker-dealer believes the company has significant growth opportunities in Latin America and certain international markets.

We agree with Roth’s view on Flora and believe the opportunity has been flying under the radar. The price target that was issued by Roth implies considerable upside to current levels and we will monitor how other broker-dealers pick up coverage on Flora Growth.

So far this year, the Latin American-based global cannabis company has been nothing short of an execution story and has been reporting important advancements by the business. We believe that Flora Growth is well-positioned to grow the business due to a variety of factors. Four core pillars to our thesis on the company are:

The economics that associated with the company’s production facilities in Colombia are very attractive and the management team said it produces cannabis for as low as $0.06 per gram
The management team has been executing on a global growth strategy and is focused on capturing market share in the European Union (EU). Through supply agreements and investments, Flora Growth is working to enter additional markets and capture market share.
The company has differentiated itself by using the entire cannabis plant to develop in-house brands focused on the hemp textile, cosmetics, and CBD-infused food and beverage markets, and to support third-party products. Through an agreement with Colombia’s largest CPG distributor, we expect the business to report strong revenue growth in future quarters
Flora has visible growth prospects and continues to focus on entering into wholesale cannabis distribution agreements and expanding internationally via acquisitions and partnerships

According to New Frontier Data, global legal cannabis sales are expected to be $51 billion by 2025. Although the data research firm attributes most of the future growth to North America, the EU is expected to play a more important factor in growth in the coming years.

Although we believe that $51 billion of annual sales is impressive, this amount is a fraction of the current size of the global illicit market. As more countries take action to legalize cannabis, we expect the size of the global illicit market to decrease while the global legal market increases.

We believe that Flora is well-positioned to benefit from a shift in regulation in markets all over the world. With extremely low production costs, the company can undercut other operators and we consider this to be an attractive aspect of the story.

Another key potential growth driver for Flora is related to how it uses the entire cannabis plant. From clothing to cosmetics, this should allow the company to penetrate several niche verticals and we are bullish on the number of potential avenues for growth that are associated with this.

By focusing on hemp and CBD products, Flora will be able to form strategic relationships and capitalize on several major markets. By not focusing on tetrahydrocannabinol (THC) products in these markets, the company will have the necessary infrastructure in place when regulation changes and allows for the sale of THC products. We are favorable on this trojan horse avenue for growth and believe that the management team is taking a strategic approach to being a leading global cannabis consumer packaged goods (CPG) operator.

At current levels, we believe that Flora Growth has a favorable risk-reward profile. The recent pressure has been significant and we believe the decline has created a fantastic long-term opportunity. We are bullish on the direction the management team is taking the business and believe that it’s barely in the first inning of a multi-phase growth cycle.

If you are interested in learning more about Flora Growth, please send an email to support@technical420.com with the subject “Flora Growth” to be added to our distribution list.

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Pursuant to an agreement between StoneBridge Partners LLC and Flora Growth Corp. (FLGC) we have been hired for a period of 180 days beginning May 13, 2021 and ending November 13, 2021 to publicly disseminate information about (FLGC) including on the Website and other media including Facebook and Twitter. We are being paid $6,000 per month (FLGC) and were not issued any shares of restricted common shares. We own zero shares of (FLGC), which we purchased in the open market. We plan to sell the “ZERO” shares of (FLGC) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (FLGC) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.

Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.