BOSTON, May 23, 2022 /PRNewswire/ -- The Boston Beer Company, Inc. (NYSE: SAM), maker of iconic, high-quality brands such as Samuel Adams, Truly Hard Seltzer and Twisted Tea, today announced the launch of TeaPot, a new line of cannabis-infused iced teas. TeaPot is the company's first infused beverage offering and will be available in select Canadian provinces beginning in July.

TeaPot blends real tea with specific cannabis strains to enhance specific times of the day. The brand's first release is a Good Day Iced Tea, made with real lemon black tea and infused with Pedro's Sweet Sativa, a unique cultivar which is grown in Strathroy, Ontario by licensed producer Entourage Health Corp. and sold exclusively in Canada under its retail brand Color Cannabis. Each 12-ounce can of TeaPot contains 5mg of THC and is crafted to minimize any cannabis taste or aroma. TeaPot will introduce additional varietals in the coming months.

"TeaPot purposefully pairs the right tea with the right pot for the right occasion," said Paul Weaver, Director, Head of Cannabis at The Boston Beer Company. "Each can is precisely dosed for social gatherings with friends and family. We think TeaPot is the best-tasting cannabis beverage on the market, and we can't wait for people to try it – we think they'll agree."

Since 2020, Canada's infused beverage market share has increased by nearly 850%[1], according to Headset retail data, and is approximately twice the size of the U.S. cannabis beverage market.

"Our goal is to be the most innovative consumer-focused beverage company on the planet," said Dave Burwick, CEO of The Boston Beer Company. "While beer is our middle name, we've also introduced successful hard teas, hard ciders, hard seltzers, and canned cocktails. We're encouraged by the continued growth of the cannabis beverage category and we believe it's one of the next innovation frontiers. As we await further progress on U.S. regulations, we'll continue to develop an exciting product pipeline in the federally regulated market of Canada."

TeaPot is produced at Peak Processing Solutions (Windsor, Ontario) and distributed by Entourage Health Corp. (Toronto, Ontario).

TORONTO, May 20, 2022 (GLOBE NEWSWIRE) -- PRESS RELASE -- The Flowr Corporation (TSX.V: FLWR; OTC: FLWPF) herein announces its financial and operational results for the fourth quarter and fiscal year ended Dec. 31, 2021. All financial information in this news release is reported in thousands of Canadian dollars and represents results from continuing operations, unless otherwise indicated.

Tom Flow, Interim Chief Executive Officer of Flowr commented, “2021 was a pivotal year for Flowr as we renewed our focus on maintaining our status as a premium cannabis producer and making the necessary changes to our business operations to reach profitability. The company made significant progress towards this objective, as we continue to take the necessary steps to reduce costs and drive revenues. In Q4 2021, we achieved new records in gross and net revenue at $4.4 million and $3.9 million, respectively, contributed by our previously announced strategy of introducing exciting new genetics and formats, enhancing our retail penetration, and solidifying our world class operations out of the K1 facility.

"Operationally, the K1 facility has been now fully operational since the second half of 2021 and each grow room is being utilized to ensure our fixed costs are being spread out over a higher number of production grams. We have increased our product offerings significantly with the launch and success of Strawnana, Sour Sis, BC Dog Walkers, and in 2022 introduced several new exciting strains including BC Clementine Crush, BC Lemon Ice, BC Spiced Grape and BC Mango Melon OG, with more planned for the rest of 2022. We have also seen significant growth in retail penetration across our core markets with store distribution well over 50%.

"Financially, we have strived to improve our financial position by reducing costs, shedding non-core assets and licenses, significantly reducing overall indebtedness, and raising additional equity capital. The sale of the KRS R&D facility and Holigen as previously announced will further reduce the company’s indebtedness to approximately $10 million, including $5.7 million under the senior credit facility and $5 million of convertible debentures, with further paydowns to the senior credit facility expected in the second quarter. The company has reduced SG&A expenses each quarter since the end of 2020 with Q4 2021 SG&A 16% lower than the same period in 2020.

"As previously announced, we have closed the sale of Holigen for what we believe to be favorable terms for Flowr shareholders. The company undertook a robust sale process and was able to transact upon a deal that gave Flowr a significant amount of cash on closing to solidify its balance sheet and also preserve the upside related to our European operations. We still believe the European market is on the cusp of regulatory change and we believe that Holigen will be able to take advantage of those opportunities with the capital and excellent management team from Akanda.

"Although we did not reach our full objectives for 2021, we are encouraged by the positive steps we have taken to position Flowr in 2022. Through the various changes that have been implemented, we believe Flowr is in a better position to realize its full potential and deliver results. The next few quarters will be an exciting time for Flowr as the Company takes the last steps towards profitability.”

SELECTED FINANCIAL AND OPERATIONAL RESULTS

The following table summarizes the company’s key financial and operational results:

^{(1) Gross revenue net of excise tax, provision for returns and concessions.}

Financial Results (presented in $000s)

• Consolidated gross revenue for Q4 2021 amounted to $4,292, representing a 108% increase compared with $2,066 in Q4 2020. Consolidated net revenue during Q4 2021 was $3,801, 138% higher than the $1,600 earned in Q4 2020. Both gross revenue and net revenue for Q4 2021 were the highest quarterly revenue recorded by the company since inception, contributed by increases in cannabis sales in Flowr Canada.
• Net revenue from Flowr Canada during Q4 2021 amounted to $3,679 compared with $1,533 in the same period of 2020, while revenue earned by Holigen was $122 during Q4 2021 compared with $67 in the same period 2020. Net revenue from Flowr Canada in Q4 2021 was a new record and the third straight quarter of revenue growth, being 61%, 88%, and 4% higher than the net revenue for Q3, Q2, and Q1 2021 respectively. The increase in revenue from Flowr Canada was contributed by higher grams of products sold during Q4 2021 and the introduction of the new strain BC Strawnana and a new format of pre-rolls, partially offset by a decrease in average prices.
• Full year gross revenue for 2021 amounted to $14,957 compared with $9,441 in 2020, representing a 58% increase. Net revenue for the full year 2021 totaled $12,348 compared with $7,513 in 2020, representing a 64% increase.
• Net revenue from Holigen related to tolling service revenue earned in Portugal, which amounted to $122 during Q4 2021 and $712 for the full year 2021, compared with $67 for the same respective periods in 2020.
• SG&A expenses for Q4 2021 further declined to $3,900 compared with $4,614 in Q4 2020, representing a 15% reduction. SG&A expenses for the full year 2021 was $16,327, 12% lower than the $18,613 recorded for the full year 2020. Since the end of 2020, Flowr has significantly reduced SG&A expenses each quarter, reflecting the cost reduction measures the company implemented during 2021.
• Cost of sales for Q4 2021 was $5,262 compared with $2,904 for Q4 2020. The increase in cost of sales resulted from a significantly higher volume of cannabis sold during the current quarter at 1,407 kilograms compared with 311 kilograms sold during Q4 2020. Cost of sales for the full year 2021 was $22,064 compared with $11,468 for 2020 primarily due to the significantly higher volume of cannabis sold.
• The company recorded impairment charges totaling $57,096 in Q4 2021 compared with $83,979 in Q4 2020. For Flowr Canada, the company recorded $24,552 of impairment against goodwill, $1,350 against intangible assets, and $14,498 against property, plant and equipment. For Holigen, an impairment charge of $4,661 was recorded against intangible assets and an impairment charge of $4,289 was recorded against property, plant and equipment.
• Net loss attributable to shareholders of the company totaled $61,277 for Q4 2021 compared with a loss of $100,454 for Q4 2020. Net loss attributable to shareholders of the company for the full year 2021 was $85,532 compared with $125,621 for 2020. The change in net loss for was primarily due to higher revenue, lower SG&A expenses, lower impairment charges, reversal on share-based compensation, partially offset by higher depreciation and amortization, loss on disposal of subsidiary, higher other expenses, and lower income tax recovery.
• During 2021, the company significantly reduced its long-term debt outstanding under its senior amended and restated credit agreement with a syndicate of lenders led by ATB Financial by a total of $12,828, bringing the principal amount outstanding to $5,705 at the end of 2021 from $18,533 at Dec. 31, 2020.
• In Q1 2021, the company closed a bought deal short form prospectus offering for gross proceeds of $15.9 million including the partial exercise of the over-allotment option ($14.4 million net proceeds after fees and transaction costs). In connection with the Offering, the company issued 31,127,453 units at a price of $0.51 per Unit, with each Unit consisting of one common share in the capital of Flowr and one full Common Share purchase warrant of the company. Each Warrant is exercisable to acquire one Common Share at an exercise price of $0.64 per Common Share for a period of two years from March 16, 2021.
• During Q3 2021, Flowr closed two private placement financings for total gross proceeds of $7,564,000 and issued 36,019,047 units of the company at a price of $0.21 per Unit, with each Unit consisting of one Common Share and one Common Share purchase warrant which entitles the warrant holder thereof to acquire one Common Share at an exercise price of $0.26 per share any time for a period of 42 months from the closing date.

Operational Updates

• During 2021, Flowr achieved full operation in all 20 grow rooms at the K1 facility and improved the THC level by an average of +3.9% and consistently increased the output of flowers at high THC levels.
• Flowr successfully introduced a new format of pre-rolls trademarked Dog Walkers which started delivery in Q4 2021. These 0.35g pre-rolls are packaged in an innovative tin pack of seven pre-rolls and have been listed in British Columbia, Alberta, and Ontario. The initial launch in British Columbia of the Dog Walkers sold out in less than two weeks.
• During Q4 2021 the company introduced its high-THC strain BC Strawnana with an average THC of 26.2%, which was accepted for listing in Ontario, British Columbia, Alberta, and Saskatchewan.
• Over 50 new and exotic genetics have been trialed since Q2 2021. Three of these new strains have been approved for product listing in Q1 of 2022, significantly expanding the company’s product portfolio. These additional listings will continue Flowr’s push to offer consumers differentiated exotic genetics, with high THC, high terpene contents, strong sensory profiles and premium quality buds.
• In December 2021 the company completed its first shipment of premium dried cannabis flowers from Canada to Israel, as part of the previously announced international supply agreement with Focus Medical Herbs Ltd., a company which IM Cannabis Corp. (NASDAQ: IMCC) (CSE:IMCC) has an exclusive commercial agreement with in Israel. The first shipment consisted of premium cannabis across two strains for a total of $825,000. The shipment represents the company’s debut into the Israeli market and the first significant international export.
• In December 2021, the company successfully closed the previously announced sale of unused industrial land located in Kelowna, BC for gross sale price of $6.3 million in cash, including $5.3 million paid on closing and a further $1.0 million cash receivable within six months upon satisfaction of certain conditions. Pursuant to the credit agreement with a syndicate of senior lenders led by ATB Financial, the company made an early principal repayment of $3 million towards the Credit Facility using proceeds from the land sale, reducing the principal amount outstanding to $5.7 million by the end of 2021. In exchange for the $3 million paydown, ATB Financial proceeded to release its security over Holigen Holdings Limited.
• Holigen’s indoor facility in Sintra, Portugal was fully operational with all grow rooms planted and producing E.U. GMP medical cannabis during Q4 2021. The BC Black Cherry and BC Strawnana strains from Flowr have been in production with the first harvest taking place in January 2022.

Key Events Subsequent to Dec. 31, 2021

• In February 2022 the company entered into an agreement to sell its interest in the KRS R&D facility to Hawthorne Canada Limited for an aggregate purchase price of $16 million, to be paid as follows: (i) an initial cash payment of $3.0 million; (ii) full extinguishment of the principal amount outstanding under the existing loan agreement between Flowr and Hawthorne for the construction of the KRS Facility on closing at approximately $12 million; and (iii) the balance of the purchase price of approximately $1.0 million paid in cash upon closing. The KRS Sale is expected to close in Q2 2022 and is subject to certain closing conditions.
• Flowr has further increased its product offerings 2022 with the launch and success of BC Clementine Crush, BC Lemon Ice, BC Spiced Grape and BC Mango Melon OG, and a further seven new SKU’s to be introduced in Q2 2022 across the provinces of Ontario, Quebec, British Columbia, Alberta and Saskatchewan. For the year 2022 to date, the BC Strawnana Dog Walker pre-rolls was the top ranked SKU and represented approximately 20% market share in Ontario in that size/price category (0.30 to 0.35 grams at above $10/gram), and continues to show strong traction in the provinces of British Colombia and Alberta.
• The company has shown significant growth in retail penetration across its core markets. In Ontario, over 65% of stores currently carry at least one Flowr product, representing significant growth from under 50% in August 2021. Across our other major markets, store distribution of Flowr products has grown from approximately 30% to over 60% and from approximately 27% to over 55% in British Colombia and Alberta, respectfully.
• On April 19, 2022, the company, through its wholly-owned subsidiary HHL, entered into a share purchase agreement with Akanda Corp. (NASDAQ: AKAN) and Cannahealth Limited, a wholly-owned subsidiary of Akanda. Pursuant to the Purchase Agreement, the Purchaser will acquire from HHL all of interests in HL (including HL’s wholly owned subsidiary RPK) for aggregate consideration of approximately $35 million.

Pursuant to the terms of the Purchase Agreement, the company has agreed to sell HL to the Purchaser for total consideration payable of approximately $35 million consisting of: (i) $3,750,000 in cash; (ii) 1,900,000 common shares in the capital of Akanda which closed at U.S.$10.30 per share on April 19, 2022; (iii) the indirect assumption by Akanda of RPK’s indebtedness of approximately $5.1 million; and (iv) at least $0.8 million of interim funding to Holigen which has already been received by Flowr. If the Purchase Agreement does not close on or prior to May 31, 2022, the interim funding will be repaid to Akanda by the delivery of medical cannabis from Holigen at a price of €2.00 ($2.72) per gram or in cash, at the discretion of Flowr. In connection with the Transaction, Holigen will pay an advisory fee equal to 7% of the Purchase Price, 50% of which is payable in cash and 50% of which is payable in Consideration Shares.

In addition, Akanda agreed to subscribe for $1 million of common shares in the capital of Flowr at a price per share of $0.07 per share. The Consideration Shares are subject to a customary six-month lockup.

The Holigen Sale closed on April 29, 2022 upon receiving the necessary approvals and satisfaction of other closing conditions.

• As of Dec. 31, 2021, the company is in compliance with the senior debt to tangible net worth ratio and the minimum cash covenants. The company was not in compliance with the minimum EBITDA covenant for the fourth quarter of 2021, the first time the covenant was tested. On May 20, 2022, the company and its Senior Lenders led by ATB Financial entered into a second amendment to the ARCA, which included extension of the minimum EBITDA covenant and certain amendments to other financial covenants, repayment terms, and provided the company with consent to complete its sale of the KRS Facility. Pursuant to the Second Amendment, the company will proceed to make repayments in aggregate of $2,5 million. Upon closing of the sale of the KRS Facility, under the terms of the Second Amendment, the company will make another $1.0 million repayment, bringing the principal balance owing down to $1.6 million. 
• The company has recently listed for sale 17 acres of agricultural property located adjacent to the K1 Facility. As a non-core asset, the company believes it will be able to sell Flowr Forest for proceeds of between $3 million to $4 million, which will be used to improve the financial position and working capital of the company.
• Effective immediately, John Chou has resigned from his position as Chief Financial Officer for medical reasons. Mike Willetts has been appointed Interim Chief Financial Officer of the company effective immediately. Willetts is an experienced business executive with over 25 years of experience in financial leadership and is currently the Chief Financial Officer of GetSwift Technologies Limited and Forward Water Technologies Corp. The company would like to wish Chou all the best with his future endeavors.

Adjusted EBITDA (Non-IFRS Measure)

Adjusted EBITDA is defined as net loss, plus (minus) income taxes (recovery), plus (minus) interest income (expense) including finance costs, plus depreciation and amortization, plus share-based compensation, plus (minus) non-cash fair value adjustments on biological assets and inventory sold, plus restructuring and transaction costs, plus (minus) loss (gain) on investments, plus impairment charges, and plus (minus) unusual or non-recurring items. Management believes this measure provides useful information as it is a commonly used measure in the capital markets and as it is a close proxy for repeatable cash used by operations.

For a full discussion of Flowr’s operational and financial results for the year ended Dec. 31, 2021, please refer to the company’s Management’s Discussion & Analysis and Consolidated Financial Statements for the year ended Dec. 31, 2021, which have been filed on SEDAR.

Duke Rodriquez laid it out bluntly: New Mexico’s adult-use cannabis retail program underperformed in April, the first month for the new market.

Rodriguez, the president and CEO of Ultra Health, a vertically integrated operator with 38 dispensaries serving both patients and adult-use customers in the state, said the nearly $39.5 million in combined adult-use and medical sales recorded by licensed dispensaries were about 25% short of his expectations.

Courtesy of Ultra Health

“I think we’re about $10 million light,” he said. “That’s the concern.”

Specifically, New Mexico retailers recorded more than $22.1 million in adult-use sales and $17.3 million in medical sales in April, according to the state’s Cannabis Control Division.

“The first signs are not all that impressive,” Rodriguez said. “Again, we should have done $20 million falling off a log with medical, and so, literally, we dropped off of medical and made a little bit more room for adult, but the aggregate was not that impressive.”

Rodriguez’s $50-million benchmark for April was two-fold.

First, New Mexico represents roughly twice the population of Montana, which launched its adult-use retail program Jan. 1, 2022, and ended up recording $25.4 million in combined adult-use and medical sales in April, according to the state’s department of revenue.

Therefore, New Mexico’s sales should have roughly doubled that figure, especially considering its geographic draw to customers from Texas—the second most populated state, where only medical cannabis with a 1% THC is legally accessible—according to Rodriguez.

Second, a trifecta of stars aligned in April for stellar retail conditions, including five Fridays and five Saturdays; the excitement surrounding the April 1 launch; and the natural sales surge associated with April 20, he said.

“We had the triple witching hour. It was the ideal month to have a nice, impressive, out-of-the-gate number,” Rodriguez said. “I look at [New Mexico] and say, yeah, it’s better than nothing. And it certainly is a launch, and it gets us off on a foot, but is it a good launch? Not so sure I can say it’s a good launch today.”

Rodriguez provides further details on the new market, Ultra Health’s expanded operations in the state, what industry stakeholders can expect for the remainder of 2022 and more in this Q&A. 

Editor’s note: This interview has been edited for style, length and clarity.

Courtesy of Ultra Health

Tony Lange: Looking back, what stood out most about Ultra Health’s preparations leading up to the April 1 launch of adult use? 

Duke Rodriguez: In the areas we had direct control, such as building out new cultivation capacity or completing construction of new dispensaries, we were full steam ahead. In the 12 months preceding the start date of April 1, we doubled the number of store locations and increased our greenhouse capacity by more than 80%. Over 150 new employees were hired and trained. The Ultra Health system grew tremendously outside of waiting for the state of New Mexico to make a final determination on the number of plants to be allowed per licensee.

TL: New Mexico’s Cannabis Control Division adopted rules Aug. 24 for a 10,000-plant count limit for cultivators, then adopted an emergency rule Jan. 13 to increase that limit to 20,000 plants—You thought that decision needed to come sooner, correct?

DR: That’s correct. So, they’re doubling it [78] days before the launch date. There’s no way that’s going to impact April 1. And even if you double it, you know, when we had the 10,000-plant limit before it went to 20,000, understand only four producers stepped up to the full 10,000. So, you could raise it to 50,000, but if you don’t have able, willing providers who can step up in production, it provides very little value.

TL: So, you were one of the four producers then?

DR: We were actually two of the four, because we have two licenses on our campus, and so we were two of the four.

TL: How are your adult-use retail operations going now that we’re in May?

DR: With only a handful of days completed in May, we are seeing very little change from April other than not experiencing the April 1 launch date and the 4/20 surge. We expect total business to continue to grow, or the sales will in fact be rather disappointing when compared with the anticipated impact of legalization. 

TL: What do you anticipate for the remainder of 2022?

DR: The year 2022 could see further deterioration on the medical side, as has been experienced by other states. The illicit market is likely to make an aggressive move to fill the void with lower priced—but untested and potentially unsafe—products. The risk of illicit product arriving in New Mexico from neighboring states like California or Oklahoma is a real consideration that could put a damper on New Mexico’s regulated sales in total. We are expecting a market with high volatility that could close 2022 at the lower end of the range of total cannabis sales of $425 million ($200 million medical and a partial year of nonmedical sales at $225 million).

Editor’s note: In more mature state markets, medical cannabis sales have declined while adult-use sales have increased. In Colorado, for example, medical sales represented roughly 18.1% of the licensed retail market in 2021, while Oregon’s medical cannabis sales represented 8.4% of its licensed retail market in 2021.

TL: What’s been the biggest challenge associated with the adult-use sales launch so far, and how has Ultra Health handled/overcome that challenge? 

DR: The biggest challenge has been this overall experience with the regulator of building the plane while you’re flying it. Rules were being promulgated throughout the year leading up to the launch so it made it difficult to commit resources to protocols while knowing that the final regulations might look substantially different than earlier proposals. It was a rapid and ever-changing landscape for both legacy operators and newbies, so there was a lot of distrust between opposing interests. The best way to handle the high level of uncertainty was to accept the reality that whatever seemed true today would likely change tomorrow, so any commitments had to be made with an eye toward flexibility first.

TL: How has vertical integration helped Ultra Health adapt to the nascent adult-use market?

DR: Vertical integration remains the best path for success under the New Mexico framework. Being able to have more control over the supply side of the equation is a huge advantage. Being a retailer-only kind of operator that is wholly dependent on an unknown or not yet developed wholesale market is a recipe for likely failure. The wholesale price per pound has more than doubled in the last six months alone, from under $2,000 per pound to over $4,000 per pound. The regulated market is going to be hard-pressed to effectively compete with the illicit market.

TL: What kind of safeguards have been put in place to help ensure that the needs of medical cannabis patients continue to be met in New Mexico?

DR: Statutorily and regulatory there are not many guard rails or safety levers that can be triggered to fully protect the medical market. Internally, we are attempting to balance demand by the competing customer populations, but, honestly, the activities are blending together that there will be very little practical way to ultimately segregate them.

TL: With dispensaries in Sunland Park, Las Cruces, Hobbs and Clovis, what kind of customer traffic are you experiencing from out-of-state residents at those locations near the Texas border? 

DR: Our projection model was built in anticipation that over 40% of New Mexico’s demand would be from out-of-state purchasers. We are seeing that reality play out particularly in southern and southeastern New Mexico. Our strongest sales are clearly in those communities within the 200-mile range of the Texas border. Keep in mind, Texas is the second most populous state in the U.S. with very little allowed regulated cannabis activities. 

TL: How do your operations in Albuquerque and Santa Fe differ?

DR: Albuquerque is the most urban densely populated market in New Mexico but also has the greatest number of dispensaries. Total sales there are the highest in the state but not per capita. Due to the high number of stores in the Albuquerque metro, the market pie is very competitive and new market entrants are arriving every day. 

It will take about a year before we see this market settle into place. There is likely to be a number of market casualties. One competitor described it as “carnage.” I am not sure it will be that bad, but it will be deep and painful for a number of hopeful new operators. Santa Fe is the most saturated market with the number of dispensaries, but the tourism season will be starting in early June, so we will get a better indication of that market in a few months.

TL: Has Ultra Health noticed any other consumer/market trends since April 1?

DR: Prices are on an upswing at both the wholesale and retail level. There is a clear indication of further price and supply pressures. It is possible that summer sales will be disappointing as compared to other states’ experience. We are not likely to get much relief on having better supply levels until fall 2022, and that will also depend on a successful outdoor growing season. We have not historically been an active outdoor grow market, so there are still a number of unknowns.