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Flower One Holdings Inc (CNSX:FONE) Signs Old Pal and Palms Premium Partnerships

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Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

Flower One Holdings Inc (CNSX:FONE) (OTCMKTS:FLOOF) CEO Ken Villazor explains why the company is a perfect partner for brands that want access to the lucrative Nevada recreational cannabis market. Flower One is the largest cultivator in the state and Villazor expects the company’s 400,000 square foot greenhouse expansion to be fully canopied by Q2. Regulations require companies to be licensed in Nevada to sell in the state; consequently, Flower One’s value proposition is accelerated access to the Las Vegas market with the skill and capacity to ensure consistent product availability. The company has recently entered into partnerships with several cannabis, derivative, and ancillary companies such as a California brands Old Pal and Palms Premium. In addition, Flower One has also struck deals with Rapid Dose Technologies and Flight Concentrates. Together, these deals help achieve Flower One’s goal of covering multiple price verticals and wide-ranging SKUs.

Transcript:

Fraser Toms:  Hey, I’m joined in this segment with Ken Villazor, who’s the CEO of Flower One Holdings, which trades on the CSE under the symbol FONE. Ken, how’s it going?

Ken Villazor:      Very good, thanks for having me on.

Fraser Toms:  No problem, I’m glad to have you on! So let’s just do a quick little wrap up of what your company is all about and what you’ve got going on right now.

Ken Villazor: Sure. Well we had the opportunity to be back here in December to be with James, to give kind of everyone an introduction to the company. We’re a US-based cannabis company, we’re focused currently in the Nevada market. I think what makes us really unique is two things: we’re really focused on the front part of the value chain, we really want to offer, particularly to established brands that want to enter the Nevada market, the opportunity to work with us, as we basically will produce from seed to finished product to fulfill our retail level. And so that’s really the opportunity for us to partner with brands, and really gain them efficient and quick market entry into Nevada.

Secondly, in terms of scale, we will be the largest cultivator and producer in the state. We’re currently converting a 400,000 square foot greenhouse just north of the strip, about 15 minutes north of the Las Vegas strip. And so when that’s completed, it will have, in addition to the 400,000 square feet, a 55,000 square foot production facilities.

So that’s one of our production facilities, and then just in November, we were fortunate to acquire a company called North Las Vegas Organics, which is a 25,000 square foot indoor cultivation/production facility, and that is a fully operating facility today, so we’re already growing, harvesting, and producing product.

Fraser Toms:  Yeah, so we were talking a bit off air – you’ve got the indoor grow going, and the greenhouse grow, 400,000 square feet and you were saying it’s not something that’s going to be done in phases? What’s the time frame that we can expect that you’ll be harvesting?

Ken Villazor: So we started the conversion of the greenhouse in May of last year, really, and in just a short nine months the Flower One team has done really a tremendous job. So we’re now at the stage where, within a matter of weeks, possibly as early as next week, we’ll begin transferring plant material into the greenhouse. And we’ll being a process that will be fairly quickly; I would say that once we’re putting plants into the flower zone – we have eight zones – it will only take us eight to ten weeks to canopy the entire greenhouse in Q2 of this year. And we’ll do our first harvest in Q2 at the greenhouse.

Fraser Toms:  Wow, that’s exciting, and that’s huge. Like, people don’t realize that 400,000 square feet is quite a bit one.

Ken Villazor: It is. It is.

Fraser Toms:  And you touched on it before with your partnerships with brands; you’ve got four press releases in the last couple of weeks, and they’re all sort of centred around that concept, so why don’t we just go through some of the partnerships that the company has created?

Ken Villazor: Sure, and you know, I think it’s, as you said, you know, we’ve had quite a few releases in the past couple of weeks; I think it’s a real reflection of the team and how much effort they’ve put into this. So really just to kind of take a step back, you know, if you’re a brand that wants to enter the market in Nevada, it’s very difficult to do that, because you have to be licensed to be able to sell in the state, and then you really have to build out your facilities to be able to grow and generate the finished product.

So we’ve come into the market in Nevada and really, our value proposition to those brands is to say, we can accelerate your market entry, and we can ensure that you’re working with a partner that has the volume and precision to consistently supply you and make sure you’ve got that steady presence in retail shelves in Nevada.

So I would say four moths ago, the team, you know, began the process of coordinating and working with a number of brands to evaluate who we would want in our portfolio of brand partners, and I’d say the last couple of weeks and the announcements that we’ve had are just really a reflection of that hard work. So we have four that we’ve announced: we’ve done Flight Concentrates, which is a Canadian company, Rapid Dose Technologies, which is again, another Canadian company with a very innovative delivery platform; and two California companies: Old Pal, which is quite well known, it’s one of the fastest-growing brands in the state, and Palms Premium, which is also in California.

Fraser Toms:  And that’s another company that’s more about the brand or the technology behind it?

Ken Villazor:      Which one?

Fraser Toms:  Sorry, the Palms.

Ken Villazor: Palms? So both Palms and Old Pal are really about the brand; Palms is a mid-tier pre-roll company that’s had great success in California, and Old Pal similar, but they’re really focused on packaged flower. So really, when you look at the pricing spectrum, Old Pal is really geared to the value part of the pricing spectrum, which has a strong market in California, and we believe it has a strong market in Vegas. I think a good analogy is, if you were to look at the strip and hotel offerings along the strip, there’s a hotel property for every price point, and we certainly think the retail shelf space in Nevada will reflect that too. And Old Pal has done a tremendous job, you know, they’re really a fairly new brand, they’re only a year old, but they’ve very quickly gained market share, they have a tremendous team of brand-builders in that company, they’re led by an individual that we’ve come to know over the last four months, and really like working with them.

So we’re excited to brig that product to the market. In fact, we’ll have Old Pal in the market before our firs harvest. We have quite a bit of strategic inventory built up at our indoor facility, and so we’re able to deploy that for Old Pal and get rally et them onto retail shelves hopefully next month.

Fraser Toms:  okay, so the two California companies it’s more about the brand and recognition, and the Canadian ones, it’s yeah, like the Rapid Dose Technologies, maybe let’s just touch on what attracted you to those two Canadian operations.

Ken Villazor: Sure. So with Rapid Dose Technology, they have unique, patented delivery platform called Quick Strips, so essentially it’s a quick dissolve thin film, so you basically place it on your tongue and it dissolves almost immediately. And for us as a company, for Flower One, when we look at our composition of brand partners, we want to b sure that we cover pretty much every pricing sku across the pricing spectrum, and then within those different pricing verticals of the value brand and the mid-tier brand and the luxury brand, we want to be sure that we cover off a range of skus from packaged flower to oils to vape pens to concentrates to infused edibles to topicals.

And so what’s really unique about RDT’s technology is, you know, they’re such a unique platform in terms of that product spectrum. It really doesn’t exist in any strong way in the market today, but we believe that type of delivery platform has a lot of value. It’s quick, it’s convenient, it’s discreet, and when you think of the Vegas market where it’s really difficult to consume cannabis, because you’re not allowed to, certainly in Las Vegas hotels, that type of discreet technology does allow you to have the experience and do so in a very discreet way.

Fraser Toms:  Without taking up a lot of time, and all that.

Ken Villazor: Exactly. And so again, we know there’s a product out there for every consumer. There’s a lot of first-time consumers who really aren’t that interested in consuming a pre-roll or interested in any type of smoke-related product like a vape pen. So it’s a very easy way, an approachable way, for a first time consumer to be introduced to a cannabis product.

Fraser Toms:  Sure. Would that be considered an edible?

Ken Villazor: It is, yeah. We consider it an edible in terms of when we look at our product spectrum and our offerings.

Fraser Toms:  Okay, and the Flight Concentrates, that’s pretty much self-explanatory, I guess, they’re concentrates?

Ken Villazor: They are. Another great Canadian company, they’ve had a lot of traction. Particularly in western Canada, they’ve got a unique vape pen with ceramic coil technology, and they also have another unique product which is a – it’s about the side of a credit card, and they have these 10 ml snap packs which are infused with either a THC or a CBD concentrate. You basically break that snap pack, and you can take the concentrate and infuse a drink, you know, put it in water and quickly take it as an infused beverage.

Fraser Toms:  Oh, that’s interesting.

Ken Villazor: It’s a great product, and again, for us as a company, we like the idea of being able to bring to the buyers at the retail level a good range of product and product sku offerings.

Fraser Toms:  Okay, great. And then just finally, we were talking a bit about this: so the endgame for Flower One is you sell to retailers, but there’s not like a favourite or anything like that. How do you go about doing -?

Ken Villazor: Right. So for us, we really view all of the retailers, the dispensaries in the state, as our customers, and we’re not vertically integrated for that reason. As a company, we’ll basically cultivate, we’ll process and we’ll create a finished product, and we’ll fulfill a retail level, but we won’t get involved directly in retail operations. We’ve certainly been approached about being vertically integrated, but our position is, we don’t want to compete against our customers in that part of the value chain. So you know, that’s really important to us and the opportunity in Nevada, there’s about 65 operating dispensaries in the state today, and that will double, basically, by the end of this year. So the state issued about 65 additional provisional licenses in December, just last December, and those provisional license holders will have about a year to get their retail outlets up and running.

And so if you kind of work back from that timeline, all of them will essentially be doing their tenant improvements or the buildout of their retail likely Q2 or Q3 of this year and then begin ordering to fill their shelves. So with that doubling of the retail footprint, and with us doing our fist harvest in Q2, we’re very fortunate to supply those additional 65 retailers.

Fraser Toms:  Yeah, so you’re expecting sort of a sharp revenue increase towards the latter half of the year.

Ken Villazor: Yeah, we don’t know if it will be sharp, but we definitely think there will be a noticeable increase in supply requirements in Nevada.

Fraser Toms:  Okay, great. Well, Ken, thanks for coming on.

Ken Villazor: Thanks for having me.

Fraser Toms:  Yeah, absolutely. So we hope to have you on again at some point in the future.

Ken Villazor: Great, love to come back.

Fraser Toms:  Ok, thank you.

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

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