Flora Growth Corp. Provides Update on Hoshi Investment in Portugal

Facility Received GACP License, First Commercial Harvest Expected in 2025

Fort Lauderdale, Florida–(Newsfile Corp. – October 23, 2024) – Flora Growth Corp. (NASDAQ: FLGC) (FSE: 7301) (“Flora” or the “Company”) is pleased to announce important progress on its strategic investment in Hoshi International Inc. (“Hoshi”) in Portugal. This update highlights the ongoing developments since Hoshi secured a new financial partner in 2023, which has accelerated the advancement of its operations.

Hoshi’s new financial partner agreed to take over the capital expenditures and operational expenses in exchange for an equity stake in the company. As a result of this collaboration, Hoshi has made headway in the following areas:

Facility Construction: Completing the first phase of construction at the facility, which includes a 1,200-square meter greenhouse with a production capacity of up to 1,500 Kilograms per year.
Licensing Inspection: Conducting a licensing inspection by the Portuguese regulator and receiving its good agricultural and collecting practice (“GACP”) production and processing license.
Cannabis Clones: Receiving the first 70 cannabis clones as part of the pre-licensing process.

The project in Portugal currently employs 18 full-time staff. To date, approximately $20 million has been invested into the facility.

“We are pleased with the strides Hoshi has made over the past 18 months. Our investment in the European cannabis market aligns with our strategy. We believe that Hoshi’s facility will become a key player in the European cannabis landscape, particularly as the market continues to evolve and move forward,” said Clifford Starke, Chief Executive Officer.

Flora initially made an equity investment of $2.4 million into Hoshi in 2021, securing a 10% ownership in the company. Hoshi, in turn, controls 51% of the Portuguese entity operating the facility. As milestones are met, Hoshi’s ownership stake will be reduced to 25%.

“We remain confident in Hoshi’s ability to deliver on its goals and timelines. The GACP certifications and expected commercial harvest in 2025 are important inflection points, both for Flora and Hoshi, as we capitalize on the growing demand for high-quality cannabis in Europe,” concluded Mr. Starke.

Flora is exploring the expansion of its EU-GMP license from Germany by collaborating with Hoshi to establish a direct sales channel. This strategic move would allow Flora to secure a long-term supply of high-quality medical cannabis from Hoshi’s operations, based in a low-cost and favorable jurisdiction.

Portugal has emerged as an attractive jurisdiction for cannabis production, offering a strategic advantage for meeting the demands of Germany and the broader European market. With its fit-for-purpose cannabis cultivation and processing facilities, Portugal provides ideal conditions for producing high-quality medical cannabis that aligns with stringent European standards. The country’s logistics infrastructure allows for efficient distribution across Europe, while its reduced VAT regime and lower operational costs make it a suitable location for cannabis companies.

About Flora Growth Corp.

Flora Growth Corp.’s mission is to become the leading NASDAQ small-cap international cannabis company. Flora is a cannabis-focused consumer-packaged goods leader and pharmaceutical distributor serving all 50 states and 28 countries with 20,000+ points of distribution around the world. For more information on Flora, visit www.floragrowth.com.

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Investor Relations:

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Clifford Starke [email protected]

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Cautionary Statement Concerning Forward-Looking Statements

This press release contains “forward-looking statements,” as defined by U.S. federal securities laws. Forward-looking statements reflect Flora’s current expectations and projections about future events at the time, and thus involve uncertainty and risk. The words “believe,” “expect,” “anticipate,” “will,” “could,” “would,” “should,” “may,” “plan,” “estimate,” “intend,” “predict,” “potential,” “continue,” and the negatives of these words and other similar expressions generally identify forward-looking statements. These forward-looking statements include, but are not limited to, statements about:, Hoshi operating its facility to the required GACP specifications or at all, Flora’s ability to maintain its current or any ownership stake in Hoshi, Hoshi’s ability to utilize and benefit from the greenhouse, Hoshi’s ability to produce cannabis, the facility reaching an operating capacity of 1,500 Kilograms per annum or any capacity at all, the financial partners of Hoshi continuing ability and willingness to fund Hoshi’s capital and operating expenditures, the first commercial harvest taking place in 2025, and Hoshi making any further progress to advance its operations. Such forward-looking statements are subject to various and risks and uncertainties, including those described under section entitled “Risk Factors” in Flora’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”) on March 28, 2024, as such factors may be updated from time to time in Flora’s periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov/edgar. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in Flora’s filings with the SEC. While forward-looking statements reflect Flora’s good faith beliefs, they are not guarantees of future performance. Flora disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this press release, except as required by applicable law. You should not place undue reliance on any forward-looking statements, which are based on information currently available to Flora (or to third parties making the forward-looking statements).