Just Brands LLC, a wholly owned subsidiary of Flora Growth Corp. (Nasdaq: FLGC), has acquired No Cap Hemp Co. in exchange for 10% of the gross revenue earned from the sale of No Cap products, up to a maximum of $2 million.
“This transaction will allow Flora to immediately benefit from a profitable, cash-flow positive and growing business,” said Flora Growth CEO Luis Merchan. “This strategic acquisition demonstrates our disciplined capital allocation approach that is consistent with both short-term needs and long-term vision as a leading global cannabis company. We look forward to increasing our product offering through this transaction while broadening our sales team in the process.”
The company said that No Cap acquisition will expedite the introduction of high-quality flower and pre-rolls to Flora’s portfolio, as well as smokeables into JustBrand’s product portfolio.
JustBrands said it will continue to expand its flower and smokeable line as well as distribute the No Cap brand throughout Florida.
The rising popularity of pre-rolled products containing CBD and Delta-9 pre-rolled products, as well as those rolled from chemical cousin Delta-8 THC, is helping drive the decision to expand these categories.
Through the first half of 2022, consumers in the U.S. spent more than $752 million pre-rolls, according to a recent report from cannabis data firm Headset. The category makes up 12.6% of all U.S. cannabis sales, a gain of over 2% from the same period last year.
Zooming in a bit closer on the pre-rolls segment, connoisseur/infused pre-rolls are the most popular among consumers in the U.S. and make up 41.5% of total sales.
The company said that the No Cap assets are expected to add approximately 75 SKUs to Flora’s product portfolio as well as the “No Cap” and “Moonblunt” trademarks.
In addition, No Cap’s gas infusion technology can aid Flora Labs’ manufacturing output.
“No Cap’s unique product offering coupled with JustCBD’s robust distribution positions Flora to be the leader in the alternative cannabinoid segment,” Merchan said.