Flora Growth (FLGC) to Partner with Avaria to Distribute Award-Winning Pain Cream Brand KaLaya Across LATAM & Produce Its CBD Formulations

Flora Growth Corp. (NASDAQ: FLGC) (“Flora”, “Flora Growth”, or the “Company”), an all-outdoor cultivator and manufacturer of global cannabis products and brands, is pleased to announce it has signed a non-binding Letter of Intent (“LOI”) to form a joint venture (“the JV”) with Canadian based Avaria Inc (“Avaria”), the manufacturer and owner of KaLaya – an award-winning pain cream distributed nation-wide across Canada.

Through the JV, Flora Growth will manage registration, sales, and distribution of KaLaya products in Colombia, Mexico, and other LATAM countries, while Avaria will supply finished product to the JV. The profits from the sale of KaLaya products under the JV will be divided equally between Flora Growth and Avaria, increasing the value of Flora’s existing distribution channels for the Company.

Further, Flora Lab will work to produce KaLaya’s CBD-infused products using cannabis from Flora’s cultivation facility. These products are expected to be distributed across LATAM using Flora Lab’s established distribution channels, with the aim of exporting to the U.S. market, where Avaria is currently launching the KaLaya brand. Avaria does not currently hold a license in Canada to produce cannabis derived versions of its products at a commercial scale.

The JV is subject to customary conditions including each of Flora and Avaria being satisfied with their due diligence reviews and the parties entering into a definitive agreement.

KaLaya – Award Winning Brand

Avaria’s KaLaya pain cream brand has enjoyed strong success since inception, where it enjoys three consecutive years of triple digit growth through their industry leading Canadian e-commerce channels. Over this period, KaLaya has garnered consumer praise and industry awards, including:

• Canada’s fastest growing topical decongestants and analgesics brand (40% YoY Revenue and 34% YoY unit grow) according to Nielsen Market Track, October 2020
• Awarded TSC’s (The Shopping Channel) #1 2020 Wellness Brand
• Amazon.ca’s Consumer Choice for topical pain relief (4.5+ Stars across 1,500+ reviews)
• #1 Ranked Topical Analgesic brand throughout Purity Life (Canada’s largest distributor of natural wellness products)

“We are very excited to partner with Avaria to bring their established, award-winning KaLaya brand to our LATAM distribution network. We believe the product will receive a similarly strong reception as it has in Canada,” commented Flora Growth President and CEO, Luis Merchan. “Moving forward, Flora Lab will work with the Avaria team to produce CBD-infused versions of KaLaya products for distribution across LATAM as well as export into the United States. Given CBD’s association with wellness, KaLaya’s established formulation, and Flora Growth’s low-cost high-quality cannabis, this is a natural partnership we are excited to bring globally.”

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