• Flora Growth has signed a Letter of Intent with Avaria Inc. to form a joint venture for the sale of its award-winning KaLaya brand across LATAM, including Flora Labs’ 2,500+ Colombian distribution channels.
• KaLaya has sold over a million units and is currently distributed via major retailers including Loblaws, Walmart, and London drugs across Canada, holding the number one customer retention rate in Loblaws’ pain cream categories.
• Flora will support the development and production of CBD pain cream formulations for the global market, with an immediate focus on LATAM and import into the United States.

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.”

About Avaria Inc

Privately owned and operated since 1995 by experienced medical professionals, Avaria Inc, doing business as Avaria Health & Beauty Corp., has over 20 years of experience in the formulation, manufacturing and sale of topical creams, oils, emulsions, liquids, lotions, gels and salves. Proudly Canadian, Avaria Health & Beauty Corp. is committed to maintaining its status as a 100% Canadian company. Research, development and manufacturing takes place in Waterloo and Cambridge, Ontario. Avaria Health & Beauty Corp. brands enjoy distribution at all levels of retail and online, domestically, as well as in select international markets.

About Flora Growth Corp.

Flora is a cannabis company that leverages natural, cost-effective cultivation practices to supply cannabis derivatives to its diverse business divisions of cosmetics, hemp textiles, and food and beverage. As the operator of one of the largest outdoor cultivation facilities, Flora strives to market a higher-quality premium product at below market prices. By prioritizing natural ingredients and value-chain sustainability across its portfolio, Flora creates premium products that help consumers restore and thrive. Visit www.floragrowth.ca or follow @floragrowthcorp on social for more information.

Cautionary Statement Concerning Forward-Looking Statements

This document contains forward-looking statements. In addition, from time to time, we or our representatives may make forward-looking statements orally or in writing. We base these forward-looking statements on our expectations and projections about future events, which we derive from the information currently available to us. Such forward-looking statements relate to future events or our future performance, including: the parties ability to enter into the JV; the future business of the JV; the size of markets for cannabis and cannabis products; our financial performance and projections; our growth in revenue and earnings; and our business prospects and opportunities. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “may,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar terms. In evaluating these forward-looking statements, you should consider various factors, including: our ability to change the direction of the Company; our ability to keep pace with new technology and changing market needs; and the competitive environment of our business. These and other factors may cause our actual results to differ materially from any forward-looking statement. Forward-looking statements are only predictions. The forward-looking events discussed in this document and other statements made from time to time by us or our representatives may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of uncertainties and assumptions, or the forward-looking events discussed in this document and other statements made from time to time by us or our representatives not occurring, except as may be required by applicable law.

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