Flow Kana hits hard times: Report
In 2018 and 2019, Mendocino County-based Flow raised nearly $200M on a business model to serve as a centralized processing and distribution hub for flower bought from legacy farmers in the Emerald Triangle. But the company has struggled amid high taxes, a still potent illegal market and other factors which have California’s craft market in open rebellion.
- Flow CEO Michael Steinmetz said California’s market structure forces a race to the bottom for growers and manufacturers.
- In November, he called on California companies to withhold state tax payments (and put them in escrow) in protest of state regulations.
In this challenging climate, Flow has faced a host of problems:
- In a deviation from its original business plan, Flow began to grow its own product, but heavy rains in October 2021 ruined some of its first crop.
- Steinmetz said Flow products are now available in about 300 California dispensaries, down more than 50% since California was a MED market. He said only about half of the retail partners can pay on time.
- In 2019-2020, a price dispute with its 23 growers led to most of them to part ways with the company. (Some of the growers have returned.)
- There have been prominent executive departures and several rounds of layoffs.
- Last July Flow acknowledged an employee started a wildfire which burned 80 acres in Mendocino County.
A 2021 dispute with one of its larger (unidentified) investors “drove us to a precarious position,” Steinmetz told MJBiz.
- Since then he said the company has been able to resume fundraising and has raised a “significant amount” of an undisclosed target.