Salveo Capital, an alternative investment firm specialising in the legalised cannabis space, has acquired a minority equity interest in Flow Kana, a sustainable sun-grown cannabis provider in Northern California.
Financial terms of the transaction have not been disclosed.
Founded in 2015, Flow Kana is focused on partnering with and giving scale to independent farmers who cultivate under full sun, sustainably, in small batches. The company recently opened the first phase of operations at its 87,000 sq ft facility in Mendocino County, The Flow Cannabis Institute, which offers a wide range of processing, co-packing, white label, and distribution services to a growing list of partner brands, dispensaries, distributors, and manufacturers in California. Salveo Capital’s investment will further support Flow Kana’s focus on expansion of its services to support the Northern California network of independent farmers and to build capacity at The Flow Cannabis Institute to manufacture premium cannabis oil for distribution and sale to companies making specialty products such as edibles, topicals, tinctures, and more.
“Flow Kana has quickly scaled its business in a relatively short time and is a perfect example of how the cannabis industry is evolving,” says Michael Gruber, a Managing Partner at Salveo Capital. “Flow Kana’s dedication and partnership with local farmers in Mendocino and Humboldt counties in California is critical to their success and a testament to their values. We are very eager to begin working alongside the entire Flow Kana management team as we continue to support the company’s strong momentum.”
“As cannabis comes out of prohibition, we are thrilled to be aligned with Salveo, and other value-add investors, who are focused on the long-term vision of building the cannabis industry in a way we can be proud of,” says Michael Steinmetz, Flow Kana’s co-founder and Chief Executive Officer. “The future of cannabis is in the hands of consumers who treat cannabis with an appreciation for all things wholesome and organic. Our partner farms use only organic methods and are true stewards of the land who have spent their lives balancing a unique and harmonious relationship between the farm, the genetics and the terroir. Cannabis cultivated this way must be embraced and adopted by the cannabis community at large, especially as large-scale industrialised production becomes a reality in a post-legalisation era.”
Salveo Capital’s primary investment focus is on high-growth, ancillary service providers to the cannabis industry – rather than more highly-regulated businesses that “touch the plant.” The firm is currently investing capital out of its first private equity fund (“Fund I”) and is targeting a USD25 million close. Salveo is seeking to rapidly scale its platform with a goal of reaching USD100 million of committed capital by 2019. In addition to Flow Kana, Salveo Capital has completed seven investments thus far including Baker, Front Range Biosciences, Headset, Purissima, Hiku (formerly Tokyo Smoke), Treez and Wurk. Legalised cannabis is a USD9 billion market in North America and, according to industry research, is expected to reach an estimated USD22 billion by 2020. From an international perspective, various countries around the world including Australia, Germany and Spain are legalising marijuana, while others including Canada, Israel and The Netherlands are permitting exportation.
