top of page

Former California industry leader Flow Cannabis Co. ‘mothballed’ as it seeks to ‘survive’

Flow Cannabis Co., the California operator that raised nearly $200 million in a bid to become “the Whole Foods of cannabis,” has “eliminated” all plant-touching activities and “mothballed” operations after running out of cash, according to company documents and a board member.

The once-industry-leading but now-struggling company burned through more than $24 million in cash in 2021 and reported sales of “approximately” $11 million, according to investor updates from the board obtained by MJBizDaily.By Chris Roberts, Reporter

OG Article: here.

This website may contain copyrighted material, the use of which has not been specifically authorized by the copyright holders. The material is made available on this website as a way to advance research and teaching related to critical media literacy and intercultural understanding, among other salient political and social issues. Through context, critical questioning, and educational framing, High at 9, therefore, creates a transformative use of copyrighted media. The material is presented for entirely non-profit educational purposes. There is no reason to believe that the featured media clips will in any way negatively affect the market value of the copyrighted works. For these reasons, we believe that the website is clearly covered under current fair use copyright laws.

We do not support any actions in which the materials on this site are used for purposes that extend beyond fair use.


Flow Cannabis Co., the California operator that raised nearly $200 million in a bid to become “the Whole Foods of cannabis,” has “eliminated” all plant-touching activities and “mothballed” operations after running out of cash, according to company documents and a board member.

The once-industry-leading but now-struggling company burned through more than $24 million in cash in 2021 and reported sales of “approximately” $11 million, according to investor updates from the board obtained by MJBizDaily.

Flow Cannabis Co. – often referred to by its flagship brand, Flow Kana has leased some licensed facilities to other companies and is attempting to sell off other real estate.

The company could eventually be sold or merge with another, board member Kevin Albert said in an interview, although the goal is to “survive” until at least 2025.

It’s a dramatic reversal for a company that aspired to become “the world’s largest cannabis supply chain” and was once one of Mendocino County’s largest employers, with more than 200 workers and a legion of small farmers growing craft marijuana on its behalf.

Last spring, however, after a bid to boost margins by becoming vertically integrated, Flow Cannabis laid off nearly all its workforce as the company continued to struggle with difficult market conditions, high taxes, an illicit market and product oversupply that ensure “outdoor cultivation prices have remained below cost of production,” according to quarterly investor updates obtained by MJBizDaily.

“Faced with an adverse environment that continued to produce significant losses to the business and a dwindling cash balance, the company resolved to cease all manufacturing activities and execute a final reduction in force, wherein all operational functions have been eliminated,” the company reported to investors in December.

After pursuing possible “combinations” with “multiple parties” and letting its cultivation licenses lapse, the company is now leasing out licensed processing and manufacturing facilities, including its 300-acre Flow Cannabis Institute in Redwood Valley, to other operators.

“We’ve mothballed (operations). We’ve cut the cash burn,” Albert told MJBizDaily.

To obtain operating cash in the near term, Flow Cannabis secured a $3 million loan with a 14% annual interest rate using property as collateral.

The company will repay the loan once the property is sold, documents noted.

According to Albert, Flow Cannabis and its brands will remain dormant until market conditions improve or the company is sold – perhaps to a multistate operator, “or if you have federal legalization, it could be a pharmaceutical company.”

“We could go back into business tomorrow if it made sense to do that,” Albert added.

But, for now, “our mantra is, stay alive until ’25.”

Major fall from grace

Flow Cannabis’ latest difficulties – which have not been previously reported – represent one of the highest-profile falls from grace for a legal California marijuana business.

The company’s plight also underscores the struggles the marijuana industry is enduring in California and beyond.

Launched in California in 2015, Flow Cannabis was an early and vocal advocate for small farmers in the state’s famed Emerald Triangle, composed of Humboldt, Mendocino and Trinity counties.

Flow Cannabis promised to connect multigenerational craft producers, whom state law prohibits from selling directly to consumers, to eager buyers in urban areas.

In return, the company offered farmers the opportunity to cut their costs and expand their market reach – a proposition it fell short on delivering, observers and former farmer partners said.

The company’s current situation follows a major departure from that vision – growing cannabis in-house rather than relying on dozens of craft marijuana growers – observers and former growers said.

Michael “Mikey” Steinmetz, a co-founder of Flow Cannabis and a former CEO who still sits on the company’s board, previously told MJBizDaily the pivot was “neither by design nor by choice.”

“It was contrary to our original business thesis,” he said, “but we’re doing it so that the dreams can have even a way of surviving.”

While Flow Cannabis officials such as Albert and investor documents said the company’s attempt to grow its own marijuana at a 12-acre farm in Lake County exceeded expectations, internal emails and former employees say it was unsuccessful, with most of the crop harvested in late fall 2021 contaminated with mold.

The saga also serves as an acknowledgment that thorny state regulatory and tax burdens as well as complications posed by federal prohibition have forced companies to drastically revisit formerly rosy sales forecasts – many based on economic models imported from pre-legalization days, when wholesale cannabis prices were much higher.

At the same time, gambles on a national market with legal interstate commerce have proved premature.

“This company, as many others have, mis-assessed just how long the federal government can ignore the will of the people,” Albert said, in a nod to earlier company growth projections that the company would become a major national player, shipping craft California outdoor cannabis to East Coast markets.

Partner issues

Some observers, including those who’ve done business with private equity firm Gotham Green Partners, which internal documents describe as the company’s largest equity investor, said the operator’s plight is also a parable for entrepreneurs who are tempted to raise capital for their companies in exchange for ceding equity – and thus losing control.

Steinmetz, the Flow Cannabis co-founder and former CEO, remains on the board but appeared to lose his control over the company in late 2021, according to board documents and other materials reviewed by MJBizDaily.

That was at the same time Flow Cannabis’ board was “rebooted” after it bought out an unidentified “large investor who wasn’t interested in continuing with the company,” Albert said.

Steinmetz declined to comment for this story.

Jason Adler, New York-based Gotham Green’s managing partner, declined to comment to MJBizDaily.

Companies that also have done deals with Gotham Green said Flow Cannabis’ fortunes reflect an industry-prevalent “loan-to-own” ethos in which some marijuana investment firms will offer capital only to later take over a struggling company.

“They come in, shower you with promises and get close to you. Meanwhile, they’re sharpening up the toothbrush, getting ready to stab you in the kidneys,” said Hadley Ford, a former CEO of multistate operator iAnthus Capital Holdings.

Ford now says his company’s choice to find emergency capital via a loan from Gotham Green ultimately led him to lose control of iAnthus – and that Flow Cannabis’ fortunes mirror his own.

Albert disputed that characterization, noting that Gotham Green is an equity partner in Flow Cannabis rather than a lender, and “like any bank or credit fund I am aware of, the lender exercised their rights under the credit agreement” when iAnthus failed to repay the loan.

“They neither had a right nor the power to take control” of Flow Cannabis, Albert said. He added that Gotham Green “did more than anyone else” to save the company from total “liquidation” in late 2021.

Broken promise

Flow Cannabis’ plight also represents a major blow for California’s heirloom cannabis farmers.

With a network of small farmers producing craft flower from heirloom genetics and using regenerative farming techniques, the company sold enough Flow Kana-branded jars of sun-grown flower to become California’s top-selling flower brand in 2018.

The farmers became the face of the brand, which preached a “small is beautiful” mantra even as it harbored ambitions to become “the world’s largest cannabis supply chain,” with aims on both “the California market and (the inevitable) national market,” according to company investor decks.

But behind the scenes, Flow Cannabis was slow to compensate for product and ponied up well below what it had promised when it did pay, according to interviews with five former farmer partners.

Already angry at the state for legalizing marijuana in a manner they believe is unfriendly to small operators, former farmer partners now say they feel betrayed by Flow Cannabis, which has become an avatar for marijuana legalization’s broken promises.

“They were all hat, no cattle,” said one former farmer partner, speaking on condition of anonymity after signing a nondisclosure agreement.

According to Albert, the board member, the Emerald Triangle farmers were unreliable business partners who would often find better-paying deals than what Flow Cannabis could offer, including on the illicit market.

“In a hot market, like (during) COVID, the farmers were able to sell (elsewhere) at higher prices than they could selling to Flow Kana,” he said.

“The farmers were trying to optimize their outcome, and Flow Kana was trying to optimize its outcome, and the two were somewhat incompatible.”

Overall, there’s a feeling in the Emerald Triangle that the company’s vow to provide small farmers an opportunity to capitalize on legalization went unfulfilled, according to farmer advocates such as Genine Coleman, the executive director of the Origins Council, which advocates on behalf of multigenerational heirloom farmers.

Flow Cannabis’ business model was based on one imported from commodity farmers who grow coffee or oranges and outsource the final steps on the supply chain to a large operator.

But those agricultural models were a poor fit for cannabis, according to Coleman.

“The experience with Flow Kana was a powerful lesson for the Emerald Triangle, underscoring the importance of preserving our sovereignty as a community of small, independently owned and operating businesses,” Coleman said.

“Our regional brand voice must be community-driven, and every effort must be made to give small producers independent market access, through tools like direct-to-consumer sales.”

Spending spree

Flow Cannabis’ initial upward trajectory reflects the enthusiasm the cannabis industry generated in 2018 and 2019, when publicly traded companies based in Canada were delivering early investors stupendous returns.

The company collected cash from investors such as Poseidon Investment Management, Elevation Partners venture capitalist Roger McNamee, Chicago-based Salveo Capital and others, including Gotham Green, which led a $125 million Series B financing round in 2019 that, at the time, was believed to be the largest private raise in cannabis.

Flush with capital, Flow Cannabis spent $3.5 million to purchase an 80,000-square foot former winery in Redwood Valley that it remodeled into a processing and manufacturing center dubbed the Flow Cannabis Institute.

It also bought the 12-acre Solar Living Center (SLC in Hopland, California, which it planned to convert into a “cannabis museum” to complement the dispensary, Emerald Pharms, then on-site.

The company hoped to offload both the SLC and a hilltop property it calls the Flow Ranch before the end of 2022 in order to bring in “several million in proceeds,” according to last summer’s investor update.

Though the SLC was close to being sold before a buyer backed out because of a “funding issue,” both properties were still recently listed for sale: the SLC for $2.7 million and the Flow Ranch for $2.9 million – its listed 2018 sale price.

Litany of disasters

According to Albert, Flow Cannabis chose to cultivate its own marijuana in 2021 after encountering obstacles dealing with the small farmers who made up the company’s identity.

Though the company met its self-set production goals at a 13-acre grow in Lake County in 2021 – with a “minor amount of mold” cleaned up, and the affected flower extracted into oil – the wholesale price of cannabis crashed to half of what the company projected at planting, Albert said.

However, former employees said the 2021 fall harvest at the Lake County was a disaster, with almost all the crop contaminated with mold because of heavy rains and a late harvest.

“I have pictures of what was coming off of the truck – there was crazy, moldy, dirty, shitty, brown weed coming from the farm,” said Jessica Maguire, a Mendocino County native who worked for Flow Cannabis as a processing manager before her April 2022 layoff.

Despite raising concerns over worker safety and product quality posed by widespread mold – which can be ameliorated if cannabis is processed into oils or concentrates but still poses a hazard to workers exposed to spores that can cause lung and neurological problems – Maguire and other workers told MJBizDaily they were told to continue the harvest.

They also said company managers insisted on harvesting and arranging for the drying of more and more moldy flower to meet production goals.

“There were all these red flags being raised,” said Achilles Gallardo, who was employed by Flow Cannabis as a processing manager.

The moldy cannabis put “clouds and clouds of dust” into the drying room, he said.

“I have literally never seen so much mold in my life,” Gallardo noted, adding that workers were ordered to continue with the harvest even after reporting dizziness.

Emails obtained by MJBizDaily from other workers tell similar stories.

The “lack of care for health and safety of employees is astonishing and disturbing,” wrote employee Casey Vaughn in a Dec. 2, 2021 email.

Reached via phone, Vaughn declined to comment.

During this time, the company also allegedly used third-party contract workers who were underage and or undocumented, in apparent violation of state law that requires cannabis workers to be 21 or older and possess legal working papers, Gallardo and Maguire said.

Employee complaints about the mold and allegations about the “unprofessional” and unsafe conduct of an executive led the company to hire an outside law firm to conduct an investigation that found no wrongdoing, Albert said.

“People were afraid of losing their jobs – there had been two layoffs already – and they were not happy people,” Albert added.

“They were stressed out, and you know, complaining.”

The poor harvest was the final shot in a series of blows that damaged the company’s reputation in the Emerald Triangle – possibly beyond repair – according to critics who spoke with MJBizDaily.

Months earlier, the company also admitted responsibility for causing a July 2021 wildfire that burned 80 acres, destroyed three homes and forced 250 people to flee.

But, according to Albert, the explanation for Flow Cannabis’ dramatic fall can be reduced to a harsh market reality:

Too few California cannabis consumers wanted to buy sun-grown marijuana marketed based on its responsible, socially conscious ethos, preferring instead for a high-THC, low-dollar proposition.

“People don’t seem to care, honestly,” he said.

“It sounded good, but in the real world, nobody cared.”

Chris Roberts can be reached at


#1 Daily
Cannabis News Show

"High at 9

broadcast was 🤩."


Rama Mayo
President of Green Street's Mom

bottom of page