Flora Growth, a company listed on Nasdaq primarily known for its cannabis operations, has made a significant shift towards blockchain technology by finalizing a private placement deal worth $401 million. This agreement will enable it to become the first publicly traded company to hold Zero Gravity (0G) tokens. The transaction is notable as it combines $35 million in cash with $366 million in the digital assets, specifically 0G tokens, which are valued at $3 each.
This deal was spearheaded by DeFi Development Corp, a treasury firm associated with Solana and managing a substantial $480 million in SOL tokens. It received additional backing from notable parties such as Hexstone Capital and Carlsberg SE Asia PTE Ltd. The move represents a major pivot from Flora Growth’s core business and indicates a strategic shift towards blockchain infrastructure.
As part of this transition, Flora Growth plans to rebrand itself as ZeroStack, although it intends to retain its existing FLGC ticker symbol on Nasdaq after securing shareholder approval. The closing of this transaction is anticipated by September 26, with support from several firms, including Dao5, Abstract Ventures, and Dispersion Capital.
Zero Gravity Labs, the entity behind the 0G tokens, has been developing a decentralized operating system targeted at training artificial intelligence models using distributed clusters. The company claims significant advancements, stating that they have achieved a 357-fold efficiency improvement compared to current AI frameworks. The project is currently in its testnet phase with a mainnet launch expected to coincide with the token release.
In a strategic move, the 0G Foundation intends to distribute tokens via an airdrop to early supporters. Following this initial distribution, major cryptocurrency exchange listings are anticipated, creating more market access for the tokens. Based on the $3 per token valuation used in the Flora Growth deal, Zero Gravity is positioned with a fully diluted valuation of approximately $3 billion, placing it in a competitive range with established crypto projects.
The stock of Flora Growth saw a remarkable 69% surge in after-hours trading following the announcement of this deal, effectively reversing a previous 32% year-to-date decline as reported by Yahoo Finance.
Flora’s treasury strategy also involves holding a portion of its assets in SOL tokens, diversifying beyond its significant 0G allocation. DeFi Development Corp highlighted the significance of maintaining exposure to SOL while leveraging this unique investment opportunity. Daniel Reis-Faria, the incoming CEO of Flora Growth, emphasized that this initiative offers institutional investors equity-based exposure to the emerging field of AI infrastructure development, while focusing on transparent and efficient capabilities for AI model training.
In a bid to further reward its initial backers, the structure of the deal allows investors in the private placement to receive pre-funded warrants, which will be exercisable upon shareholder approval, providing an opportunity for them to benefit from the potential appreciation of 0G tokens after their public launch.
