Nasdaq-listed cannabis company Flora Growth is undertaking a significant strategic shift, announcing it will rebrand to ZeroStack and launch a $401 million treasury to support Zero Gravity (0G), a decentralized artificial intelligence blockchain project. The move signals a major pivot from the cannabis sector into the rapidly growing field of AI infrastructure.
Key Takeaways
- Flora Growth (FLGC) will rebrand to ZeroStack, shifting its corporate focus to decentralized AI.
- The company is launching a $401 million treasury initiative to fund the Zero Gravity (0G) blockchain.
- The funding consists of a $35 million private placement in cash and $366 million in digital assets, primarily 0G tokens.
- The deal, led by DeFi Development Corp., is expected to close by September 26, pending shareholder approval.
A Major Corporate Restructuring
Flora Growth, a company previously focused on the cannabis industry, has initiated a fundamental change in its business model. The company announced it will adopt the new name ZeroStack while retaining its current Nasdaq ticker symbol, FLGC. This change is part of a larger strategy to enter the decentralized AI market.
The core of this transition is a substantial $401 million treasury created to scale the Zero Gravity (0G) project. According to the official announcement, this initiative is structured through a private placement deal. The funding is a combination of capital sources, reflecting a blend of traditional finance and digital assets.
Details of the Financial Transaction
The $401 million treasury is composed of two main parts. The first is $35 million in cash raised through a private placement. The second, and larger, component is $366 million in in-kind digital assets. These assets are primarily denominated in 0G tokens, the native cryptocurrency of the Zero Gravity platform.
The deal is being led by DeFi Development Corp. (DFDV). Other participating investment firms include Hexstone Capital, Carlsberg SE Asia PTE Ltd, Dao5, Abstract Ventures, and Dispersion Capital. The transaction is contingent on shareholder approval and is anticipated to be finalized by September 26.
Market Reaction
Following the announcement on Friday, shares of Flora Growth (FLGC) experienced a notable increase, rising by 5% as investors reacted to the news of the company's strategic pivot.
Focus on Decentralized AI Infrastructure
The investment is designed to accelerate the development of Zero Gravity's infrastructure, which focuses on training large-scale AI models in a decentralized manner. 0G aims to provide a more efficient and accessible alternative to centralized AI development, which is currently dominated by a few large technology companies.
Technological Capabilities of Zero Gravity
Zero Gravity reports that its platform is already capable of training a 107 billion-parameter AI model using distributed computing clusters. This is a significant technical achievement, as models of this size typically require immense computational resources that are only available to major corporations.
The project claims its framework provides a 357-fold efficiency improvement over existing distributed AI systems. This level of performance could potentially lower the barrier to entry for developing advanced AI, making it accessible to a wider range of developers and organizations.
Daniel Reis-Faria, the incoming CEO of the rebranded ZeroStack, commented on the strategic importance of the move. He stated that the new structure offers institutional investors a way to gain equity-based exposure to a "transparent, verifiable, and privacy-first AI infrastructure."
Collaboration with Solana
The new treasury will not be limited to 0G tokens. As part of the agreement, a portion of ZeroStack's treasury will also be held in SOL, the native token of the Solana blockchain. This indicates a strategic alignment with the Solana ecosystem.
"We’re thrilled to partner with FLGC on this fundraise and look forward to driving a deep collaboration between 0g and Solana," said Joseph Onorati, CEO of lead investor DeFi Development Corp.
Broader Trends in Corporate Digital Asset Treasuries
Flora Growth's move comes at a challenging time for companies holding digital assets on their balance sheets. According to a recent report from Standard Chartered, many digital asset treasury (DAT) firms are facing significant financial pressure. This is largely due to declining market net asset values (mNAVs) across the cryptocurrency sector.
The DAT model, which gained popularity following MicroStrategy's successful Bitcoin accumulation strategy, has encountered difficulties. Many smaller firms now trade below an mNAV of 1. This threshold is important because trading above it allows companies to issue new shares to raise low-cost capital for further crypto purchases.
A Consolidating Market
With access to affordable capital diminishing, the growth prospects for many smaller DAT firms have stalled. Standard Chartered analysts predict a period of consolidation within the sector. They suggest that larger, well-funded companies are likely to emerge as the dominant players, potentially acquiring smaller firms struggling with suppressed valuations.
Flora Growth's pivot is unique in this context. Rather than simply accumulating established cryptocurrencies like Bitcoin, the company is creating a treasury specifically to fund the development of a new blockchain-based technology project. This strategic use of a digital asset treasury to directly build a new ecosystem represents a different approach within the broader DAT trend.
