The protective equipment PPE Medpro was contracted to supply has been in storage since 2020 after the company failed to prove it was correctly sterilised.
Mone - who recommended the company to the government through the "VIP lane" - initially denied being linked to the firm, but admitted to the BBC in 2023 that she had lied about not being involved.
While a life peerage cannot be relinquished, Mone could choose to resign from being a member of the House of Lords.
Her peerage can only be removed through an act of parliament.
Flynn told BBC Scotland News: "This can't be the end of the story. That money needs to be back in the public purse but most importantly there needs to be consequences.
"Michelle Mone should not be in the House of Lords. The government can make sure that doesn't happen and I will support them if they do that."
He added: "Is it ok that Michelle Mone continues to sit in the House of Lords, is it ok that she continues to make laws over all of our lives?
"I think the overwhelming view from the Scottish public will be no."
[SRC] https://www.bbc.co.uk/news/articles/cpq5pvp0v3ro
