As the marijuana industry continues to explode, cannabis companies are looking to get increased visibility and gain their share of the market. One company that is continuing to prove its value is OrganiGram Holdings (TSXV:OGI) (NASDAQ:OGI).
OrganiGram, a leading licensed Canadian cannabis producer based in New Brunswick, is making some serious headway in the industry. On Tuesday, the company began trading on the NASDAQ, joining industry giants like Canopy Growth Corp (NYSE:CGC), Tilray (NASDAQ:TLRY), Aurora Cannabis (TSX:ACB) (NYSE:ACB), and Cronos Group (TSX:CRON)(NASDAQ:CRON).
At the same time, OrganiGram announced a $15 million investment for a high-speed, high-capacity, fully-automated production line with the ability to produce an estimated four million kilograms of chocolate cannabis edibles every year.
Let’s take a look at what this major exchange listing means for OrganiGram and how the company is positioning itself well for the upcoming legalization of edibles in Canada.
Why OrganiGram is Well-Suited for Major Exchanges
In order to be listed on a major exchange list the NYSE or NASDAQ, companies must meet listing requirements in regards to their total value, price per share, corporate profits, daily and monthly trading volume, and revenues.
Considering that OrganiGram has an average trading volume of 1.79 million, a market cap of $1.16 billion and the lowest cost per gram production, it is clear why the company made the jump to the big leagues.
OrganiGram revenue also soared 693% year-to-date in Q2, reaching a record net revenue of $26.9 million CAD in its first quarter of recreational adult-use marijuana sales. At the same time, the company reported an all-in-cost of cultivation of $0.85 CAD per gram of dried flower harvested, down from $1.48 CAD in Q2 2018. This decrease in cost is largely due to higher yields per plant.
What’s more, OrganiGram reported an adjusted EBITDA of $13.3 million and an adjusted EBITDA margin of 49%, which has been positive for three consecutive quarters.
OrganiGram is one of three licensed producers in Canada to be in all 10 provinces. Add that to the company’s low cost of cultivation and it seems that OrganiGram will be able to maintain its positive revenue even when the price of cannabis inevitably drops.
Investing in the Edibles Market
OrganiGram has also positioned itself well for the upcoming legalization of edibles in Canada, which is expected for October 17, 2019. The company has already been working to ensure it’s ready for the upcoming demand for cannabis edibles.
OGI is expanding capacity with the Phase 4 and Phase 5 expansions of its Moncton facility, as well as the extraction agreement with Valens. The company is also focusing its interests on vaporizable pen technologies and a selection of edible products, which is why it has made a $15 million investment that will contribute to a state-of-the-art chocolate molding line and a fully integrated packaging line that includes advanced engineering, high-speed labeling, robotics, and automated shipping carton packing.
The company said that chocolate molding line and additional fully automated packaging equipment for product lines such as edibles and other derivative based products have been ordered and short path distillation equipment for edibles and vape pens has been purchased. It expects to take delivery of the line in the fall.
On top of its new chocolate cannabis edibles initiative, Organigram has also developed a shelf-stable, water-soluble and tasteless cannabinoid nano-emulsion formulation that provides an initial onset within 10 to 15 minutes if used in a beverage. The company said that it will not develop its own line, but is seeking a strategic partner with proven experience in beverage product development to create cannabinoid-infused beverages.
Although OrganiGram has faced hardships in the past, it is clear that the company is on the right path, with $63.4 million in cash in the bank, impressive recreational and medical marijuana sales, one of the lowest costs per gram, and a strategic growth plan. It will be exciting to see how OrganiGram will stand up against competition once the legalization of adult-use cannabis edibles happens this coming fall.
OGI share price reacted favorably to all of the positive news, increasing by more than $1.00 CAD on the TSXV in the last week to $10.51 CAD by 12:30 pm EST. Since it began trading on the NASDAQ Tuesday at $8 USD, the company’s share price has been trading at an average volume just shy of one million, hitting a high of $8.44 USD and a low of $7.80.
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