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On that same day, Organigram revealed their diverse portfolio of adult use brands. Edison Cannabis Co., Edison Cannabis Co. - Reserve, Ankr Organics, and Trailer Park Buds each cater to unique demographics of the upcoming recreational market. Edison Brand Co. - Reserve is targeted towards the connoisseur user of cannabis. This ultra-premium line is unique in that only the top flower of the plant is used, which is the part of the plant that absorbs the greatest amount of light, and yields the largest, most lush flowers. Additionally, Edison flowers are hand-manicured and craft cured, meaning that there is strain-specific temperature and humidity treatment applied post-harvest. This allows for the buds to maximize trichome retention, as well as increase their flavor and aroma profiles. Furthermore, Organigram won three voter-driven awards at the 2017 Lift Awards, including first place of all licensed producers for the Top Sativa Flower.
Organigram has traded at a significant discount to peers over the last year due to financial underperformance. This has created a potential arbitrage opportunity between Organigram and some of its peers. There are four licensed producers who will have equal or greater production capacity to Organigram at the onset of recreational access. The market capitalization of each of those companies is in excess of $2 billion, while OGI is currently worth around $600 million. This, in and of itself, may make the company an attractive takeover target by larger peers looking to increase their production, or
diversify their operations geographically in a short period of time.
With an expected shortage of cannabis at the onset of recreational access in Canada, those with significant production will naturally secure supply agreements with provincial retailers. Organigram has already signed two provincial supply agreements for the recreational market. Over the last several months, the company has announced supply agreements with both New Brunswick and PEI, for total annual supply of 6 million grams. By June 2018, the company will be in production of 36,000kg annually, putting them in the top 5 of all licensed producers using this metric. This makes it very likely that Organigram will be able to secure supply agreements with additional provinces.
Many investors have shifted their focus to LP’s with international exposure. Rightfully so, since global market growth for regulated cannabis is advancing at breakneck speed throughout Europe and South America. Organigram has quietly been moving key executives into roles which focus on international initiatives. On May 8, 2018, the company revealed the beginnings of their international strategy with a 25% acquisition of Alpha-Cannabis Pharma GmbH. The Stadthagen, Germany based processor and distributor aims to import Organigram’s products into the country for oil extraction and distribution. Subsequently, the company also announced that they have received a permit to export medical cannabis to Australia.