As far as dried-flower goes, the company’s position is that there is always going to be a place for premium-dried flower and we believe Organigram’s buds are top-notch within the industry. Being recognized for having the top “Sativa Flower” at last year’s Canadian Cannabis Awards as well as top “Cannabis Blend” for our Wabanaki and Blue Cheesecake products is validation as such. Consequently, although we are very focused on the “second wave” of legalization with edibles, beverages, vape pens, etc, we are certainly aiming to compete at the top of the “premium flower” market in Canada via our “Edison Reserve” brand.
I try to use reputable public domain sources that all of our readers can readily access. Doing so, at time of writing, OGI’s market cap is approximately $645M based on just over124M net shares outstanding. Compared to many other LPs, OGI may appear value priced … what do you say to those investors considering increasing their position or looking to open a position in Organigram?
While we cannot provide financial advice to existing or potential investors I would encourage investors to pay close attention to valuation as from our vantage point there is a big disparity between the valuation of LPs whether it being enterprise value to production capacity, to sales or to expected profitability.
The Canadian cannabis market in general has seen many companies’ valuations skyrocket ever since Justin Trudeau became Prime Minister in 2015. The vast majority of the appreciation seen in the industry has been in anticipation to legal recreational sales in Canada and finally we are only a couple of weeks away from that date.
What this means is that it is “showtime”. I expect there to be a massive reset in relative valuations as investors start paying attention to execution which will manifest in repeatable sales and profitability (or not for those that can’t). Investors need to pay attention to average selling price, cost of production, SG&A and capture of market share.
With a premium indoor-grown flower and what we believe to be strong brands we expect to obtain good pricing and also low COGS. And unlike some of the other companies out there we are not carrying massive SG&A lines because we believe that turning a meaningful profit is important to our shareholder base.
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