OrganiGram Holdings Inc Is Today's Cannabis Focus

While most US cannabis investors are focused on home grown marijuana plays, up in The Great White North there’s a lot happening. By 2024, Health Canada projects that the medical cannabis market in Canada will reach $1.3 billion and have ~450,000 patients out of a population of 35 million.Prime Minister Justin Trudeau was elected after including legalization of recreational marijuana. On April 20th, 2016, the Canadian Health Minister Jane Philpott announced that Canada would introduce legislation to decriminalize and regulate cannabis in spring of 2017. The recreational market in Canada is estimated to be worth $7 to $10 billion.One company investors need to pay attention to is OrganiGram Holdings Inc. The stock trades in Canada under the symbol OGI, in the US under OGRMF, and in Germany under 0OG.OrganiGram Holdings is a TSX Venture Exchange listed company whose wholly owned subsidiary, OrganiGram Inc., is a licensed producer of medical marijuana in Canada. OrganiGram is focused on producing the highest quality, condition specific medical marijuana for patients in Canada. OrganiGram's facility is located in Moncton, New Brunswick and the Company is regulated by the Access to Cannabis for Medical Purposes Regulations (ACMPR).In September, the company amended its Health Canada licensed sales capacity of dried marijuana to 1,200kg per annum. Additionally, Health Canada also increased OrganiGram's licensed production and sales capacity for cannabis oils to 500kg per annum. OrganiGram is also near completion of its fully funded build out in the existing Moncton facility for up to 3,500 kg of production capacity, which is expected to come online in early November.OrganiGram has acquired the industrial property adjacent to the Company's existing facility in Moncton, N.B. The acquisition, which includes a 136,000 square foot building situated on 10 acres of industrial land, facilitates the Company's phased expansion initiatives related to cannabis production and extracts processing. The Board of Directors has approved the initial buildout of approximately 70,000 square feet. This phase of construction will bring Organigram's annual production capacity to approximately 16,000 kg of flower, and approximately 6,400 kg of fan and sweet leaf. The planned expansion also includes a state of the art 20,000 square foot commercial scale oils and extracts manufacturing facility.OrganiGram just finalized an agreement with TGS International, LLC. The agreement will provide for consulting services related to the development and operation of a commercial scale cannabis extracts production and processing facility, as well as the exclusive licensing in Canada of over 225 unique cannabis products. This deal looks to provide some tremendous revenue growth for OrganiGram when you consider what TGS has accomplished in Colorado. TGS has commercially developed an extensive line of cannabis extract and derivative products by using multiple extraction methodologies that are streamlined with standardized operating procedures and supported through proprietary software and security systems. Their award winning proprietary brands, The Green Solution™ and NectarBee™ have generated well over US$100MM in cumulative sales through their affiliated Colorado operations, including over US$43MM in 2015 alone.Pursuant to the agreement between the Company and TGS, OrganiGram shall issue 437,957 common shares to TGS at a price of $1.37 per share, payable after certain calendar and operational milestones, and will provide additional cash consideration to TGS, by way of a royalty, during the term of the Agreement. Additionally, TGS shall be issued stock options in accordance with a 36-month vesting schedule. CEO Denis Arsenault said:

"We are pleased to have finalized this transaction and look forward to continuing our work with TGS. Their technological knowledge and cannabis expertise are key for OrganiGram as we continue to focus on maximizing our production yields, streamlining our extraction processes, and continuing to develop and innovate our portfolio of high quality cannabis products."

In August, OrganiGram completed a $23 million bought deal financing. A total of 17,710,000 common shares of the Company were sold at a price of $1.30 per Share, for aggregate gross proceeds of $23,023,000. Approximately 70% of the net proceeds from the Offering went towards expanding its production capacity to upwards of 12,500 kilograms. Approximately 20% of the net proceeds is for developing the commercial scale production, distribution and sales infrastructure for its recently licensed cannabis oil extracts program. The balance is for working capital and general corporate purposes.In the third quarter ending May 31, OrganiGram reported sales of $1,806,849, which represents a 27% increase compared to the previous quarter. Grams sold for the quarter increased to 213,270 resulting in an average net revenue per gram sold of approximately $8.47. OrganiGram's cash cost per gram produced during the quarter was $1.29. CEO Denis Arsenault said:

"At Organigram we are creating employment and economic growth opportunities for Atlantic Canadians, a reliable and high quality product for our customers, and value and efficiencies for our shareholders. Our low cost of production, coupled with our organic product offering, strong balance sheet, and near term growth prospects position Organigram favourably in both the existing medicinal and forthcoming recreational marketplace."

OrganiGram looks to be one of the best plays in not only Canada, but also in the entire cannabis space. We believe investors should look towards Canada for not only its favorable regulatory environment, but also well-financed and well-run companies like OrganiGram. We will be updating our subscribers with the latest on OrganiGram and other cannabis names. For complete coverage, sign up below!Disclosure: We have no position in OrganiGram Holdings Inc and have not been compensated for this article.