OrganiGram Holdings Inc (OTCMKTS: OGRMF) continues to dominate the markets making a huge move up in recent weeks making all-time new highs and transforming into a volume leader with the stock regularly topping $40 million CAD in dollar volume per day.
Organigram operates in the booming cannabis sector which has easily outpaced the broader markets this year and for good reason; the recreational cannabis market is projected to expand at a compound annual growth rate of 19.75% over the next decade, easily making it among the fastest growing areas of the global economy by a wide margin. Legal marijuana sales are expected to grow to more than $20 billion by 2022 according to Marijuana Business Daily. As October 17 looms closer Canadian MJ stocks have been heating up big time.
OrganiGram Holdings Inc (TSXV: OGI) (OTCMKTS: OGRMF) is a leading producer of medical marijuana based in Moncton, New Brunswick. The company’s wholly owned subsidiary, Organigram Inc., is a licensed producer of cannabis and cannabis-derived products in Canada. The Company operates a state-of-the-art, purpose-built cannabis growing operation at their facility in Monctron. The Company maximizes their space using a 3-tiered system, so that there are vertically 3 levels of growing going on; one on top of the other, in every room. They have also gone all-in with there mechanical and engineering side making sure that the conditions in every room are consistent and can be adjusted manually. We also get a glimpse into their recreational branding strategy and how it translates to the cannabis-production side of things.
Organigram recently broke ground on its Phase 4 expansion project which will be completed over three different, but concurrently constructed, stages in 2018 and 2019. Phase 4a (31 grow rooms) will come online in April of 2019, increasing the Company’s target production capacity to 62,000 kg/yr. Phase 4b (32 grow rooms) is expected to be ready by August of 2019, increasing the target production capacity to 89,000 kg/yr. Construction for Phase 4c (28 grow rooms), which will bring target production capacity up to 113,000 kg/yr., is scheduled to begin in January 2019. The rooms will be available to Organigram by October of 2019.
Last month Organigram reported record net sales for both the three-months and nine-months ended May 31, 2018 of $3.7 million and $10.1 million respectively vs. $1.9 million and $3.6 million respectively for 2017.
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Organigram has been very busy in 2018; the Company began harvesting from its Phase 2 expansion facility (23 grow rooms) on April 20, 2018 bringing its target production of dried flower equivalent to 22,000 kg/annum. In May the Company launched its adult recreational brand strategy which included house brands such as The Edison Cannabis Company, ANKR Organics and Trailer Park Buds.
In May Organigram received a “License for Controlled Drugs and Substances” from Health Canada making the Company a Licensed Dealer. The company also received its “Permit to Export Cannabis” license which allowed Organigram the ability to make its first international medical shipment to Australia (completed in July.
Shortly after quarter-end the Company began use of its Phase 3 expansion filling six of the 16 grow rooms with the remaining rooms filled in June and July bringing its target production of dried flower equivalent to 36,000 kg/annum.
On September 6 Organigram was upgraded to OTCQX from the OTCQB® Venture Market. Organigram Holdings begins trading today on OTCQX under the symbol “OGRMF.” Moving to the OTCQX® Best Market is a reflection of Organigram’s continued growth and investor interest in the United States and beyond.
Organigram has seen its U.S. trading volumes as a percentage of its overall trading volumes increase substantially in 2018 and believes that upgrading to the OTCQX® Best Market should help drive increased cross-border liquidity. Since launching the Company’s strategy for adult recreational cannabis and securing distribution across six Canadian provinces to date, De Luca states that the move to OTCQX is the next step. “As interest in Organigram grows outside of our national borders, the move to the OTCQX® Best Market is a natural and welcome progression.”
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Currently trading at a $692 million market valuation Organigram has an excellent cash position with $31 million in the treasury and $124 million in short term investments. The Company has significant debt and fast growing revenues reporting record net sales for both the three-months and nine-months ended May 31, 2018 of $3.7 million and $10.1 million respectively vs. $1.9 million and $3.6 million respectively for 2017. Organigram is well positioned to build upon its domestic medical business into becoming a national player in the adult recreational market and a global player in the medical market with current production capacity of 36,000 kg expected to grow to 113,000 kg by the end of next year. There continues to be very significant demand for Organigram which should only increase as we get closer to legal recreational cannabis in Canada. We will be updating on Organigram when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with Organigram.
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Disclosure: we hold no position in Organigram either long or short and we have not been compensated for this article.