Organigram Holdings (OGRMF) is licensed as a Licensed Producer of medical marijuana, including dried cannabis and cannabis oil, under the ACMPR. Pursuant to its license, the Company is permitted to possess, produce, sell, provide, ship, deliver, transport and destroy medical marijuana, marijuana plants (including plants and seeds) and cannabis oil, in conformity with the ACMPR, and made its first shipment of medical marijuana to registered patients in September 2014. As at the date hereof, the Company has one of 32 licenses to produce and sell medical marijuana and one of 20 licenses to produce and sell cannabis oil under the ACMPR. The Company has the only license to produce and sell both medical marijuana and cannabis oil in Atlantic Canada. Moreover, management believes that the Company benefits from a number of competitive advantages which will allow it to be strategically positioned for future potential developments in the industry.1

The Company has entered into agreements with several organizations committed to helping first responders and veterans deal with chronic ailments. Under the terms of the agreements, each of the organizations will refer patients to OrganiGram. The Company continues to pursue, as part of its business model, further strategic partnerships and opportunities with other suppliers and organizations and continues to actively evaluate such opportunities.2

Since commencing operations at its main facility located in Moncton, New Brunswick, the Company has continued to expand the main facility to create additional production capability. The Company has also strategically acquired land and buildings adjacent to the main facility that would be bring the Company's production space to 429,000 square feet over 17.5 acres.

The Company's license was amended August 10, 201 7, allowing the Company to store substances inventory up to a maximum storage capacity value of $31 , 250,000 for the security level 8 vault, and $250,000 for the security level 5 safe. The amended License has a current term that expires March 27, 2020. It is anticipated that Health Canada will extend or renew the License at the end of its term. See "7.1 Financial Risk Factors".

Medical marijuana and cannabis oil patients order from the Company primarily through the Company's online store or through the phone. Medical marijuana and cannabis oil is and will continue to be delivered by secured courier or other methods permitted by the ACMPR. The Company's prices vary based on grow time, strain yield and market prices. The Company may from time to time offer volume discount or promotional pricing.

The Company is also authorized for wholesale shipping of medical marijuana plant cuttings and dried flower to other Licensed Producers. The Company has already completed sales through its wholesale strategy and based on current costs, management expects the wholesale shipment strategy to continue. This sales channel requires minimal selling, general and administrative costs over and above the cost to produce plant cuttings and dried flower.

Business outlook

The Company continues the ongoing development of 35 English Drive and 320 Edinburgh Drive to add additional capacity and permit the increased production of medical marijuana, cannabis oil, and related products. The increase in capacity is also to prepare for legalization of recreational use of marijuana in Canada. The Government of Canada announced on April 13, 201 7, legislation to legalize the recreational use of marijuana in Canada by July 1, 2018.

The current expansion at its main facility is expected to be completed and operational in the spring of 2018. The expansion plan provides for a significant increase in the Company's cannabis production capabilities, and is designed to increase total production capacity to approximately 25,000 kilograms per year of flower.

With the bought deal for gross proceeds of $50,000,003 announced November 28, 2017, the Company intends to use the net proceeds of the offering within the next 18 months to fund an additional expansion program to construct one of the largest indoor cannabis production facilities in Canada. The expansion plans are expected to add up to 40,000 kilograms per year of incremental capacity which would bring the Company to an anticipated annual output of 65,000 kilograms per year of medical and adult-recreational cannabis products, including edibles, infused oils, and extract products.

Each phase of expansion has a focus on improving quality, safety, and capacity while building on the Company's unique growing methodology that optimizes environmental controls and ensures quality product on an annual basis. To facilitate this expansion, the Company is constructing a 30 mega-watt power substation on-site to ensure a continuous supply of power. Investments in operations have also occurred with recent purchases of automated processing equipment in the areas of potting, irrigation, climate control, harvesting, and packaging. A new super critical C02 extraction system has been installed and will be fully operational in early 2018. This piece of equipment will complement the ethanol extraction processing line to meet the demand for both medicinal and recreational oil products. The Company fosters a safe working environment and recently achieved 365 days without a lost time accident.

The Company continues to plan for the anticipated legalization of edibles and concentrates in the year 2019 by partnering with T GS International LLC, a vertically-integrated cannabis company which owns and operates over 300,000 square feet of state licensed and regulated production, processing, and manufacturing facilities, as well as 11 medicinal and/or adult-use retail locations in the state of Colorado.

To manage this growth, a recent career fair was held in Moncton in October 2017 which had 600 pre-registered applications to help fill the anticipated doubling of the workforce in the next 12 months. As well, the Company has partnered with Community College of New Brunswick to develop a twelve-week cultivation certification program that will develop skilled labour for positions in the Company.

As part of its continuous focus on quality, the Company has adopted Quality Management System and Good Manufacturing Practices standards with the intention for certification to validate the quality programs. All products receive third party testing and results are published on the Company website for full transparency.

Marketing initiatives for the past year resulted in a redesigned website, trade show booths, and packaging. Branding for both the recreational and medicinal markets has occurred and will be implemented during the new fiscal year, including an exclusive Canadian licensing agreement to develop a brand for the Trailer Park Boys. With a focus on product quality, the Company increased the number of registered patients by offering several new dried cannabis options, including premium flower and milled product. The Company also launched its Shubie product with success, a high CBD cannabis oil offering, targeting medical patients looking for an approachable entry point into medical cannabis. As Canadian jurisdictions continue preparing for the recreational marketplace, the Company has been actively involved in various industry-wide initiatives including federal and provincial education, advertising and branding standards, and the development of retail models.

The Company announced on September 1 5, 2017 that it has entered into a memorandum of understanding ("MOU") with the New Brunswick provincial authority for the distribution of marijuana to the adult-use recreational market. Through the MOU, the province of New Brunswick secures a supply of at least 5,000 kilograms of recreational marijuana per year from Organigram. The MOU, one of the first in Canada, is the result of positive, productive and ongoing consultation between the Government of New Brunswick and the Company.

Both the Company and the Government of New Brunswick are committed to the safe and responsible implementation of the upcoming federal legislation regarding access to adult-use recreational marijuana. As a result, as part of the MOU, the Company will also contribute to social responsibility programs that will provide ongoing education, helping ensure public safety remains a priority.

To align itself with capacity growth, the Company has increased their medical field sales personnel by over thirty percent during the fourth quarter ending August 31 , 201 7, and are active in adding to the account management team for the recreational market. The primary focus within the medical market is fostering existing clinic relationships by offering consistent, quality products that meets the needs of the medical patients. The Company also continues to establish new and sustainable long-term strategic partnerships with both traditional family health teams and progressive clinics.

On June 1 , 201 7, the Company finalized the acquisition of Trauma Healing Centers ("THC"). THC specializes in medical cannabis assessment and prescribing and sees patients on a referral basis offering a multi-disciplinary approach to healing chronic conditions. The Company believes this arrangement allows both companies the resources to scale up and achieve future expansion plans.

The company believe these initiatives mentioned will position the Company for continued growth in sales and increase long- term shareholder value.

Recent development

On November 30, 2017 the company is proud to have been honoured with one of the most coveted awards of the evening: Top Sativa Flower for its popular premium flower, Wabanaki in the fourth annual Canadian Cannabis Awards ceremony and gala.

On November 30, 2017 the company announced that it has entered into a letter of engagement with Eight Capital under which Eight Capital has agreed to purchase, together with a syndicate of Underwriters (the "Underwriters") 14,285,715 units (the "Units") of the Company on a "bought deal" basis pursuant to the filing of a short form prospectus, subject to all required regulatory approvals, at a price per Unit of $3.50 (the "Issue Price") for gross proceeds of $50,000,003 (the "Offering").

On October 31 , 201 7, the Company purchased the land and building on 55 English Drive, adjacent to its current campus for a purchase price of $2,000,000 cash. The building is approximately 10,000 square feet with a blue-chip tenant. The property will be used as part of its expansion plans.


  1. ^ https://fintel.io/doc/sec/1620737/000106299319004607/form40f.htm
  2. ^ https://www.organigram.ca
Created by Asif F on 2019/12/09 06:02
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