The Green Organic Dutchman Holdings Ltd. (TSX:TGOD), one of the Canadian marijuana stocks, has agreed to a Joint Venture with a company in Denmark
SmallCapPower | January 29, 2019: The Green Organic Dutchman Holdings Ltd. (TSX:TGOD), one of the Canadian cannabis stocks, Friday announced the signing of a definitive agreement with Queen Genetics/Knud Jepsen A/S (Knud Jepsen) of Denmark to establish a production Joint Venture (JV) and a Genetics JV. While the production JV will produce commercial cannabis and cannabis oils, the Genetics JV will develop and patent cannabis genetics. Although both JVs will be formed in Denmark, TGOD’s goal is to expand production to other low-cost European jurisdictions in the future, significantly widening its reach within Europe. Green Organic Dutchman already has presence in Europe through its 100%-owned HemPoland, which produces 32,000 kgs of dried hemp and sells cannabidiol (CBD) brands in Europe.
Under the terms of the agreement, TGOD will have exclusive rights to all cannabis-related production from the JV through a guaranteed offtake agreement, while the Production JV will have exclusive access to all intellectual property including cannabis genetics developed within the Genetics JV. The first phase will involve a 2,500 kg pilot program at Hinnerup, Denmark, followed by 25,000 kgs of production in Denmark, and later, multiple low-cost countries across Europe. Valued-added formulations and products from the bulk facility will be marketed in established European and international sales and distribution channels.
Green Organic Dutchman CEO Brian Athaide commented, “This JV is incredibly important to furthering TGOD’s presence in Europe. Knud Jepsen is a remarkable partner, having over 80 years of experience in R&D and cultivating plants in millions of square feet. As we roll out multiple phases of our JV and plan to increase the partnership to multiple countries across Europe, leveraging Knud Jepsen’s expertise as operators, and our expertise in cannabis will be critical to TGOD’s expansion throughout the continent. The partnership will allow TGOD to focus on building global sales and distribution channels, developing proprietary and patentable IP, and furthering brand equity.”
In addition to Europe, Green Organic Dutchman has an international presence in Jamaica (14,000 planned capacity) and Mexico (sales and distribution partnership). Within Canada, construction is underway at two facilities in Hamilton, Ontario and Valleyfield, Quebec. The 150,000 sq. ft., 14,000 kgs annual capacity Hamilton facility is expected to be complete in Q1 2019, with first harvest in 1H 2019. The Valleyfield Facility, the world’s largest organic cannabis facility with total capacity of 142,000 kg capacity annually, is expected to begin first cultivation in Q2 2019 with ramp up in 2H 2019. By 2020, TGOD’s total peak capacity could exceed 200,000 kgs annually, making it a Top 5 marijuana producer.
Post the announcement, shares of Green Organic Dutchman climbed nearly 7% on Friday to close at $3.72 on the TSX, followed by a nearly 9% gain on Monday. TGOD currently trades at market cap of $1.1 billion.
Disclosure: Neither the author nor his family own shares in the company mentioned above.
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