Organigram Gets the Green Light for Cannabis Expansion

Organigram Holdings Inc. (TSXV:OGI) will have a target production capacity of 36,000 kg/year of dried flower equivalent once the remaining 10 Phase 3 rooms come online

SmallCapPower | June 6, 2018: Organigram Holdings Inc. (TSXV:OGI), a Moncton-based medical cannabis producer and Canadian marijuana stock, Tuesday said it has received an expanded cultivation license from Health Canada for its previously-announced Phase 3 expansion. The entire perimeter of the expanded facility is approximately 40,000 sq ft and the expanded license will compass the first six of Organigram’s new 16 three-tier cultivation rooms.

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The remaining 10 Phase 3 rooms are expected to come online on or before June 30, 2018 in stages pending Health Canada approval, at which point Organigram will have a target production capacity of 36,000 kg/year of dried flower equivalent. This, the Company believes, would make it one of the Top 5 licensed producers in terms of current production capacity.

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Also, Organigram announced on Monday that it has signed a non-binding term sheet to invest $10 million in cash into Eviana for 8.7 million common shares of Eviana and common share purchase warrants. This deal comes just a month after Organigram signed a non-binding term sheet to acquire up to a 25% stake in Alpha-Cannabis Germany.

Read: Canadian Cannabis Stocks That Are Top Takeover Targets 

Eviana Health Corporation delivers customized consumer health care products using natural hemp strains of cannabis sativa for cannabinoid-based topical creams and products and cosmeceutical and nutraceutical merchandise. Post-closing, Organigram will own ~26% of Eviana’s outstanding shares on a non-diluted basis and ~40% on a fully-diluted basis.

Additionally, the Companies have negotiated the preliminary terms of an off-take agreement whereby Organigram shall have the right to purchase up to 50% of Eviana’s annual CBD oil production (or comparable form including but not limited to crystals) at 95% of the agreed raw CBD oil (or equivalent) wholesale price for a period of five years. The option to purchase a percentage of Eviana’s annual CBD oil production is based on Organigram’s continued ownership in Eviana. This potential investment supports Organigram’s aggressive growth strategy and helps ensure that Organigram is well prepared to meet the international demand for CBD oil.

Organigram Holdings Inc’s stock currently trades at market capitalization of $623.1 million on the TSX with price-to-book ratio of 3.87x.

Disclosure: Neither the author nor his family own shares in the company mentioned above.

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