Organigram looks to the future
If you’re like millions of other Canadians, you have kicked off summer l ong weekends by grabbing a sixpack of beer off the store shelf. But two years from now, you might do something different. You might look instead at a cannabis oil cartridge and see Bubbles staring back at you through his pop-bottle glasses.
With the Justin Trudeau government preparing to introduce l egislation decriminalizing and regulating cannabis for recreational use, Organigram, the largest licensed medical marijuana producer in the Maritimes, is preparing to be a major player in the emerging market. Toward that end, it has signed two partnerships, one of which calls for the production of Trailer Park Boys- branded marijuana products.
Since the show first aired in 2001, The Trailer Park Boys has become a fixture of the Canadian entertainment landscape. And since 2014, thanks to an agreement with Netflix, audiences in the United States and around the world have followed the misadventures of Ricky, Julian and Bubbles, too.
Organigram and show producer TPB Productions agreed that the pairing of a licensed marijuana producer in New Brunswick and three fictional cannabis- l oving residents of a Nova Scotia trailer park made a lot sense.
“We both have a strong connection to the Maritimes, and that makes us unique in our respective industries,” Ray Gracewood, chief commercial officer at Organigram, said when the deal was signed in November. “This relationship solidifies one of our strategic building blocks as we plan for the legalization of recreational use in Canada.”
Another building block, Gracewood explains, is to secure strategic partnerships with other industry players. As part of its long-term plan, Organigram is committed to developing production, distribution and sales capacity for cannabis oil extracts, and it has already obtained permission f rom Health Canada to produce and sell them. Two months before the Trailer Park Boys deal, the company formed a product development and distribution agreement with TGS International, an affiliate of The Green Solution, a vertically integrated cannabis company based in Colorado.
The Green Solution owns and operates more than 300,000 square feet of production, processing and manufacturing facilities that are state- licensed and regulated.
It also has more than a dozen s t ores, and it has developed an extensive line of cannabis oil extracts and edibles. Under the terms of the deal, Organigram gets exclusive licensing in Canada of more than 225 unique cannabis products, along with consulting services related to a commercial- scale extraction facility.
When the partnership was announced, Denis Arsenault, chief executive officer at the time, said Organigram had “raised the necessary capital, secured the required real estate and selected the ideal strategic partner to position the company as a major force in the emerging oils and edibles market.”
In the meantime, Organigram has been expanding its facilities and it is expected to have a production capacity of about 17,000 kilograms per year by the end of 2017.
Those two new partnerships notwithstanding, Organigram has been facing several challenges in recent months. In December and January, it issued voluntary recalls of some of its products after low levels of unapproved pesticides were found in dried marijuana and cannabis oil.
The company, however, has been dealing with the problem head- on. It allocated money to cover losses associated with the recalls, and it has offered non- insured customers credit equal to the price of the recalled product. As well, Organigram recently completed an investigation into events leading up to the recalls and it implemented new growing and harvesting protocols. All marijuana harvested after the recall has tested negative for pesticides, and the company will be posting test results on its website starting this week.
“When you go through a crisis you learn a lot about your employees. You can i dentify t hose who are strong, those you can build a foundation on,” says Arsenault, who is now Organigram’s executive chairman. “Through that process you become a better company. Successful companies have a lot of good people.
“If you have to face a crisis as a company, it’s better to face it when you’re relatively small,” he continues. “It’s better that we’re facing it now rather than a year and half down the road, when the impact might have been catastrophic.”
Organigram executives are confident that the company will become a leader in the Canadian recreational market, which some analysts predict could be worth as much as $10 billion.
“We are a well- run company, not an opportunistic enterprise, and we expect to be one of the top marijuana companies in terms of size and capability,” says Gracewood.
“The recalls have battered our stock but haven’t changed our long-term prospects,” adds Arsenault. “We are now in a position to capitalize on the recreational market, domestically and internationally. Our intention is to own the Maritimes and expand from there.”