Organigram Holdings Inc (CVE:OGI) (OTCMKTS:OGRMF) (FRA:0OG) CEO Greg Engles shares his thoughts with the positive reaction in recent weeks from shareholders. He believes the company’s vision is resonating with the public markets and that OrganiGram is positioned well in terms of cannabis production, patient out-reach and recreational branding.

TRANSCRIPT:

James West: Hey, welcome back to Midas Letter Live. My guest this segment is Greg Engel. He’s the CEO of Organigram Holdings Inc., trading on the TSX Venture under the symbol OGI. Greg, welcome back.

Greg Engel: Great to see you again, James.

James West: Greg, you’ve been putting out some fantastic news: the trading in the share price has adopted this incremental incline over time in a narrow bandwidth of volatility, which is utterly best case scenario for any public company. What do you feel is driving most of the interest in the stock these days?

It’s a great question. I think we’re seeing that people are now, our messaging around ‘focus on fundamentals’, focusing on our strategic vision both in terms of what we’re doing domestically and internationally, is really resonating with investors. So, and we continue to urge investors that it’s really critical at this point to make sure that companies are delivering on their promises, delivering on their fundamentals. And you’ve seen that more recently with us in terms of what we’ve done internationally; we’ve alluded to it in the past, and also some of the technical work we’re doing in terms of product development and innovation as well. So those are really having an impact with investors.

James West: Right. In May 17th, you announced that you’ve received an export permit for Australia, and so, how significant is that for the economics of the company going forward?

Greg Engel: It’s a big deal, and certainly so – I mean, we’ve been very active. As you know, we brought in our current president of our international group, Guillermo Del Monte, came from ICC, has years of experience on the international side. So in the last month, we’ve actually received an export permit for Australia, so that’s our first global international shipment. We’ve also made an investment in a German company called Alpha Cannabis, and that will allow us to access the German marketplace.

And most importantly as well is that we also received our dealer’s license, so we’re now one of 10 licensed producers as far as I know, in terms of numbers, that have a dealer’s license, and that allows us to not only export our dried cannabis products, which we can do today, but now with the dealer’s license, we can export our current oils as well as different formulations of oils to markets in Europe and Australia and other locations.

So those are all key facets, and more to come.

James West: Right. You actually put on quite an investor day recently that we were privileged to be at, and it was quite a revelation to me to see how much thought had gone into your new brands. And so you’re clearly positioned and ready for the onset of the recreational market, and so, but it was also very clear that your medical side isn’t going to suffer because of that. And so, tell me about those brands and the thinking that went into them, because they’re kind of fun.

Greg Engel: Yeah, no, I mean, certainly as you say, our focus is, we’re a medical company today; our focus is very much on serving our medical patients, and that’s critical, right? We’ve got to have a commitment to them, and we’re supplying them with prescription medication, really, at the end of the day. So that has to continue.

But you know, in terms of our adult recreational brands, I mean, we had pre-tested the idea of Edison with the Edison Project by OGI last fall to really see, is there a place on the medical side, and was that going to resonate into the recreational market, for Edison as a brand, and also for a premium, large-flower, hand-trimmed, and you had a chance to see our facility recently so you’ve seen some of the sizes of flowers that we’re producing.

James West: Yeah.

Greg Engel: And we’ve taken the knowledge and the learns we had from that brand and created, you know, the Edison Cannabis Company, as well as the Edison Cannabis Company Reserve Line, which is really that premium product, for the adult recreational market. So that’s part of our strategy; that’s going to be our mainstream and premium strategy. We’re also leveraging our organic production into a line called Anchor Organics, with a little bit of a call-out to Atlantic Canada, with the Anchor name, and we expect to be bringing those organic products back to the market this July/August, this summer.

And then finally, Trailer Park Buds, which is a bit of a, you know, is a nod to kind of Trailer Park Productions and that linkage, for people that really can find humour in kind of looking at themselves and the whole industry and stuff. So that’s a real comprehensive strategy, and one that – we were just at Lift on the weekend, as you know, Lift was on here, and you know, great response in terms of those brands. People that were current cannabis users or cannabis-naïve were coming up and just wanted to hear more about them, and we’re really resonating with them. So, phenomenal response.

James West: Wow. Awesome. So the cannabis brands that are focused on the recreational: they’re not actually available now, you’re going to wait till the regulations change?

Greg Engel: Absolutely, and that’s one of the keys. The regulations are going to be, actually, are not going to be have the same brands available in the adult rec market that you have in the medical market, so that’s going to be a difference.

James West: Right. And I noticed also that there was a lot of consideration for the pricing of your products, so that the Edison varieties were clearly priced higher to appeal to a more connoisseur type of client, whereas the Trailer Park Buds were generally better priced and to appeal to, you know, cost-conscious consumers.

Greg Engel: Absolutely. And so certainly, as you know, a leading indoor producer, and really a company that’s focused on high-quality products, having that Edison line really positions us to kind of key in on the target market. As we’ve talked about before, we’re seeing a lot of expansion in Canada going on with greenhouses.

James West: Right.

Greg Engel: And we know, and as we continue to produce, you know, a premium product, and our costs continue to come down because our yields are growing so significantly, we’re able to bring that premium product to the market. And we know four years in, in Colorado, that there’s a major place for that premium product. But you’re right, you’ve got to look at your value customer, and you’ve got to look at a range of customers. So that’s where the Trailer Park Buds line falls in. so.

James West: Right. The financials have also been looking great, and are you able to talk about what the financial picture performance-wise is going to look like going out 12 months?

Greg Engel: Not 12 months. I mean, certainly I would make two comments: one is that we’ve been actively building up inventory in advance of the adult recreational market, so that’s key, that when the market starts we’re able to channel-fill across the country; we’re really a national player, not just in Atlantic Canada.

And then certainly when that launches, you know, we had previously back in April received Phase II approval, which was part of the facility you saw. That brought us up to 20,000 kilos, and we are imminently expecting our Phase III to be online, which will bring us up to 36,000 kilos of licensed capacity. And to put it in perspective, that’s actually more licensed capacity than Aphria has today. So it shows where we’re positioned and put us in the top kind of four in terms of production capacity for the near-term market opportunities. So, phenomenal for us as a company to be able to supply the adult rec market at launch, because it’s really going to be critical in terms of ramp positioning and making sure that you have shelf space.

James West: Yeah, you bet. So then, is it likely that 2019 is going to be a profitable year for Organigram?

Greg Engel: I think you’re going to see some good things out of us this year. I mean, certainly as we do our first selling into the rec market, with the inventory we’ve built up, you know, we expect to have a very good year this year before the end of the calendar year.

James West: Okay, great. Well, let’s leave it there for now. We’ll come back to you in a quarter’s time and torture that one a bit more! Thanks for joining me again, Greg.

Greg Engel: Okay, great. Thanks for having me again, James.