Like many Canadian cannabis companies, OrganiGram (TSX: OGI) (NASDAQ: OGI) has had a tough year, losing 75% of its value over 12 months and having to dip into the markets to raise cash.
Growing pains associated with Canadian cannabis legalization plagued OrganiGram's once-promising roll out of regulated cannabis products. Optimistic executives did not help manage investors' expectations.
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Help is coming
Fortunately for the company, a positive catalyst is now easing some of the pain. In January, the Canadian government began its cannabis 2.0 program in which derivative products made from the marijuana plant can be legally sold in the form of an oil to be cooked into an edible product, used as a trans-dermal product like lotion, or used with a vaporizer.
Cannabis derivatives carry a higher margin than dried cannabis; producers make more money by selling a processed candy than they do the plant itself.
Product release
This week, OrganiGram finally released its medical line of cannabis 2.0 products, including "Edison vape pens powered by Feather; Edison-branded pods specifically for PAX Era vaporizers; and Edison Bytes chocolates in dark and milk chocolate, in both one and two pack formats," according to its press release.
This launch comes months after other companies launched theirs. For instance, Aurora Cannabis (NYSE: ACB) released its competing product lines in January.
Earlier this year, OrganiGram tested its preliminary shipments of derivative products to see how they were received among users. The next few months were dedicated to perfecting recipes and preparing for market launch.
Now OrganiGram can begin to realize the incremental sales associated with derivative revenue as its competition has been doing so far this year. While the cannabis producer was late to the party, this news is a welcome development for investors.
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Bradley Freeman owns shares of Aurora Cannabis Inc. The Motley Fool owns shares of and recommends OrganiGram Holdings. The Motley Fool recommends OrganiGram Holdings. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
