Like many Canadian cannabis companies, OrganiGram (OGI -1.91%) 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.
Image Source: Getty Images
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, months after other companies launched theirs. To compare, Aurora Cannabis (ACB -5.15%) released its competing product lines in January.
Earlier this year, OrganiGram tested its preliminary shipments of derivative products to examine with provincial buyers and patients. 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.
