Will OrganiGram Stock Finally Capitalize on Cannabis 2.0?

Pot-stock traders might recall that the rollout of Cannabis 2.0 was expected to have a positive impact on OrganiGram (NASDAQ:OGI) and other cannabis companies. Indeed, there was plenty of hype surrounding Canada’s rollout of cannabis derivatives such as edibles, beverages, topicals and concentrates. Unfortunately for OrganiGram stock investors, the hype exceeded the reality in 2019 and early 2020.

Will OrganiGram Stock Finally Capitalize on Cannabis 2.0?

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This was clearly evident in the share price, which steadily declined throughout much of the year.

Then came the onset of the novel coronavirus, which further complicated the dynamics of the global cannabis market. However, even with the industry-wide issues at play, there may be hope on the horizon for OrganiGram stock and those who invest in it.

The company’s commitment to the success of Cannabis 2.0 might pay off soon. Plus, the company is repopulating its workforce, signaling a possible turnaround for OrganiGram. But are these rays of sunshine enough to outweigh the industry’s cloudy outlook?

Cannabis 2.0 Isn’t Dead

With some cannabis companies struggling with supply headaches and rapid cash burn, next-generation cannabis derivatives offered hope of a pot-stock revival.

That revival seemingly never got off the ground, but to the company’s credit, OrganiGram isn’t giving up on Cannabis 2.0. It could even be said that the company’s doubling down on its bet that the cannabis-derivatives market will pick up in the back half of 2020.

Specifically, OrganiGram announced its plan to rollout its Cannabis 2.0 products to the company’s medical-marijuana customers. This will include OrganiGram’s vape pens and vaporizer pods under the Edison Cannabis Company brand. Also included will be the company’s Edison Bytes brand chocolates.

CEO Greg Engel seemed to emphasize that this cannabis-derivatives rollout is targeted towards the medical side of the market: “Organigram has a deep and long-standing commitment to our medical cannabis consumers … As more and more patients turn their attention to new forms of cannabis, we are proud to offer them access to an innovative and growing product portfolio.”

Investors shouldn’t view the cannabis-derivatives push as a panacea for OrganiGram or for the marijuana industry in general. Still, it’s encouraging to know that this company hasn’t given up on Cannabis 2.0.

Besides, this product rollout could bolster OrganiGram’s bottom line. Cannabis-derivative products are often higher-margin items compared to raw cannabis products. It remains to be seen, but it’s possible that OrganiGram’s product-line expansion could make the company more profitable in the long run.

Getting Back to Work

It’s usually a good sign when a company is hiring more employees. Therefore, OrganiGram stockholders should be encouraged to learn that the company is now recalling around 50 employees to its Moncton, New Brunswick campus.

“These employees will fill core roles across various departments that have been deemed highest priority by the Organigram leadership team in this initial phase,” the company stated. The announcement should provide a much-needed shot in the arm for discouraged OrganiGram shareholders.

The workplace at OrganiGram will look quite different as the Covid-19 pandemic necessitates additional safety measures. As a result, the recalled workers will likely observe more cleaning and hand sanitizing as well as social-distancing measures at the Moncton campus.

Shareholders should be glad to know that this could just be the first phase of a broader return-to-work plan for OrganiGram. However, the path to a full return to work isn’t without obstacles. In particular, concerns about safety in the wake of Covid-19 haven’t dissipated.

Thus, “[s]ubsequent phases of this plan will be dependent upon public health and safety guidelines and the evolving needs of Organigram’s business,” added the company in its statement on the matter.

The Takeaway on OrganiGram Stock

There’s no guarantee that OrganiGram’s new Cannabis-2.0-products rollout will generate strong profits. Also, we can’t be sure that more employees will be permitted to return to work soon.

Still, OrganiGram’s investors should appreciate the baby steps. Progress can lead to profits, which in turn could have a positive and lasting impact on the share price.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarketsFinom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, https://investorplace.com/2020/06/will-organigram-stock-finally-capitalize-on-cannabis-2-0/.

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