Organigram Seeing Increased CBD Demand in Canada After Legalization

Organigram Holdings (TSX VENTURE: OGI) (NASDAQ: OGI), the parent company of licensed cannabis producer Organigram, said that it saw an increased demand for CBD from Canada after the recent legalization of adult-use, recreational cannabis.

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The company recently shipped more than 130,000 units of pure CBD oil destined for markets across Canada.

“Since legalization, Canadian consumers have proven themselves to be not only receptive to, but surprisingly well educated about, the benefits of CBD,” Greg Engel, the CEO of Organigram, stated.

“Consumers have embraced the idea of cannabis as it relates to overall wellness. While medical patients have long since discovered the potential benefits of CBD, we didn’t anticipate how that awareness would translate into the recreational market but are pleased to be able to help meet this consumer demand,” Engel added.

Meeting Growing CBD Demand

Organigram attributed its ability to respond to growing CBD demand in part to the success of its relationships and provincial partners.

The company has a long-term agreement in place with 1812 Hemp, a New Brunswick-based industrial hemp research company. The deal initially offered Organigram access to approximately 6,000 kg of dried hemp flower harvested in the fall of 2018 which the company purchased and sent for extraction in the first calendar quarter of 2019.

In addition, Organigram has a right-of-first-refusal on future procurement of hemp from 1812 Hemp which is expected to increase significantly over 2018 levels in 2019 and beyond.

Likewise, as announced in early 2019, Organigram’s multi-year extraction contract with Valens GroWorks Corp. means Valens will continue to extract cannabis flowers and trim from Organigram’s Moncton operation as well as hemp to produce extract concentrate.

As expected, the concentrate is now being used by Organigram to produce cannabis oils. Following the legalization of derivative-based products, the company plans to use the concentrates in the production of derivative edible and vaporizable cannabis products.

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