OGI So, which Canadian pot stock is going to break this money-losing streak and be the first to push toward a no-nonsense, recurring operating profit (i.e., one that doesn't involve one-time benefits or fair-value adjustments)? If my arm were twisted, I'd choose OrganiGram Holdings (NASDAQ:OGI).
An up-close view of a flowering cannabis plant in a large indoor grow farm.
Here's why OrganiGram will be the first Canadian pot stock to generate a recurring (and real) profit New Brunswick-based OrganiGram is unique for a number of reasons. Among major growers, it's the only company located in the Atlantic region of Canada. This can be particularly helpful in serving these eastern provinces. Although Nova Scotia, Prince Edward Island, New Brunswick, and Newfoundland and Labrador are lesser-populated provinces, cannabis usage rates tend to be higher among adults in these Atlantic provinces than the national average.
OrganiGram is also different in that it's working with just one major grow facility in Moncton. Rather than having to spend money developing and maintaining multiple grow sites, OrganiGram has focused its efforts on building up its only growing and processing capacity at Moncton.
Speaking of which, OrganiGram's cultivation efficiency is particularly interesting. Because of its proprietary three-tiered growing system, the company should produce 113,000 kilos annually, at its peak, in less than 500,000 square feet of space. Conservatively, this means OrganiGram will yield about 230 grams per square foot, which looks to be about double what most of its peers will be averaging on a yield-per-square-foot basis.
What's more, OrganiGram's third-quarter operating results show that it's well on its way to leading its peers into recurring profitability. During the fiscal third quarter, OrganiGram produced CA$24.75 million in net revenue and a gross profit of CA$12.28 million, before fair-value adjustments. This compares to CA$11.11 million in operating expenses. In other words, OrganiGram was profitable on an operating basis in Q3 2019 by CA$1.17 million, but was ultimately dragged down by a CA$12.46 million fair-value adjustment that worked against its gross margin. https://www.fool.com/investing/2019/10/19/this-canadian-pot-stock-should-generate-the-first.aspx
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