Green Organic Dutchman: Early Access to Canada’s Premier Licensed Producer
February 16th, 2017
Canada’s cannabis industry could become a $22.6 billion industry, while base retail sales are expected to account for about $8.7 billion of that figure. With 35 licensed producers (LPs), these dynamics have created a compelling opportunity for a handful of companies authorized by Health Canada to grow and sell cannabis. The Green Organic Dutchman’s upcoming IPO offers investors a unique opportunity to buy into an LP early on.
In this article, we will take a look at why Canadian licensed producers represent an attractive investment opportunity and why investors should watch for The Green Organic Dutchman’s IPO.
Why Invest in Canadian LPs?
The Canadian cannabis industry could become a $22.6 billion industry, according to Deloitte and RIWI Corp., driven by more widespread medical use and upcoming recreational legalization. The analysts further estimate that the base retail market for cannabis could be worth up to $8.7 billion in annual revenue, while the remainder of the annual revenue would be divided amongst testing labs, security providers, and other ancillary industries.
The $8.7 billion in annual revenue from base retail sales would presumably be divided amongst only 35 licensed producers. Under the Access to Cannabis for Medical Purposes Regulations (ACMPR), Health Canada has designated these licensed producers as having the exclusive right to grow, process, and sell dried marijuana, cannabis oils, and related products to Canadians through direct mail – the distribution method under Canadian laws. Some of the licenses only allow for cultivation while others only allow for sale, further narrowing the competitive landscape.
Many of these licensed producers began as over-the-counter stocks and eventually became worth hundreds of millions or even billions of dollars. In fact, Canopy Growth Corp. (TSX: WEED) (OTC: TWMJF) – the largest licensed producer at the moment – became the first “marijuana unicorn” with a valuation of over C$2 billion. Others like Organigram Holdings Inc. (CSE: OGI) (OTC: OGRMF) and Emblem Corp. (CSE: EMC) are worth over $100 million.
Well Positioned for Success
The Green Organic Dutchman is a licensed producer, for both cultivation and sale, founded and financed by the people behind Organigram Holdings Inc. (CSE: OGI) (OTC: OGRMF) and Emblem Corp. (CSE: EMC). Since going public, these two companies have returned 400% and 750%, respectively, to shareholders that became involved early in the process. The team aims to do the same with their involvement in the Green Organic Dutchman.
The Green Organic Dutchman has the initial capacity to grow 1,000 kilograms of dried marijuana per year with fully-funded expansions in progress to reach 14,000 kilograms per year. By comparison, Canopy Growth Corp. (TSX: WEED) (OTC: TWMJF) has a capacity of 19,100 kilograms of dried cannabis and 9,800 kilograms of cannabis oil per year across its subsidiaries with a market capitalization of C$2.13 billion, according to its latest SEDAR filings.
In addition to a high production capacity, the company provides premium organic cannabis that commands higher selling prices and profit margins. More than half of consumers prefer organic products to conventionally grown products at the supermarket and cannabis-based products aren’t any different. These preferences are likely heightened by the recent instances of recalls and contaminated products hitting the market.
The Green Organic Dutchman has cultivated partnerships with leading institutions across all areas of its business in order to increase the odds of success.
Larssen Greenhouse provides 25+ years of professional engineering experiences and has led the design-build of over 15 cannabis facilities across multiple jurisdictions. Eaton leverages its global leadership position in power management to deliver cost-effective energy solutions to these grow operations. And, Ledcor spearheads building management as the second largest construction company in Canada with over 6,000 employees.
In addition to its construction partnerships, the company plans to leverage its close relationships with other licensed producers to sell its organic product at wholesale prices as high as $5.00 per gram. Management has also been developing strategic partnerships with marijuana clinics, pain clinics, and veteran networks that don’t involve any commission structures. Drug stores, pharma companies, liquor stores, and dispensaries represent additional potential joint ventures.
The Green Organic Dutchman represents a compelling opportunity within Canada’s burgeoning $8.7 billion per year cannabis industry. With experienced managers from Organigram and Emblem at the helm, the company’s executive leadership is highly-qualified to execute on its vision to create a leading licensed producer. The company’s extensive partnerships further increase the odds of success over the coming months and years.
The company recently completed a successful initial financing of $13.2 million that was three-times oversubscribed, which suggests extremely high demand for its shares with over 1,300 new shareholders added to its investor base.
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