Organigram Holdings Inc. (Nasdaq: OGI) is betting on big growth in Germany’s medical cannabis market, executives said this week during the company’s first-quarter earnings call.
CEO Beena Goldenberg told analysts that Germany’s medical cannabis market has “grown four times since the announcement last April of the decriminalization of cannabis,” presenting a key opportunity as the company awaits European Union manufacturing certification for its Moncton facility.
The company has rapidly gained market share in key product categories, moving from 16th to first place in vapes with over 22% market share while also claiming the top position nationally in pre-rolls, according to Goldenberg.
The company expects to receive EU Good Manufacturing Practice certification this spring, which Goldenberg said would eliminate middleman converters and boost margins on German sales through its partnership with Sanity Group, where Organigram has invested $21 million.
“Once we get our certification in our facility, not only does that eliminate the middleman, which increases, obviously, our margins and our end customers margins as they get our product, but… Sanity’s demand for our flower would go up,” Goldenberg said.
The company plans facility improvements aimed at increasing production capacity. CFO Greg Guyatt said Organigram will invest $16 million to upgrade 76 flower rooms with higher-intensity LED lighting at its Moncton site starting in March. The project is expected to boost plant yields by up to 15%, adding 6,100 kilograms of annual capacity.
A separate project to add pre-vegetation rooms by repurposing storage space could add another 6,700 kilograms of annual capacity by the first half of fiscal 2026, executives said.
The facility upgrades come as Organigram begins integrating its recent $90 million acquisition of Motif Labs. Early results show the deal could exceed initial projections of $10 million in annual cost savings within 24 months, according to Goldenberg.
The company has already found efficiencies in its operations, with 21% of harvests now coming from seed-based cultivation versus traditional cloning methods. A distribution optimization in Western Canada is expected to yield $400,000 in annual savings.
Guyatt told analysts the company expects to realize about $5 million in synergies during the second half of fiscal 2025 as integration efforts ramp up. He projected positive operating cash flow by the fourth quarter, traditionally the company’s strongest period due to seasonal patterns.
The company also expects to receive the final $41.5 million tranche of its investment from British American Tobacco this month, which will be fully dished out to those international growth initiatives.
Aside from Germany, the company also sees opportunity in Australia, particularly for “2.0 products” like vapes and gummies once regulations allow. The company currently serves four international markets, though executives expressed reluctance to invest in U.S. markets where capital would be “ring-fenced,” according to Goldenberg.
[[{“value”:”Management sees German medical market quadrupling as it awaits key EU certification and works to boost production capacity.
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