Organigram ‘assessing options’ after unfavorable ruling on cannabis edibles

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Health Canada has concluded that Organigram Holdings’ Edison Jolts lozenge cannabis products should be classified as edibles rather than extracts.

The decision – announced in a late Friday news release – is a blow to the Canadian cannabis producer because extracts of this nature are potentially a much more lucrative product than edibles under Health Canada’s classification system for ingestibles.

That’s because the distinction between a cannabis edible and extract has major implications for the marketability of those products in Canada.

Any cannabis product classified as an “extract” has 100 times more allowable THC per package than a product classified as an “edible,” making it more appealing to some consumers.

Organigram has stopped the production of Jolts in its current format and is working with regulators to sell any remaining inventory to provincial distributors.

“We are disappointed with the outcome of Health Canada’s further review of our Jolts product,” CEO Beena Goldenberg said in a statement.

“Our patented Jolts lozenge was launched over two years ago following significant research and development and was specifically designed to appeal to consumers looking to access regulated and tested ingestible products from the legal market that met their needs for potency and price.

“We are currently assessing our options to continue to meet the needs of consumers while retaining them within the legal market.”

A federal court had ruled last August that Health Canada breached its duty of procedural fairness when it decided that Organigram’s lozenges should be classified as “edible” cannabis rather than extracts.

Justice Cecily Strickland kicked the decision back to Canada’s health department to review its initial decision and make a new determination involving the Jolts lozenges.

It took Health Canada more than six months to make the final redetermination, which ultimately produced the same outcome as the first decision.

In January 2023, Health Canada began asking some federally licensed cannabis companies to stop selling certain ingestible products that the regulatory agency says are incorrectly classified and labeled as “extracts” rather than “edibles.”

It’s not clear what impact the Health Canada decision will have on other companies producing similar products, or if the agency will commence a crackdown on noncompliant companies.

Some ingestible cannabis products the regulator considers noncompliant with federal rules, made by competitors to Organigram, were still widely available in Canada as of late 2023.

Shares of Organigram trade as OGI on the Nasdaq and Toronto Stock Exchange.