As Canada’s biggest cannabis producers lose money hand over fist, companies that execute successfully in their home country and overseas are poised to stand out.
One such company is Organigram.
The New Brunswick-headquartered producer is laying the groundwork to capitalize on the next round of legalization in Canada – the launch of the edibles, extracts and topicals market later this year.
Part of that strategy involves finding a globally focused beverage partner.
Automation is also key for success, Organigram CEO Greg Engel said in an interview with Marijuana Business Daily.
“When you go to edibles, having not only automated production but automating packaging is going to be critical because it’s going to be about throughput, consistency and quality,” he said.
Engel said Organigram is “looking more globally strategically” and has no plans to launch its own infused beverages in the near term.
“We will have a range of vaporizable products available for launch and then chocolate products shortly thereafter with other derivative products to come in early 2020,” he said.
“Our experience with Rec 1.0 is that it is important to have a consistent supply of products at launch.”
MJBizDaily sat down with Engel to talk about the next wave of cannabis products and international partnerships.
According to a recent MJBizDaily report, cannabis producers – even the largest ones – are mostly unknown outside Canada’s cannabis industry bubble. How do you overcome that?
It’s an opportunity for companies like Organigram to continue to get our message out, talk about the fundamentals in business, and some of the key things we’re doing.
Reputationally, one of the key things we’ve done is to make sure we have a fully independent board and an independent chair. Good governance is critical.
I’m the only insider that sits on the board. It’s a good example of the transition point in the industry from founders to a more traditional business model.
You recently made your biggest international investment to date. In a sea of opportunity, how do you weigh global options?
My decades of experience in pharma and biotech (indicate that), other than a few southern European countries, typically many of those European countries are late adopters on pharmaceuticals.
So, they’re not jumping on cannabis as an option that quickly necessarily. Medically, beyond the German market, we’re seeing very slow movement.
But it will grow.
I think the near-term opportunity is definitely CBD.
We’re actively looking right now. Regarding near-term opportunities for companies, the CBD and nutraceutical health market is dramatically underserved in Europe. There is tremendous opportunity there.
In Europe, what do you think must happen for quicker industry maturity for medical cannabis and CBD?
What I’d love to see in Europe is a more centralized kind of regulatory structure. It’s spotty.
Different markets have different regulations in place, and it is treated not as a drug product but as a food additive. And there also has to be more rigorous controls put into place. We know from companies that we’ve spoken to that there are products on the shelf that don’t contain what they say they contain.
The European Union as an entity has an opportunity to do that in a more fulsome fashion and put a pan-European regulatory framework in place, which I think would be beneficial.
On the medical side, it’s going to be country by country. In general, I think many of European jurisdictions are going to want to see a more traditional pharma-like product, rather than a smoked form.
In Canada, what did you learn in “Cannabis 1.0” that you can use in “Cannabis 2.0?”
A couple of key learnings:
- One is that retail stores matter. Certainly, what we’ve seen to date is that in provinces that have a higher percentage of retail stores versus population, the sales from the legal framework are much higher. Part of that is because many consumers may not be comfortable buying online.
- The other thing in our strategy is “depth versus breadth” has really played well. The consumer can come back and have that same experience and have access to the product.
If you look at a consumer packaged goods (CPG) market, whether it’s a Walmart or Shoppers Drug Mart, if the product was inconsistently available, at a certain point they no longer list you.
That hasn’t happened in the cannabis space. But certainly I think for some of the provinces where they’ve had really inconsistent and variable supplies from companies, it is going to impact the agreements they sign with those companies for Cannabis 2.0.
Are partnerships with consumer packaged goods companies important for cannabis companies?
The flip side to that is: Do CPG companies need a cannabis partnership? We’ve seen a number of deals here … but it’s really been three alcohol-beverage deals and one tobacco deal. I think it depends what market you’re looking at.
If you’re a global CPG company and you want to enter the CBD market, do you test marketing and product development in Canada, which is a phenomenal location to do that?
We’ve developed a water-soluble, tasteless, odorless, thermally stable, kinetically stable additive for beverages, and … are actively pursuing a global partner to utilize our proprietary formulation and use biosynthesis as a source in the future.
… So, part of our approach has been to create a solution for a potential partner.
How do you find a dance partner for drinkables?
We’re not going to launch a beverage ourselves today because we prefer to do it with a partner that has proven formulations on taste and proven formulations on mouthfeel and the whole side of that.
However, there’s still a lot of uncertainty about what the beverage market is going to look like. It’s almost nonexistent in the U.S., but it’s all about developing that fast-acting and short-duration formulation.
If it’s the right partner, you’ve got to look at what each party brings to a partnership.
So, that’s our approach: Let’s create technology in multiple areas that would be value to a partner.
Correct. We’re focused on global players. It’s still to be determined when they’re going to enter the market and where they stand. If it’s beverage alcohol, if it’s CPG, if it’s other verticals.
There’s a lot of interest out there, but we haven’t seen any other deals since the InBev deal with Tilray.
This interview has been edited for length and clarity.
Matt Lamers can be reached at firstname.lastname@example.org