ORGANIGRAM

Navigating the Cannabis Industry

Jordan Hemelspeck
Davvy Chahal
Tanzil Ali
Gagandeep Singh
Tony Tran

NOVEMBER 27, 2017

SHARI ANN HERRMANN
 Contents
Organizational Overview ......................................................................... 3
SWOT Analysis ........................................................................................ 4
Competitor Analysis ................................................................................ 6
Strategy 1 ................................................................................................ 7
Strategy 2 ................................................................................................ 9
People ................................................................................................... 10
Recommendations ................................................................................ 10
Implementation .................................................................................... 11
Predictions and outcome ...................................................................... 14
Bibliography .......................................................................................... 16
Organizational Overview

OrganiGram Holdings Inc. (OrganiGram) , is a licensed medical marijuana

producer based in New Brunswick, Canada. OrganiGram was founded back in 2013

with the goal of improving the quality of life for Canadians by creating jobs and

delivering a safe and most importantly a quality product to Canadians effectively. They

are the first medical cannabis company in the maritimes to be able to sell and produce

medical marijuana. OrganiGram has seen exponential growth in their amount of staff in

the past few years.In 2014 OrganiGram had 17 staff members, that number grew to 70

in December of 2016. OrganiGram is looking into increasing that number to 170 with the

expansion of their facilities. OrganiGrams organizational structure is made up of three

levels. The C-Suite includes the chief executive officer, chief operating officer, chief

financial officer, and chief commercial officer. There are also directors and employees

that carry out and perform certain functions such as garden workers and client support.

OrganiGrams facilities are made up of three buildings with a newly acquired 10-acre

property with a 136,000 square-foot industrial building.

SWOT Analysis

OrganiGram Holdings has a few strengths on which can draw in order to thrive in the

post-legalization market. The first strength lies in the cultivation talent. The company

has been producing for the medical market for several years, which means that it has

developed competency in the agricultural side of the business, producing different

strains that deliver particular medical results. This talent will be important going forward

into the legalization era. Further, the company has been able to develop competency in

the manufacture of edibles. This market is particularly lucrative in US states that have

fully legalized cannabis being able to deliver products with a specific THC or CBD

level, in a variety of formats including mints, cookies and bars, is essential to being

competitive in the recreational marketplace.

The business savvy of the ownership group is another strength, because when the

recreational market opens up there will be tremendous opportunity for the first movers in

the business. If the trends in places like Colorado and Washington hold in Canada, then

there is exceptional opportunity to build a nationwide brand name for high-consistency

products with national distribution. It does, however, take a particular amount of

production, distribution and marketing savvy to execute a nationwide strategy across

Canada. Even large grocery and drug store chains tend to be regional there are

actually not that many companies that have gone nationwide in retail in Canada. Thus,

a high level of business savvy will be the only way that this company can navigate the

different provincial regulations that will come with nationwide recreational cannabis.

There are a few weaknesses, whoever, that must be addressed. The first is that the

company is based on New Brunswick , which means that it is geographically away from
the economic centre of the country, much less away from the Western provinces. While

doubtless there is a market in the Maritimes, gaining access to provincial distribution

channels will likely require some sort of local presence, and being based in a small

market like New Brunswick is definitely a weakness. Furthermore, there are questions

as to whether the company has the capital to go nationwide at present. Given that this

business is not all that legal at present, how much money the company has in advance

of legal cash flow is a pretty fair question. Moreover, no company in the cannabis

business at present has experience at legal marketing it just has not been a thing in

the cannabis business to date.

The opportunity is tremendous a market of 35 million if the company can do

nationwide business, and potentially more if it can crack the code in shipping to the US.

That is for another day getting access to the big four provinces is opportunity enough,

assuming that OrganiGram will gain access to the Maritime provinces and

Newfoundland right out of the gate.

The threats are mainly from competitors and from the reality of local provincial laws. For

example, if Ontario decides that distribution will only be through the LCBO, and that it

will only buy from Ontario suppliers, that could leave OrganiGram out of the biggest

market in the country. Ultimately, that could prove a challenge and a threat to

OrganiGram's ability to go nationwide Further, having sufficient capital has been

identified as a key success factor, so this is something that could be a threat for

OrganiGram, should the company not have enough capital nor enough access to capital

going forward.
A further threat is that many provinces are leveraging their liquor distribution systems for

distribution of cannabis. While local producers often have preference in these systems,

that is not a good thing for a company based in New Brunswick, a small market.

Depending on how the rules in each province shake out, Organigram could potentially

have trouble selling in Nova Scotia or PEI, much less in the lucrative Ontario and

Quebec markets.

Competitor Analysis

The interesting thing is that this business does not technically exist yet, so the

competitive landscape is actually quite unknown. That presents some rather significant

challenges for OrganiGram. It literally does not know if its competitors will be mom-and-

pop shops making hash brownies, or whether it will face market entrants from the

established tobacco companies, growing and selling cannabis at scale.

The experience thus far in Washington and other recreational US states is that there is

almost a wild west with respect to competition. There are a wide range of producers,

and each seeks to sell a variety of products. There are few dominant players in the

market. Many compete strictly in edibles, while others only compete as cannabis

growers, selling to consumers and to edibles producers. The fact that there are no

dominant players has really opened the field for any company with professional

capabilities in terms of packaging, product and marketing. An early capital advantage

can surely help OrganiGram gain a foothold in the market and start to build some

credibility with consumers.

It is worth considering that a highly-fragmented market shakes out to two main types of

competitors. The first is a cost competitor, producing mediocre cannabis at a low cost,

and probably acting a supplier to edibles manufacturers. The other competitor is a

differentiated one with a brand name, possibly some proprietary strains, and products

that perform well in consumer reviews. That sort of competitor likely has the best

chance at long-run success. Being able to compete as a differentiated produced

typically requires a substantial amount of capital, and that has been identified as one of

the most important key success factors for Organigram.

Strategy 1: What strategic choices has the company made?

Organigram has made strategic choices to expand to other potential markets,

adapt to the changing market, and stick to their roots as a company. The growing

business started as a small company selling only organic medicinal cannabis to its

customer base in the early 2013s. As a growing company, Organigram has created

many job opportunities and a large client base in Canada over the years. The company

has made advances in the current cannabis industry in the past and is presently

adapting to the recreational market.

Organigram is making the right choice to expand to a larger market of recreational

users. This expansion could mean a much larger customer base since customers are

either medicinal or recreational users. The company itself has a well-established

presence in the medical marijuana market, if it were able to create a similar presence

while advertising its products to attract recreational use; it would perform very well.
Organigram could potentially find different ways to adapt to the new laws of that will

remove the prohibition of recreational use of marijuana to advance. The company can

consider different forms of distribution. The Cannabis Canada Association stated that

they hope that the Province will allow for private retail sales alongside government

owned stores (Zochodne, 2017) and that Organigram has been working to ramp up its

production capacity before the end of pot prohibition. (Zochodne, 2017). This is a sign

that Organigram has already been trying to increase their capacity for a large amount of

distribution. Organigram is thinking ahead and implementing a concentration strategy,

where they pump all their resources into production and concentrate on distributing to a

single market. If marijuana were to be controlled and sold like tobacco, Organigram

would dominate in the recreational Canadian market. The company has the advantage

of being able to mass produce large quantities and if they were able to sell them in

stores like cigarette packs; it would open up a large opportunity to drastically increase

their market share. This opportunity of expansion could also lead to expanding to

worldwide distribution to places that are able to use marijuana recreationally.

Even with the changing market, Organigram has always believed that improving the

quality of life for Canadians is not just about getting safe, quality product to them

effectively. Its about creating jobs, being good neighbors and contributing to our

community... (OrganiGram, 2017) this statement shows the companies objectives and

achievements since the beginning have been clear. The clear message that the

company portrays I why I believe it is making the right choices towards their goal of

achieving a reputation in both the medical and recreational markets.

Strategy 2: Describe the companys long term objectives.

Organigrams main long term objective would be to be as successful in the

recreational cannabis industry as the company is in the medicinal industry with only a

limited amount of knowledge of the new market. With only a fraction of knowledge of a

different industry, Organigram must make very strategic decisions. There are potential

competitors that may have an edge on Organigram because the competitors may come

from already recreational roots. The competitors may sell their products at a lower price

without it having to be an organic product or sell a different product that Organigram

does not supply. If competitors come up with different products; Organigram must

adapt. In 2016 Organigram partnered with TGS international LLC experienced in

selling and manufacturing edibles. (Case study) This was a display that Organigram is

trying to generate different ways to adapt to the changing environment. The companys

only products were dried cannabis and oil. If they were to find a way to also create a

new product such as edibles that can be used medicinally or recreationally, they will be

able to adapt to their environment. I believe that with the knowledge of the cannabis

market and the way Organigram is reacting to change; they are on the right track to

success in the long run.

People

Many job opportunities came with the growth of Organigram. It was reported that

at the end of March 2016, the New Brunswick government awarded payroll rebates of

up to $990,000 over three years to Organigram to help create 113 new jobs in the

province, this is clear that the company opened up various job positions for the

community. When the company started in 2014 it only had 17 members, but overtime it

increased to 70 members as of December 2016. It is still looking to expand by up to 170

members in the upcoming years. (Zochodne, 2017)

Recommendations

The company is based in a small market of New Brunswick which may act as a
barrier in the nationwide growth of company. Therefore, new branches should be set

up in the economic centre of the country, which will also help to meet the growing

demand of cannabis for recreational purpose.

According to some researches done by government officials, it has come out that
after the law for legalization of cannabis is drawn out, demand of cannabis for

recreational use will be at boom. OrganiGram should start making arrangements to

meet high demand for cannabis. They should hire more employees, expand their

production and expand their distributions.

 OrganiGram needs capital to go nationwide. Before the law is passed for legalisation
of cannabis for recreation use, they should start investing in channels of distributions

so that they have enough of resources to meet the demand and distribute there

products nationwide and even in other countries where cannabis is legal.

Some local provincial laws may pose threat on distribution of OrganiGram. Some
provinces may be willing to get supplies from local suppliers only. For example, if

Ontario decides that they will only buy from Ontario suppliers. To deal with threats

like these OrganiGram should start expanding their business and stronghold there

positions in different provinces to enjoy Monopoly in market.

As we have the dynamic environment in Canada, OrganiGram should keep a track

on what might happen next. They should come up with a new department which will

predict and scan the environment regularly. This will help them to get aware before

the problem arise and take necessary steps to avoid it.

Implementation

Government has shown signs of legalising cannabis for recreational purpose.

Companies like OrganiGram are aware of changing laws regarding the use of Cannabis

for recreational purpose. According to the research held by government agencies they

are expecting rise in demand for cannabis next year.

OrganiGram which is a regular producer and supplier of medical cannabis have to meet

the growing demand of cannabis in order to maintain there goodwill in market. They

have to implement certain plans to meet the high demand of cannabis. As there is less
than a year left in legalisation of cannabis for recreation purpose they should start

working now.

OrganiGram is only located in New Brunswick which is away from the main cities and

towns.

Firstly, they should make a team which will travel to different places and scan a suitable

environment where new branches and sub departments of OrganiGram should be

constructed. For this, capital will be needed which they can get from company surplus

or by selling stocks.

After the expansion process, the newly constructed branches should be used as

production units, new production equipments with new technology will be purchased by

the company. This will obviously demand more employees. The HR department will

employ new recruits at these production units. However, this will lead to increase in

production of cannabis and OrganiGram will now be able to meet the rising demand of

cannabis.

Secondly, after the production of cannabis has increased and company is able to meet

the increasing demand, the next step for the company is to expand its distribution

nationwide by getting in contact with new suppliers which will supply there product

nationwide. Moreover, if the company is left with surplus cannabis they can supply or

ship it to other countries like America where cannabis is legal, which will help

OrganiGram to have a worldwide reputation.

Proper implementation of these plans wills stronghold OrganiGrams position in the

cannabis market and they will keep on dominating against other cannabis producing

companies.
Predictions and outcome

In closing, Organigram is a young company with lots of room to grow in the

upcoming months of legalization. However, Affirmative action need to be taken in order

to grow this organization into a billion-dollar company; an example of this would be the

relocation of its headquarters to a more populated area. This action can be difficult to

execute because it means the relocation of many employees and their lively hoods. This

is a curial step to take to grow the business, a bigger city means larger cliental, more

face to face time with investors, and the more word of mouth to get the name out into

the general public. Growing nation-wide before the legalization is a big factor that plays

into the success of the business. Having the business already across Canada and

having the name out there will scare away competitors because they will not want to

compete with such a large company once the legalization is complete. This will also

serve in the supply and demand factor because the demand for cannabis will be so

great that having your company nation-wide will help supply it to the customers which in

turn will become loyal customers to the company. Having these loyal customers will

generate lots of profit and will tell their friends and family about the company and will

generate even more clients. Having said all that if the company does not change their

ways they will remain a local business and only serve a small population of cannabis

users. Eventually a bigger company will move in a blow them out of the water if they do

not adapt, this however this may not happen if their clients stay loyal to them and they

just stay in business for that reason. There will always be the fear of the Blackberry

situation where they did not adapt to the changing market and could not compete with

Apple and Android. Success with the changes can be measured by the how much profit
each store is pulling in each quarter and if the client base is new or returning customers,

another way is looking at their stock prices and determining how much they are going

up. Finally, as long as OrganiGram can adapt to the recommendations that have been

provided we see no problem why they cant be one of the biggest names is the

cannabis industry.
Bibliography
OrganiGram, I. (2017, July 27). Our Story. Retrieved November 25, 2017, from
OrganiGram: https://www.organigram.ca/our-story/

Zochodne, G. (2017, September 11). Medical marijuana producers bristle at Ontario's

planned monopoly on recreational cannabis sales. Retrieved November 25,
2017, from Financialpost: http://business.financialpost.com/investing/medical-
marijuana-producers-bristle-at-ontarios-planned-monopoly-on-recreational-
cannabis-sales

Castaldo, J. (2017) How big is Canada's pot market, really? Macleans. Retrieved
November 24, 2017 from http://www.macleans.ca/news/canada/how-big-is-
canadas-marijuana-market-really/

Crawley, M. (2017). Marijuana economics: predicting Ontario's legal pot market. CBC
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Zochodne, G. (2017) Amid the green rush, suits are taking over Canada's cannabis
industry. Financial Post. Retrieved November 24, 2017
from http://business.financialpost.com/commodities/agriculture/amid-the-green-
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