Canadians enjoy premium, organic cannabis and The Green Organic Dutchman (TSX:TGOD) is proving that. The pot producer’s Unite Organic, a high-THC strain that was released in August, just received a second order from the Ontario Cannabis Store (OCS) as consumers have shown they are willing to shell out extra cash for top quality weed.
“We can see from the initial response that demand for high-quality flower is strong,” said Brian Athaide, CEO of TGOD, in a press release. “We are thrilled to witness such strong sales and positive feedback from retailers and consumers across Ontario, Canada’s most populous province at 14.32 million people.”
The Toronto-based company has struggled operationally this year which has been reflected in its share price, so it has been in real need for some good news. Since Aurora Cannabis Inc. (NYSE:ACB)(TSX:ACB) sold off its shares in TGOD last week, the stock has been in a free-fall as investors have been left with little to be excited.
Although TGOD didn’t specify a quantity of its first shipment of its premium product, nor provided numbers for the second order, it’s still a good sign for the company there is demand for its Unite Organic product.
— The Green Organic Dutchman (@GrnOrganicDutch) July 8, 2019
TGOD’s organic focus
Before the company made its first shipments, it ran a small pilot that determined the demand for premium organic cannabis in Canada was in excess of supply. One of the ways that TGOD has looked to differentiate itself from its competitors has been by selling products that are certified organic.
In its press release, Green Organic cites a study conducted by Hill & Knowlton earlier this year that found over 50 per cent of recreational consumers stated that it is important that their cannabis be organic.
The company’s core focus it to capitalize on this trend by growing its Unite Organic strain in proprietary living soil without irradiation. The strain is certified by two leading organic organizations to provide consumers with a safe, and enjoyable cannabis experience.
Green Organic said the higher price tag for its premium product has not been a barrier for cannabis consumers looking for high quality, adding it has plans to sell its top-tier products across Canada.
Our team is working hard to ramp up production of our premium organic products as we get ready to expand distribution with additional strains and product forms as well as to other provinces in the months ahead. With our Hamilton hybrid greenhouse completed, and a second one nearing completion in Valleyfield, we are on track to distribute nationally early next year.
– Brian Athaide, CEO of TGOD
Company posting meager sales
While Green Organic takes the time to ramp up production and enter new provinces, relying on the OCS in Ontario might limit its success. The province’s online portal has not had a good track record with consumers, as store rollouts appear to be tightly connected with boosting sales in the legal market. Ontario is expected to have 42 new stores by the end of October, which could service TGOD well if it want’s to increase revenues.
In its most recent quarter, the company reported a $16.6 million loss on $2.9 million in sales. Those numbers certainly don’t sparkle. But to make matters worse, Green Organic has yet to record cannabis sales in the Canadian market as its revenues have came from a Poland-based subsidiary that sells hemp.
The company is going to need to start producing some much stronger results in order to get investors excited about the stock, especially given that losses during the last three quarters have reached $48.6 million.
With plenty of cannabis companies showing stronger sales than TGOD, it may prove to be an uphill battle for the company to get investors buying its shares again.