Barely legal: Organigram (OGI.V) loses organic accreditation, Mettrum whistleblower tells all

organigram-organicBeleaguered Canadian licensed producer Organigram (OGI.V) has lost its organic certification, according to a story by CBC Wednesday.

The company, which has had to recall product sold all the way back to February of 2016 due to the discovery of myclobutanil, a chemical that emits hydrogen cyanide when burned, will have its certification restored if and when it demonstrates changes to its process.

Even so, Organigram’s website still made statements, as of Wednesday, such as “organic is just… better” and “100% organic cannabis.” It included a section detailing its organic growing “methodology.”

In an email, Organigram spokeswoman Giselle Doiron noted the company’s organic certification had been suspended, not withdrawn. She said the company has worked closely with Ecocert.

“The presence of pesticides within our products were as much of a shock to them as it was to us, and we’ve identified several changes to our internal standard operating procedures that will ensure that this presence cannot occur in the future,” she said.

Organigram’s reason for being, their main selling point, has long been their organic certification. With that now in doubt, the company has some fast work to do to right the ship.

A month ago, in an interview with Cantech Letter, CEO Denis Arsenault said his organic certification was a non-issue.

One of the distinguishing features of OrganiGram is its organic status. Will the recent recall affect that?
“We don’t think so. I think we’re trying to get the recall behind us and I think we’re well on our way there. We’re working with the regulators and are confident it will all wash out in the near term and long term.”

Earlier, he told the CBC that he didn’t know how the Myclobutanil came in contact with his product.

“I think it’s not just the shock that was the issue, it was how did it happen? How can it happen? So your mind immediately goes to that,” he said. […] “You isolate a period and then you isolate all the products that came into your facility during that period and then you test the products that come into your facility during that period like the fertilizers, the soils, the coco coir, the peat moss — all of these various items. This is the process how you work towards identifying the cause.” he said.

Arsenault said final testing is being done but the company is still not sure exactly how the pesticide came in contact with the product.

I am. If the Mettrum situation (see link below), wherein employees reportedly sprayed their plants to get rid of a mildew infestation, is any guide, we can extrapolate exactly what happened at OGI.

At Mettrum, the amount of Myclobutanil found was more than allowed for weed but less than allowed for food, according to reports. At Organigram, the amount of Myclobutanil found was more than allowed for weed and MORE THAN ALLOWED FOR FOOD, according to similar reports.

Memo to Denis: It didn’t come in through soil or coco coir or peat moss. Your people sprayed it directly on the plant. An organic certified plant. You got busted – and it wasn’t even your company that ‘discovered’ the situation, it was testing Aurora (ACB.V) did on product your company sold to them.

This. Is. Heinous.

The damage from Organigram’s foul-up has hurt more than just its own bottom line. Aurora was forced to perform its own recall when it noted it had sourced some product from OGI.

Now, the government appears set to institute more random testing.

The recalls affect nearly 25,000 customers. Late Tuesday, Health Canada announced it will begin randomly testing medical marijuana products to make sure only authorized pesticides are used.

In an email, Health Canada said Organigram’s recall affected 3,895 clients, and involved 392 kilograms of dried marijuana and 33 litres of cannabis oil.

Organigram snuck out mention of its recall in the last five minutes of trading before the end of year long weekend, and a follow up recall expansion notice a few days later, buried behind an extensive release about how the company had bought a vacant lot.

Mettrum has also dealt with a product recall for similar issues, with details of that situation emerging through national press.

Organigram stock had recently climbed out of the doldrums despite the recall news, but today’s revelations saw the stock crash from over $3 to $2.74 in the afternoon.

UPDATE: OGI has released a news update that mentions the loss of their certification but, true to form, buried it at the bottom of a release headlined “Organigram supports Health Canada auditing improvements.” The pertinent information comes on the sixth paragraph of a six paragraph newser. I mean, exactly how weak can this management team get? They’re still trying to bury this problem behind news releases with titles intended to prevent you from bothering to read them. Say what you will about Mettrum (and there’s plenty to say), but the behaviour of Organigram’s management team through this mess has been a disgrace, and the buck stops with Denis Arsenault, who has been buying up stock lately, presumably to keep it from plummeting further.

FURTHER UPDATE: The Globe and Mail’s Grant Robertson has published a piece about the games Mettrum (MT.V) is playing hiding their own Myclobutanil crisis. Whistleblowers and all! Canopy Growth Corp (CGC.T), which is in the midst of purchasing Mettrum, will want to do some house cleaning if and when that deal goes through.

YET ANOTHER UPDATE: The Organigram Twitter account hasn’t been heard from in months, but Organigram patients are now going to the media telling of their ongoing medical complaints after consuming the OGI product, which look a lot like cyanide poisoning. Organigram offering 20% off next order in apology, which is a study in goofy customer service.

WHILE WE’RE AT IT: Aphria (APH.V), who had their own PR crisis when it was found they were charging veterans higher prices than regular customers because the government was covering their bill (allegedly, but really), has announced they’re doing a fat raise and taking their schtick to the big boards.

— Chris Parry

Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

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