The Green Organic Dutchman (TGOD.T) is sharing production ramp-up and other updates during hosted site visits for analysts at its Hamilton and Valleyfield facilities both today and tomorrow.

TGOD has always been open about their operations at both the Hamilton and Valleyfield sites, especially after the long, arduous climb they had to undertake to get city council at Hamilton to approve their new site.

“We are doing something no other producer has done before, growing premium certified organic cannabis at scale. By leveraging our proprietary growing methods, purpose-built facilities and industry-leading horticultural team, we are creating a wide economic moat within the premium organic segment,” said Brian Athaide, CEO of TGOD.

The tour includes a behind the scenes view of what TGOD is banking on as the world’s largest organic cannabis cultivation facility at Valleyfield. The company is expecting their product portfolio to be completed in time for cannabis edibles to go live in October, and participants will enjoy the opportunity to sample the company’s non-infused beverage formulations.

Highlights

• Approximately 25 analysts from Canada and the United States participating.
• Growing team will showcase TGOD’s grow differentiation and proprietary horticultural practices.
• Tour includes walk through of TGOD’s purpose-built facilities designed specifically for certified organic cannabis cultivation.
• Hamilton hybrid greenhouse now completed; all rooms licensed by Health Canada, bringing total annual production capacity for the site to 17,500 kg.
• Valleyfield first phase on track to be completed in Q4 with the first harvest in early 2020, taking annual production capacity for the site to 65,000 kg.
• Cannabis 2.0 portfolio unveiling, including non-infused beverage formulations sampling.
• Large scale cultivation combined with premium pricing will generate industry-leading margins.

Update:

Here are a few images from the inside of their Valleyfield site.

Last, an image from the actual tour.

In other extremely related news, Health Canada gave Medican Organic, which is TGOD’s subsidiary at Valleyfield, its medical sale license today.

Unite!

Unite Organic, the company’s high THC signature strain, has outperformed the company’s expectations. So much, in fact, that the Ontario Cannabis Store has placed a second order, earlier than the company originally anticipated.

The road to becoming a successful cannabis company in Ontario isn’t harder than in other provinces, and this is what makes TGOD’s claim of a successful strain so special. The problem, of course, is the cannabis regulatory regime in place in Ontario.

Not to get too ideological about these kinds of things, but there are some things that the government does not do well. Given the stigma attached to the plant from decades of prohibition-era propaganda and pressure from the United States, it’s no wonder that the Ontario government wants to clutch so tightly to control. That control, naturally, translates over into excess regulation, which eventually strangles revenues.

That’s why the Ontario Cannabis Retail  store lost $42 million last year.

The Cannabis Act is overly restrictive, according to Adam Pankratz, a lecturer at the University of British Columbia’s Sauder School of Business and an expert in business decisions related to marijuana legalization.

“There is good political rationale behind that, but it has hurt the businesses’ ability to actually sell the product. That is causing the roll-out issues that we are currently seeing,” Pankratz said.  “I think the roll-out has been much more awkward and much clunkier than many were expecting.”

“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,” Athaide said.

So when a company comes along with a quality product and experiences some success in a market that’s geared towards failure, it’s a compliment to both the product, and the quality of the company’s leadership.

But all the excellent product and quality leadership isn’t going to save this company’s general downward trajectory. They’ve managed to enjoy some small improvement over their September bottom at sub $2.40, but they have a long, hard climb if they’re going to get back into the $4.30 range they enjoyed in May.

We’ve been making generic statements about the nature of the cannabis business for awhile now, and we still stand by them because they’re not wrong, but eventually something has to give. Maybe the latest bump (which we’ve seen replicated over a few companies this week) might be the indication that the slump started by Canopy Growth’s (WEED.T) fall from grace is over.

Let’s not get our hopes up, though. It’s probably too early to tell for sure.

—Joseph Morton

Full disclosure: The Green Organic Dutchman is an equity.guru marketing client.