Over the past year or so, Organigram Holdings (TSX:OGI) (NASDAQ:OGI) has been regarded as one of the more efficient companies in the cannabis industry. While that may be true, it should also be remembered that in a nascent industry like the cannabis industry, growth trumps many other metrics, and in that regard, the company has been found wanting.
Recently, the company announced its financial results for the second fiscal quarter, and the performance was unimpressive. There was no growth, and Organigram’s losses widened. While adult-use sales did register a sequential rise of 19% or C$2.96 million, the recreational use sales dropped by as much as 40% or C$3.65 million.
The second-quarter performance was crucial for Organigram as well as many other cannabis firms since before Q1 2020; it was easier to generate significant year on year growth. In those prior year periods, cannabis had not yet been made legal, and hence, growth was negligible. The performance in this particular quarter was a reality check for Organigram.
The number of players in the industry has increased considerably, and most companies would find it hard to sustain consistent growth. For instance, one-time cannabis giant Aurora Cannabis has dialed down its expectations and projected ‘modest or no growth’ in the coming quarter.
Organigram is, however, working on certain plans to become more competitive and eventually generate consistent growth. Earlier this month, the company announced a slew of new product lines of recreational marijuana, which are going to be launched in Canada. One of those brands is AKNR Organics, which has apparently been developed after years of research from Organigram.
On the other hand, Organigram is also going to launch marijuana pods that are meant for PAX Era oil vaporizers. The pods are going to be launched under the Edison Cannabis Company brand. Investors could do well to keep an eye on OrganiGram stock.