The Green Organic Dutchman Holdings Ltd (TSE:TGOD) Launching Medical Cannabis Sales in Canada
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Narrator: The Green Organic Dutchman Holdings Ltd. is a publicly traded organic cannabis company with operations focused on medical cannabis markets in Canada, Europe, the Caribbean and Latin America, as well as the Canadian adult use market.
TGOD has a plant capacity of 219,000 kilograms and is building over 1 million square feet of cultivation and processing facilities across Ontario, Quebec, Jamaica and Denmark.
The Green Organic Dutchman Holdings Limited is listed on the TSX under the ticker symbol TGOD.
James West: Brian Athaide, CEO of Green Organic Dutchman, trading on the TSX under the symbol TGOD. Brian, welcome back.
Brian Athaide: Good afternoon. It’s great to be here.
James West: You too, yeah, good to see you. What’s the big mover and shaker in TGOD lately? It’s been on a consistent incremental value appreciation journey, which I like to see, and especially independent money managers, or rather, institutional money managers like to see. What’s causing this?
Brian Athaide: We’re just getting started. We’re focused on delivery or operational plants. So frankly, we’re not out there publishing kind of new news every day; we’re focused on delivering. And so actually, it’s very, a lot of milestones coming up soon. So this quarter, we’re launching in the medical market in Canada, based on our current facility in Ancaster, and we’ve got the other 20,000 square foot indoor coming online this quarter as well, in the coming month.
Next quarter, we’ll see the balance of Hamilton come online, and then Valleyfield comes online in the latter part of this year.
James West: Right.
Brian Athaide: As you saw in our release, we did postpone or push back both of those facilities by a few months to really re-design some of the facilities, especially the processing part, based on the learnings we’ve seen in the industry, make sure we can get the throughput more efficiently, but actually increased our capacity. So I am excited about that.
Things are progressing well in both Europe and Latin America. Our acquisition in Poland is doing well; we’re ahead of where we expected to be. We’ll actually publish our fourth quarter and fiscal year results on March 19th, so that’ll be our first revenue we’ve had out of Europe. And then –
James West: Wow. Any guidance?
Brian Athaide: No, we don’t give guidance.
James West: Okay.
Brian Athaide: But you’ll see the results soon. Really excited that we’ll might be pre-revenue.
James West: Profitable?
Brian Athaide: It does, yes, actually.
James West: Really? Okay, great.
Brian Athaide: It’s still small at this point, but –
James West: Sure, well, that’s, but any profit is a good profit, I say.
Brian Athaide: But the, in Canada we’ll have revenue starting this quarter; still small. We’re only going to do a small kind of pilot with 200 patients to start with, more test the pipes, make sure the order/shipping/billing processes are working properly, and then we’ll expand our patient count as our production comes online through this year, and then we’ll launch in the recreational market in Canada towards the back half of the year.
James West: Okay. I’m looking at your website here on my screen and you’ve got all these interesting products that are up on the screen in a testing mode. Like, the MK Ultra – Test Only. And so that sort of suggests that you’ve got some – there’s the page I’m looking at right there, is MK Ultra – Test Only. Obviously the CBD contents are part of the test, and not representative of any real product, but why am I seeing all these different products up here? What’s that telling us?
Brian Athaide: So that shows you we’re getting ready for our launch, right? So we’re actually launching our Grower’s Circle in this coming month, we’re just waiting for one final Health Canada license for our oils, but expect to get that in March, and then we’ll be launching. But actually, we’re looking – we’ve done a consumer work. I mean, as we’ve talked last time, we’re really very much a consumer-focused company, a wellness company, so we’re doing a lot of consumer testing across different product forms, especially looking forward to October when you have the other categories being legalized around vaping, around edibles, around beverages.
So we’ve really been focused a lot on getting the consumer data, finding out what concepts resonate best, what product delivery methods resonate best with consumers. And we’ve got some great technologies that we’ve licensed out of the US, which we’ve talked about before, with Stillwater, the water-soluble cannabinoids that have got kind of a 10 to 15-minute onset in beverages, to –
James West: Oh, okay. So those are turning –
Brian Athaide: Evolab, which has one of the leading vape companies in Colorado as well, we’re leveraging that technology on our vapes. So I mean, we’re really excited about what’s coming.
James West: Sure, okay. So, you know, looking at your price chart here, you’re down from your sort of your highs in the $8 to $10 range, but you’ve definitely started to demonstrate – if you put this up on the screen for me, guys – a definite sort of solid progression towards a increase in valuation. There we go, thank you.
So is this kind of like, is this like the trend, the pattern we’re going to see? I mean, is this trend and pattern that we’re seeing a result of the results that you’re delivering? Or is this in anticipation of something that’s, you know, still ahead?
Brian Athaide: I’d say it’s representative of the progress we’ve made towards our business plan. So I mean, the decrease you saw in the latter, last quarter of last year, there were several things driving that, right? We had 100 million shares become freely trading in November, we saw the whole market come down, basically, based on all the issues the category faced or the industry faced following legalization, and then we had Aurora selling some shares because they were able to sell down to 10 percent and maintain their 20 percent offtake.
So we had all of those headwinds from a share price standpoint, and then also the tax law selling. That’s all behind us now, and now we can focus on the fundamentals, like in terms of really delivering our business plan, starting to sell in Canada, expanding our distribution and sales in Europe. Launching into Mexico, our Jamaica business is also expanding. We’re expecting our second store to open imminently, potentially as early as next week.
James West: Oh really?
Brian Athaide: Yeah. So we’re really excited.
James West: What kind of market will that be? What will that look like?
Brian Athaide: So in Jamaica, we have the first store that opened in Kingston already. It’s not really a tourist location, but the next four are all in tourist locations. So the next one will be in Montego Bay; we’re looking at Ocho Rios, Falmouth and Negril, and really want to lock up the tourist market there, because we’re really selling at a much more premium. In Jamaica, you can buy local weed at, you know, $1.00 a gram, and we’re selling for 7 to 10 times that, but so far, it’s going really well. We’re also expanding our production there, and are developing a field that will actually be creating TGOD branded products for export.
James West: Right.
Brian Athaide: So we’re getting the products with our partner there on a cost-plus basis, and then we’ll be exporting to Mexico, TGOD-branded product, from Jamaica.
James West: Wow!
Brian Athaide: And then to other countries in Latin America.
James West: Okay. So is TGOD going to sort of – I’ve seen a lot of business models where companies are starting to do like cannabis tourism to places like Jamaica. Is that something that TGOD’s going to do as well?
Brian Athaide: It is indeed.
James West: Oh, wow.
Brian Athaide: Now, our brand there is called Epican for now; we will launch TGOD later, but Epican. And we’re working with tour companies, setting that up, and actually with resorts as well, to be able to do delivery, and we’ve got a vending machine we’re testing as well. So, all sorts of new and innovative concepts. Don’t know exactly which ones will stick, and create the biggest growth; we want to test all sorts of different types of models, and whichever ones work best, we’re going to expand rapidly.
James West: Okay. So then, is TGOD’s sort of global approach, is it going to include Europe and Australia and all of that as well, at some point?
Brian Athaide: So we got limited bandwidth to start with, so what we focused – I mean Canada is 37 million people, we’re focused on Europe and Latin America. So Europe, the population is 20 times the size of Canada, and Latin America is about 18 times that size, and we’re seeing the fastest progression from a legislative environment in terms of legalization, first in medical and potentially eventually in recreational as well.
So I know there is lots going on in Australia and Thailand, some other countries in Asia or South Africa; we’re really focused on Europe and Latin America first, and then maybe in two years from now we’ll start looking beyond that. But our goal is really to dominate the organic segment.
James West: Sure.
Brian Athaide: Right, we’re the only players of scale in organic, and so we want to get that first mover advantage in organic, not just in Canada, but in Europe and Latin America.
James West: Okay. And so, what is the sort of market sort of signal that you’re getting that makes you so confident and so certain that the organic sort of track is the way to go?
Brian Athaide: Well, if you look at our team, we’re all consumer products kind of people, so we’ve done a lot of consumer work in Canada. We’ve actually tested, I mean, in about five different countries in different languages, and tested the organic concept, and it really resonates everywhere. You see it even in the food business, right? Organic is growing much faster than other types of food products, and so we’ve tested it.
From smoking it, it’s very obvious, right? So I mean, if you think about your tomatoes, your cucumbers, you’re washing them or peeling them; with weed, no one washes it before they smoke it. So you don’t want pesticides in there. They become toxic when you burn it. It’s very obvious how organic plays there. But when it comes to oils and other value-added products, when you’re extracting the cannabinoids, THC or CBD, you’re also extracting pesticides. People don’t want that. You can remove it in the manufacturing process, but it’s better not to start with it.
James West: Right.
Brian Athaide: So we’ve looked at, against all sorts of organic beverages, organic edibles, and you see it in other categories as well, whether it’s granola bars or juices, organic is a sizeable segment, and there’s a segment of the consumers who really want organic – something that’s cleaner, healthier. That’s what we’re focused on.
James West: Yeah. No, I am, I mean, almost my entire life is organic wherever I can. Obviously, when you go out to a restaurant, that gets a little tougher; that’s where I draw the line, but I mean, if I could buy organic cannabis on the Ontario Cannabis Store, I would buy it. But still at this point –
Brian Athaide: You will soon.
James West: Yeah, exactly. So when will I be able to buy your cannabis on the store?
Brian Athaide: So we’re starting with medical patients first, because we really are medical first.
James West: Okay, so I need to become a patient first?
Brian Athaide: Yes.
James West: I actually already am a patient, and I, you know, it’s not so much that I need cannabis for my medical conditions so badly that I must be a medical patient; it’s more like, well, I can pass as a medical patient, and sometimes that’s a better way to get the cannabis you want. It’s not necessarily, you know, a fraudulent approach; it’s more just a innovative approach. Any port in a storm, kind of thing.
So, like, right now, there’s no cannabis in the Ontario Cannabis Store that’s organic?
Brian Athaide: I think Whistler just got listed in Ontario. Now, whether they’re selling their organic products there or not, and when, I’m not sure.
James West: Okay.
Brian Athaide: And I believe Organigram is listed in Ontario now; again, only, I think, 5 percent of their production is what I’ve heard is organic.
James West: Yeah, yeah.
Brian Athaide: So there’s no one of scale who can supply the whole market with organic, but we expect to be able to do that during this year.
James West: Well, that’s exciting to me, because, you know, I think cannabis especially, of all sort of perishable products, lends itself to an organic audience. So I’m really hopeful to see that that pans out for you, because I’m just such a big supporter of organics on a conceptual level. So we’ll leave it there for now, Brian.
Brian Athaide: Okay.
James West: That’s a great update. I thank you very much, and I wish you the best of luck with your rollout, I can’t wait.
Brian Athaide: Thank you very much. We’re really excited.
James West: I’ll be first in line. [laughter]