(Photo: submitted)
Moncton cannabis company Organigram has acquired Quebec-based hash producer Laurentian Organic Inc.
Organigram announced the purchase today, saying it paid $36-million for Laurentian, including $10-million in cash and $26-million in shares.
Paolo De Luca, Organigram’s chief strategy officer, said in a news release the purchase was “a unique opportunity to fulfill multiple strategic and financial objectives.”
He pointed out that the hash market will be increasingly important in Canada, so acquiring one of the country’s leading producers makes sense.
He said Organigram can leverage its national sales and distribution network to give Laurentian’s products more reach. The company will also benefit from better access to the flower supply and input material for hash from Organigram’s Moncton facility.
Laurentian is in the middle of a cultivation and production expansion that, when complete, will more than quadruple its Quebec footprint.
De Luca said Organigram plans to invest at least $7-million in capital projects at Laurentian to drive cultivation growth, expand processing and storage space, and invest in automation.
The company expects construction on the expansion efforts to be finished during the summer of 2022.
“Between local expansion planned at Laurentian’s site, synergies expected to be realized with Organigram and entrance/scale-up into new/existing markets, the Company is forecasting revenues from the Laurentian and Tremblant brands to grow beyond the Company’s Fiscal 2022 year-end of August 31, 2022,” Organigram said in a news release.
The acquisition comes less than a month after Organigram reported a $26-million revenue loss in its fourth quarter. That loss was an improvement from the previous year, when the company lost close to $39-million between June and August.
Organigram said the smaller loss in 2021 was due to higher gross margins that were partially offset by impairment charges.
Its net revenue was $24.9-million, up from $20.4 million in 2020, and at the time the company had grown its share of the recreational cannabis market to seven percent.
Earlier this year, British American Tobacco also bought a 20 percent stake in Organigram, with a $221 million investment.
While the partnership helped create a “centre for excellence” at Organigram’s Moncton facility focusing on developing new products, it also helped Organigram shore up its balance sheet and opened the company up to expansion and investment opportunities.
Trevor Nichols is a Reporter with Huddle Today, a content sharing partner of Acadia Broadcasting.
