Green Organic Dutchman Holdings Ltd: This $0.55 Pot Stock Could B…

Looking for Profit in Pot Stocks? Read This

Since Canada legalized recreational marijuana for adult use last October, sales have been booming. One of the companies that’s well-positioned to capitalize on this growing industry is Green Organic Dutchman Holdings Ltd (OTCMKTS:TGODF, TSE:TGOD).

Headquartered in Toronto, Ontario, Canada, Green Organic Dutchman is a licensed cannabis producer. As its name suggests, the company focuses on the organic side of the business.

The company is building two main facilities: Ancaster Campus in Ontario and Valleyfield Campus in Quebec.

Once operating at full capacity, these facilities—which total more than 1.4 million square feet—will be able to produce over 200,000 kilograms (440,925 pounds) of organic pot annually. (Source: “Investor Presentation November 2019,” Green Organic Dutchman Holdings Ltd, last accessed November 19, 2019.)

If you’ve tried to plant an organic garden in your backyard, you’d know that growing organic vegetables is not the fastest or the easiest thing to do. But at TGODF, the focus on organic pot provides the company with a unique advantage—capturing the hefty organic premium.

You see, in Canada, the average price for non-organic cannabis is $10.26 per gram. For organic pot, the average price is $15.92 per gram. That’s a 55% organic premium! (Source: Ibid.)

Sure, not everyone is willing to pay that premium. But survey results suggest that in Canada, organic pot is preferred by 61% of medical users and 50% of recreational users. (Source: Ibid.)

Put it together and you’ll see that Green Organic Dutchman Holdings Ltd has a very lucrative market in front of it.

And, as it turns out, the company has just made major progress in capturing that market.

On November 19, Green Organic Dutchman announced that it had received orders from the provinces of Alberta, Manitoba, and Nova Scotia. The company will be shipping the orders this month. (Source: “The Green Organic Dutchman Expands Canadian Distribution,” Green Organic Dutchman Holdings Ltd, November 19, 2019.)

Note that Green Organic Dutchman entered the Canadian recreational pot market in August 2019 with its first shipment to the Ontario Cannabis Store. So, before this week’s announcement, the company’s adult-use pot distribution was limited to the 24 legal retailers in the province of Ontario.

Now, thanks to the orders from these three new provinces, TGODF is gaining access to 340 new retail locations!

At the same time, Green Organic Dutchman Holdings Ltd is launching two new strains of cannabis, “Discover” and “Tranquility,” in Ontario.

“As we continue scaling up our operations, we are now in a position to start distributing our premium certified organic cannabis products to additional provinces as well as launching new strains,” said the company’s vice president of sales, Mike Gibbons.

“Retailers are eager to get access to larger quantities of premium, high-quality dried flower, a market segment currently undersupplied. We are on track to distribute nationally in Q1, 2020.” (Source: Ibid.)

Investors certainly liked the progress. On the day of the news release, Green Organic Dutchman stock surged 11.7% to $0.55 per share.

Green Organic Dutchman Holdings Ltd (OTCMKTS:TGODF) Stock Chart

Chart courtesy of StockCharts.com

And this could be just the start.

You see, the recreational pot legalization last October was considered the first wave of legalization.

The second wave, or “Cannabis 2.0,” is happening right now.

In October 2019, the Canadian government legalized cannabis derivative products—such as edibles, beverages, and extracts—with the first batch of products expected to hit retailers’ shelves in December.

Green Organic Dutchman Holdings Ltd has been eyeing this new market. The company has a portfolio of value-added products scheduled to be launched at the end of the fourth quarter of this year.

Given that these cannabis derivative products tend to have higher margins than dried flower, Cannabis 2.0 could become a major catalyst for the organic pot company.

Don’t forget, the new orders from Alberta, Manitoba, and Nova Scotia should start boosting the company’s financials, too.

To give you an idea, when TGODF entered the Canadian recreational pot market with a “small pilot” project in Ontario in the second quarter, the project brought in CDN$600,000 in sales. (Source: “The Green Organic Dutchman Reports Q3 2019 Results,” Green Organic Dutchman Holdings Ltd, November 14, 2019.)

Analyst Take

As it stands, Green Organic Dutchman Holdings Ltd is not really a big player in the cannabis industry, but it is traveling on the right path.

Production has been ramping up, and the company has substantially expanded its distribution channel.

If things go as planned, the company will be running a substantially larger business next year, meaning TGODF stock might be able to command a much higher price.