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The Green Organic Dutchman Is The Sleeping Giant Of The Canadian Cannabis Sector

Mar 7, 2019 • 12:02 PM GMT+0000
8 MIN READ  •  By Michael Berger
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2019 has been a significant year for the Canadian cannabis industry and this is a market that we have been closely watching. We expect 2019 to be a banner year for the international cannabis industry and have been focused on discovering the companies that are poised to benefit from this. 

During the last year, several leading Canadian Licensed Producers (LPs) made investments in international cannabis markets and we have been monitoring these transactions. Over the next year, we are going to monitor how these investments perform and want to highlight a company that has been ahead of the curve.

The company, The Green Organic Dutchman (TGOD.TO) (TGODF) has been nothing short of an execution story and is in the middle of a massive expansion in Canada that will result in it having more than 1 million sq. ft. of production capacity. At the same time, the Canadian organic cannabis producer has not taken its finger off the pulse when it comes to the intentional opportunity and this is a company we continue to closely monitor. 

During the last month, The Green Organic Dutchman has received several upgrades from leading broker-dealers that are focused on the burgeoning cannabis opportunity. Although these upgrades are significant and help justify our level of conviction in the company, the shares have barely moved and this is something that is worth noting. 

Some of the reasons pertaining to why we are so favorable on The Green Organic Dutchman is due to the number of catalysts that it has for growth, the focus on producing premium organic cannabis, and the valuation when compared to its peers. We think that these three factors make the company an opportunity to watch and will continue to close monitor the shares. 

TGOD: An Organic Cannabis Leader 

Last year, The Green Organic Dutchman commenced trading on the Toronto Stock Exchange (TSX) and we have been closely monitoring the shares since then. Following a successful initial public offering, the company has been executing on a major expansion while it has been focused on the burgeoning international opportunity. 

The company represents a multi-faceted growth opportunity that is well capitalized and is barely in the first inning of a major growth cycle. The Green Organic Dutchman has been laser focused on the construction of massive production facilities in Canada while it it has been making investments in Europe and Jamacia. 

Last week, The Green Organic Dutchman provided a detailed update on its Jamaican partner Epican Medicinals Ltd., and we were favorable on this. Last Summer, the company purchased a 49.18% interest in Epican, a fully integrated Jamaican cannabis company with cultivation, extraction, manufacturing and retail distribution licenses. Since then, significant progress has been made towards expanding cultivation operations, opening additional retail dispensaries, and establishing a leadership position in Jamaica’s emerging medical cannabis market.

Currently, Epican operates its flagship dispensary in Kingston and has been experiencing continuous growth on a month-over-month basis. The company is working towards being granted a GMP certification at the Kingston Lab which would allow them to export products to legal markets across the globe.

Epican is in the middle of a major expansion in Jamaica and has secured strategic locations in Montego Bay and Negril for the second and third dispensary locations.  The Montego Bay retail location is complete and ready to open pending authorization from the Cannabis Licensing Authority (CLA). Additional locations that Epican is looking at, including Negril, are planned for 2019 and 2020.

We are favorable on The Green Organic Dutchman’s leverage to the Jamaican cannabis market and believe that Epican represents an attractive opportunity. This investment is proving to be a wise decision by the Canadian organic cannabis reproducer and we will monitor how the team continues to execute on the expansion.

Executing on the European Cannabis Opportunity 

Although we are favorable on The Green Organic Dutchman’s leverage to the Jamaican cannabis market, we are more excited about its leverage to the European market through HemPoland and Queen Genetics/Knud Jepsen. The cannabis opportunity in Europe is very attractive and this is partly due to the price of cannabis being much higher when compared to Canada. Another reason why we are excited about the company’s leverage to Europe is due to the sheer size of the market. With a population that is twice as large as the United States, investors need to be monitoring the European opportunity.

Last year, The Green Organic Dutchman acquired HemPoland, a leading European manufacturer and marketer of premium organic CBD oils. This acquisition provides an easy way for the company to expand into new markets in Europe and is immediately accretive. HemPoland was the first company in Poland to obtain a state license allowing the company to grow hemp and manufacture CBD oil products.

Last month, The Green Organic Dutchman updated its corporate website to reflect an increase in HemPoland’s production capacity. The increase was significant and now, HemPoland will be able to produce 91,000 kgs of organic hemp on an annual basis. Previously, the company was able to produce approx. 32,000 kgs of organic hemp and this increase is significant. HemPoland provides The Green Organic Dutchman with a European gateway with distribution channels to over 750 million people and sales in over 700 locations across 13 countries. We are favorable on this acquisition and expect HemPoland to significantly enhances the company’s presence in Europe.

In the middle of 2018, The Green Organic Dutchman first entered the European market by signing a letter of intent for a 50/50 joint venture with Queen Genetics/Knud Jepsen A/S based in Denmark. Earlier this year, the companies signed a definitive agreement to establish two 50/50 joint ventures. The first joint venture will be for the purpose of producing commercial cannabis and cannabis oils and the second joint venture will be for developing and patenting innovative and commercially valuable elite cannabis genetics. The companies will form both joint ventures in Denmark with a goal of expanding the first joint venture into future low-cost European jurisdictions.

The agreement outlines the launch of a premium organic European bulk cannabinoid production platform where The Green Organic Dutchman will have the exclusive right to all cannabis-related production from the joint venture, through a guaranteed off-take agreement at a pre-determined price relative to the production cost. This will provide The Green Organic Dutchman with a consistent supply of high-quality organic cannabis grown in Europe, ready for the local European markets. 

The European cannabis opportunity is significant and The Green Organic Dutchman has made significant strides when it comes to this burgeoning market. We think Knud Jepsen and HemPoland represent strategic partners and will monitor how these relationships create value from here.

Receives Second Organic Certification at Hamilton Facility

The company announced on Tuesday, that it has received organic certification from Pro-cert Organic Systems Ltd.. This is the second certification body to endorse TGOD’s organic process at its Hamilton facility.

The Company is committed to the highest standards of organic cultivation of cannabis. TGOD cannabis is grown in soil, without synthetic fertilizers, herbicides or pesticides, and is never irradiated. Canadian consumers have stated that they prefer organic cannabis. In a recent study conducted by Hill & Knowlton, over 50% of recreational consumers stated it was important that their cannabis was organic. When the same question was posed of medical patients, that number increased to 63%.

“Certified-organic provides consumers with the best cannabis experience, and the entire TGOD organization is committed to that standard,” said Brian Athaide, Director and CEO of TGOD. “The certification from Pro-Cert, along with the earlier certification from ECOCERT means that both leading organic certification bodies have approved our process. This is testimony to the work of David Bernard-Perron, Vice President, Growing Operations, and the entire cultivation and Operations team in Hamilton.”

Pro-Cert is one of North America’s foremost certification bodies, with a client base including producers, processors and traders from across Canada and the United States. Pro-Cert’s certification programs are ISO 17065 compliant and accredited, providing global recognition and international access to the products that are certified. TGOD packaging will include the Pro-cert logo to convey the organic point of difference to consumers.

A Company with Significant Catalysts for Growth 

When we look at The Green Organic Dutchman, there are number of factors that get us excited and we want to highlight some of these. First, the company is in the middle of a massive expansion that is fully funded and will result in the company being the largest organic cannabis producer in the world. Second, The Green Organic Dutchman has several major catalysts for growth and we are monitoring how the opportunity in Greece progresses. Finally, the company is well capitalized and is trading at an attractive valuation when compared to its peers.

We have been closely following The Green Organic Dutchman and is favorable on its growth prospects going forward. We believe that the company’s focus on producing organic cannabis is significant and provides an important differentiator. Over the next year, we expect to see the company complete several of its major construction projects and will monitor how the team executes on this. 

If you want to learn more about the organic cannabis opportunity and how The Green Organic Dutchman is positioned to be a leader in this, please email us at support@technical420.com.

 

 

 

 

 

Pursuant to an agreement between StoneBridge Partners LLC (owners of www.technical420.com), and The Green Organic Dutchman, StoneBridge Partners LLC is being paid $7,000 per month for a period beginning March 3, 2018, and ending March 3, 2019. We may buy or sell additional shares of (TGODF/TGOD) in the open market at any time, including before, during or after the Website and Information, to provide public dissemination of favorable Information about The Green Organic Dutchman. The principles of SBP participated in the private placement rounds for The Green Organic Dutchman Holdings, Ltd. (TGOD) & own a collective 852,961 shares & 75,156 warrants. The principals of SBP intend to sell their positions in (TGOD) for profit. As of January 29, 2019 StoneBridge Partners LLC holds freely trading 367,977 shares and 75,156 warrants of The Green Organic Dutchman (TGODF) purchased in the open market. These may be sold at any point. This disclaimer will be updated at such time.

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners, LLC and Founder of Technical420.com. Prior to entering the cannabis industry, Michael was an Equity Research Analyst at Raymond James Financial covering the Energy Sector. Michael has been featured in publications such as The Street, Bloomberg, US Money News, and hosts various cannabis events across North America.

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