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Beena Goldenberg, CEO at Organigram Holdings, at the company's offices in Toronto, Oct. 18, 2021.Chris Young/The Canadian Press

It was a rotten year for cannabis producers. The illicit market exerted a strong pull, big-budget acquisitions have yet to pay off, and stock prices sank.

Organigram Holdings Inc., at least in some respects, defied the trend in 2021. The Moncton-based company increased its market share to become the country’s fourth-largest producer, struck a large investment deal and, though it has yet to turn a profit, it has at least narrowed its losses. Unlike its larger peers, such as Canopy Growth Corp. and Aurora Cannabis Inc., whose share prices declined by 65 per cent and 40 per cent respectively, Organigram’s stock was up roughly 28 per cent as 2021 came to a close.

Company chief executive officer Beena Goldenberg can’t take all the credit – she only joined in September – and as she settles into the role, she’ll have to keep the momentum going. “I’m an operator,” she said in an interview. “It’s about how to drive profitability in the business and how to continue to grow it, but in a smart way.” Part of the approach will be to avoid some of the perceived missteps of her peers. But in a volatile and still-developing industry, that won’t be easy.

Organigram sees third-quarter fortunes improve, posts $4-million loss

Ms. Goldenberg took over from Greg Engel, who left the company in May shortly after securing a $221-million investment from British American Tobacco PLC for a 19.9-per-cent stake. She’s part of a wave of executives from the consumer packaged goods industry now taking over cannabis producers. That includes Tilray Inc. CEO Irwin Simon, who founded organic and natural foods company Hain Celestial Group.

Mr. Simon is also Ms. Goldenberg’s former mentor, and she spent 15 years working with him. “He actually legitimized the space for me,” she says of the cannabis industry. “If he could go there, why shouldn’t I consider it?” The two are now competitors, though that doesn’t faze her. “I learned a lot from him,” she says. “I hope he would say the same about me.”

Ms. Goldenberg grew up in Montreal, and completed both a bachelor’s and master’s in chemical engineering at McGill University. Her specialty was in food and fermentation, and after graduating in 1986, she worked for a company that was trying to develop a cocoa-butter substitute through yeast fermentation. (Cocoa-butter prices were through the roof at the time.) Later, as an engineer with Pillsbury, she realized she was playing an important technical role but had no decision-making power. She asked the vice-president of marketing about taking on a role in the department and spent the next nine years in marketing positions.

In 2005, she joined Hain Celestial Canada as general manager and, a decade later, became CEO. The Canadian division had around $40-million in sales when she joined and jumped to $300-million by the time she left in 2020. Hain Celestial, she said, had a knack for finding and acquiring natural and organic product companies, and integrating them with the larger organization.

It’s not dissimilar to what’s happening in the cannabis sector, which is highly fragmented. “It needs to consolidate,” she says, “and get to a place where the licensed producers are making money. Right now, we’re not making enough money, that’s for sure.”

That includes Organigram, which Ms. Goldenberg joined after a brief stint at Supreme Cannabis before it was acquired by Canopy in 2021. Organigram turned in a $26-million loss in its fourth quarter, which was at least an improvement over the $38.6-million in red ink from the same period last year. Revenue grew by 22 per cent, to $24.9-million.

Sales were boosted by the popularity of Organigram’s value cannabis product, Shred. According to data from research firm HiFyre, the company increased its share from 4 per cent to 7 per cent as of October in Alberta, British Columbia, Ontario and Saskatchewan. Organigram was one of the few producers to gain market share in 2021, according to Bank of Montreal analyst Tamy Chen. “The key risks to current momentum are an abrupt change in consumer preferences or competitor actions that steal share,” she wrote in a recent note. “These variables are difficult to predict.”

Indeed, there’s little brand loyalty when it comes to cheap weed. Budget-conscious consumers are generally looking for the highest THC content for the lowest price. “We have seen significant repeat purchases on Shred, so I think we’re hitting something right,” Ms. Goldenberg says, adding consumers are attracted to Shred’s flavour and aroma profile. Still, she acknowledges it takes many years to develop brand loyalty.

A positive sign, she adds, is that demand for Shred is still outstripping supply. “With Ontario, they’re telling us we’re leaving sales on the table because the product is turning so quickly in the stores,” she says. The company is spending $38-million to upgrade its facility in Moncton and increase capacity to 70,000 kilograms of flower per year, up from 40,000 today.

Selling large quantities of a value product does have a downside, however, and Organigram’s margins are thin, according to Raymond James analyst Rahul Sarugaser. But he anticipates the problem will be short-lived as Organigram expands into more profitable categories, such as gummies and higher-priced cannabis. In a recent note, Mr. Sarugaser said he expects the company to overtake Canopy in terms of revenue next year.

In some respects, Organigram has avoided much of the overcapacity issues that have weighed on some producers (though it hasn’t avoided layoffs), nor has it been quite as ambitious when it comes to acquisitions. Organigram bought soft-chew manufacturer Edibles & Infusions Corp. in April, adding gummies to its portfolio. In December, it purchased Quebec-based producer Laurentian Organic Inc. in a $36-million deal, increasing its presence in that province.

Ms. Goldenberg intends to be just as selective when it comes to future acquisitions, looking to fill gaps in Organigram’s product mix or regional sales presence. “We build it in smaller pieces,” she said, “as opposed to looking at a larger producer that when you put it together, there are things you have to shut down.”

Her attitude toward the United States is similarly conservative. Though legalization of cannabis on a federal level is still an uncertain prospect, some producers have struck deals with U.S. companies that give them the option to make an acquisition when the law changes. Organigram is one of the few larger players that has not done so, though Ms. Goldenberg isn’t sweating it. “The option to tie up the capital for something that might happen two or three years from now, I’m not sure is the best approach,” she says. “We’ll do it at a time and with an opportunity that’s right for us. It’s not a rush.”

This year, at least, that prudent approach has paid off.

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