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Can Cannabis' Largest IPO Redeem Itself?

Earlier this year, The Green Organic Dutchman (TSX:TGOD) (OTCQX:TGODF) set the record for the world’s largest IPO in the cannabis industry. With a current market cap of $1.29 billion, and a purported grow capacity nearing 130,000 kg of marijuana, investors had high hopes for one of this year’s more promising stories in the industry. Unfortunately, a recent expose disproving their claims of a nearly completed grow facility in Hamilton had investors crying foul, wondering if they were just the latest in a long line of “pump and dump” schemes to plague the sector.

Still, controversy aside, the Dutchman is now setting its sights on becoming an international player. They recently achieved an internationally-recognized organic certification from Ecocert Canada, and they claim to be working on their Good Manufacturing Practices (GMP) certification which the European Union requires of countries that are exporting to Europe.

The Hamilton Facility as represented in The Green Organic Dutchman's Investor Deck

But the company has its eye on more than Europe; the company is entering the Jamaican market in a big way, as a foundational player in Jamaica’s newly legal cannabis industry. The Dutchman made a 49 percent investment in Epican Medicinals, a foundational Jamaican cannabis company involved in almost every sector of the marijuana trade, from cultivation to extraction, to manufacturing and distribution. Experts argue that Epican is an excellent fit with the Dutchman because they already operate a GMP facility. The new joint venture will bring a new 125,000 square feet facility and assistance by the Dutchman to help Epican obtain its own Eco-Cert organic certification.

The international cannabis market has tremendous growth potential to become an incredibly large and lucrative market quickly, far surpassing the growth of the U.S. (at $55 billion, currently the world’s largest market) or even the Canadian market (projected by Deloitte to be CAD$22.6 billion in the next few years). There is a strong demand from Germany and emerging demand from newly legalized countries like Jamaica.

The Hamilton Facility, actual photos (Source:The Cannalysts)

To prepare, The Green Organic Dutchman recently turned its attention to the beverage industry by creating a new global beverage division as an entry point and pathway into the global cannabis industry. Initially, the company will supply organic ingredients for globally branded beverage product lines. The new venture has a sizeable $55 million research and development (R&D) budget. Some of that funding will be used to build an R&D center with 40,000 square feet of space for product development and manufacturing of cannabis- and cannabinoid-infused drinks, according to company President Csaba Reider. The Dutchman and Stillwater Brands recently entered into an exclusive agreement to focus on ingredient, beverage and food technologies; this initial step is part of the long-term strategy of developing many other cannabinoid-infused packaged goods.

The company also recently obtained a Health Canada license to produce cannabis oils for medical purposes. Using their novel carbon dioxide extraction system, The Dutchman can create purified organic cannabis oils at the rate of 6,600 kilograms each year. The Canadian lab, built to GMP specifications, appears to be a model for the required EU GMP certification mentioned earlier. The EU license will allow the company to export the oils to the EU’s demanding market for organic cannabis products.

The Dutchman’s goal is to become the “world’s largest branded organic cannabis company,” according to CEO Robert Anderson.

The Green Organic Dutchman has also taken steps to implement the latest technology by signing deals with companies like R&D leader CBx Sciences and Evolab, a leading vaporization brand that enjoys a significant U.S. market share. Anderson explains that such partnerships allow The Dutchman to further expand offerings for novel and safe cannabis delivery methods to patients around the world.

Still, with recent developments concerning their facility in Hamilton, investors are taking what The Green Organic Dutchman says with a grain of salt. The promise of this year’s largest IPO may very well come true, but much remains to be seen.


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