Canadian-based Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI) gave good news and bad news on Monday morning. The company stated that it had received approval from Health Canada for its expansion, but then also said its workforce would be reduced due to Covid-19. The stock was moving higher by 5% in early trading to lately sell at $1.65.
Organigram said it had been carefully monitoring and actively planning for the evolving situation related to COVID-19 and the potential impacts on business. The company noted that not all of the jobs at its Moncton facility can be done remotely and that in order to protect employees it was expecting temporary layoffs. “The Company currently expects that its workforce will be materially reduced as a result of voluntary and company-imposed temporary lay-offs to facilitate adequate social distancing while the COVID-19 situation lasts. This will result in corresponding production and packaging reductions.” Organigram said it hoped to “reallocate its remaining workforce as needed, utilize inventory already on hand and focus on leveraging its most efficient and automated lines of production.”
“We continue to monitor this rapidly changing situation and will make the decisions necessary to ensure the safest environment for our employees and their families as well as protecting the best interests of our business and our stakeholders,” said Greg Engel, Chief Executive Officer.
In the good news, Organigram received Health Canada’s approval for the licensing of the remainder of its Phase 5 expansion together with the renewal of its licenses for standard cultivation, standard processing and sale for medical purposes under the Cannabis Regulations. The renewed and expanded licenses are effective as of March 20, 2020.
The company outlined the terms as follows:
- The terms of the licenses include approval of a two-floor production facility designed to support all processing activity as well as dedicated spaces for packaging of flower, pre-rolls, vape pens, and powdered beverages.
- The Phase 5 expansion also includes a new extraction facility with increased capacity for CO2 extraction, and winterization as well as new capabilities designed for future product development.
- The amendments also allow for new purpose-built harvest and drying rooms and support areas for quality assurance, maintenance, and sanitation.
- The licenses are valid for a three-year period until March 20, 2023, and are subject to customary terms and conditions.
Written by Debra Borchardt