The Summer Blockbuster of Weed: Bedrocan (BED.V) vs Organigram (OGI.V)

(Photo: Reuters)

If you've been watching the medical marijuana market from afar these last few months, wondering when the rubber might hit the road (or if it might skid off into a wall), today is the day that many of your questions will be answered.

In the movie business, the last thing you want is two huge blockbusters opening on the same day. There's only so much money to go around, so says conventional wisdom, so if Star Wars Episode 12 is opening on August 25, Titanic 3 will generally be scheduled to release the following week rather than same day.

In the medical marijuana business, we're about to see two big deals launch on the Venture on the same day with no such fear that investors will run out of cash while buying in. As this industry seems to be doing well and there is now the chance of medical marijuana users being able to buy weeds online, this industry will continue to grow, therefore helping to improve the health of many who require the use of medical marijuana.

If you already use medical marijuana products through thinks like cbd gummies online, read on to find out more about these two big deals.

The rest of the market may well be advised to take a few days off. Organigram (OGI.V) and Bedrocan (BED.V) will be public companies at the open, and they will suck up a whole load of investor dollars when they do.

Both companies hit the exchange with a loaded treasury, as Organigram turned an expected $5m raise into $7.5m before they were done, leaving apparently another $15m on the table from those who missed out. Bedrocan, with an all-star lineup of big brokers stuffing wads of cash into it for the last several months, has a war chest from their recent financing that is said to be $16m deep, with the same again set to be brought in on warrants if needed.

Both are attracting significant interest because both have licenses permitting them to grow and sell medical marijuana, something only 13 Canadian companies can publicly boast right now, with only one of them (Tweed: TWD.V) listed publicly.

Bedrocan started as a company in 1984 in the Netherlands, moving from stock standard agriculture to medical marijuana in the early '90's. The firm launches its Canadian arm with a hefty reputation as the medical marijuana supplier to Europe.

Bedrocan isn't having the sort of problems growing their crop that Tweed and several others are having, largely because they don't actually have a growing facility. What they do have is permission to import product from the Netherlands, which is what they've been doing to date. Their 52,000 square foot grow facility is not expected to be ready for business until 2015, but they'll bring out their experts from Europe to ensure a smooth transition, and they claim to have 1100 registered patients set to buy.

Organigram has a manageable 30,000 square foot sized growing facility, and has sold out of product as their listing looms. Their sales pitch is two-pronged: they're certified organic, and they're French-speaking from CEO to website to call centre, giving them a big head start on the French market, and by virtue of their Moncton, NB location, they can also lay claim to the Maritimes – good for about 28% of the Canadian market if they can avoid screwing up..

Avoiding screwing up isn't as easy as one might think, in this early adopter phase. Growing weed in a basement is a touch easier than growing it over 150,000 square feet in a concrete warehouse, so the market has been littered with companies that have lost their first mover advantage by either not being able to get a product to market, having to dispose of bad products after QA issues, or even losing their license when Health Canada found problems that went beyond the accidental.

Bedrocan and Organigram have been a long time coming. Because product has been so scarce and consumers slow to sign up for complicated patient registration and e-commerce sign-ups, and because one really has to look hard to find something to buy on the market as things stand, the new two arrive with many many people breathing sighs of relief.

That Organigram is actually doing business, and with differentiators that could matter a lot, and that Bedrocan has more knowledge than anyone else in the industry, means these two are getting the kind of institutional and big investor attention that Tweed had earlier in the year, when it listed at $0.84 and quickly shot to $4.60, before drifting back to the $2.60-$3 range since in the months since.

Organigram private placement investors got in at $0.85, and there'll be 45m shares out, as I understand it, at a $38m valuation. Bedrocan's valuation, at the raise, was $57m.

To put these valuations in perspective, Tweed's market cap is $106m and, so far, it hasn't returned a whole lot of value. There's every possibility – some might even say it's a probability – that both Organigram and Bedrocan will jump at the open, and double or even triple.

I'm told by brokers connected with both deals that there's a ton of interests from clients to pick up free trading shares in the market. Organigram will also benefit from interest from US investors, with US pundits such as the 420 Investor, Alan Brochstein, and the infamous 'Wolf of Weed Street' having set price targets of beyond $1.40 on Twitter in the last few days.

So the big question is, in a situation like this... which is the company to buy?

If both stocks shoot up in early trading Monday, as expected, the answer may come from a note published by Verdmont Capital, a Panama-based brokerage house which helped Organigram finance and has published a detailed note on the company here.

"Please keep in mind, our view on Organigram is relatively long term in nature. We are by no means instructing investors to pile into the stock on Monday."

Something to consider: Mettrum, another license holder, will be going public later down the line, while Aphria, helmed by the former CEO of Jamieson Laboratories, and Thunderbird Biomedical, a smaller play aimed at the high end of the market, will follow suit within weeks.

Yes, the medical marijuana space has been heavy with two-bit companies engaging in a gold rush, but the real businesses – the ones where professional people follow professional strategies aiming for real revenues – those are now upon us.

Do your own due diligence. And, full disclosure, Chris Parry is a shareholder in OrganiGram. The company is also an advertiser.

Chris Parry

Chris Parry is the Director of Editorial at Stockhouse.com, Canada's most trafficked financial web site, where he focuses on the marijuana and technology beat. Previously, Chris oversaw the Vancouver Sun and Province online news teams in the areas of digital products, social media strategy, traffic development, directed content revenue programs and news. More →

Twitter: @ChrisParry

centrifoogle@gmail.com

Chris Parry

Twitter: @ChrisParry

centrifoogle@gmail.com

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