In this edition of "Rising High," The Fly conducted an exclusive interview with Danny Brody, vice president of investor relations at The Green Organic Dutchman (TGODF), a Canada-based global organic cannabis company focused on sustainable, all-natural principles. Here are some of the highlights:
DIFFERENTIATION: The Green Organic Dutchman grows a completely organic product which differentiates the company from the general marketplace, Brody said. Organic is a lifestyle choice and consumers care more about what they’re putting in their bodies than ever before, he said. “57% of medical cannabis consumers recently polled said they prefer organic and 43% of recreational consumers recently polled said they prefer organic, yet only three companies produce a certified organic product,” he said, adding organic growing therefore made sense on the product side and demand side. “Then for the pricing side, we actually get about a 30% premium…so we got the demand side, it’s healthier for consumers and we get a significant pricing increase,” Brody said. “For us it made sense all around.”
LEGALIZATION: When asked which country might follow Canada’s lead in legalization, Brody said he was unsure as there are many countries that could possibly legalize. “There’s over 40 medical countries now around the world and there are countries like Germany where they’re fairly forward-thinking,” he said. “There are quite a few options out there.” Regarding U.S. legalization, the VP said he would be surprised if candidates don’t run off of a federal medical legal market for 2020. “I think that’s going to happen sooner than later,” he said. “They’ve now got over 33 medical/recreational states, so it’s just a matter of time before the whole country goes legal in my opinion. I’m hoping that it happens for 2020, I think it’s going to be huge for the global markets.”
EXPANSION: Brody said TGOD is absolutely planning to expand more globally as more countries embrace legal programs. "Canada is a great place to live, don’t get me wrong, but there’s only 38M people here,” he said. “The goal for TGOD is to take the knowledge, IP and all the R&D initiatives we started in Canada and then start planting that globally.” Brody noted that the company entered the Jamaican market last year with a 50/50 partnership in a company called Epican and also went into Poland via the acquisition of HemPoland. The VP said the company has also entered Mexico through a joint venture with one of the largest pharmaceutical distributors in the region and has also signed a letter of intent in Denmark for cultivation and R&D. “It’s going to be a central hub for production and export to other European countries. We’re working on a whole bunch more in Europe and then we’ve got South America,” he said. “It’s just simple mathematics. Where’s the population based? Where is the company going to make the most money?”
CHALLENGES: When asked about challenges in the space, Brody said he believes the toughest issue is that cannabis is still federally illegal in many places. “It feels like its two steps forwards and one step back every single day with the different legalities around the world,” he said, adding the company faces “a lot of red tape” in different locations. “When we’re trying to go out and work with different countries and create different products, it’s still so new,” Brody said. “There’s not the infrastructure developed in different countries, there’s not the procedures and protocols in place yet to handle cannabis, but that is the opportunity.”
OPPORTUNITIES: Brody said he sees a number of opportunities opening up in the space as the industry grows. The VP said he sees the first opportunity being international expansion based on population demographics and the second on the medical side. “The medical market is not to be underestimated at all,” he said. "Cannabis as an alternative to opioids where we have fast acting or sustained release, tablets with a repeatable, consistent and measurable effect, I think that’s going to be absolutely massive.” The third opportunity is going to be developing a repeatable, measurable effect for cannabis products amid mass-scale adoption of the recreational market, Brody said. “With cannabis, if you have a muffin or a brownie with THC in it, you don’t know if it’s going to hit you in 30 minutes, 60 minutes or two hours. You don’t know how hard it’s going to hit you and you don’t know how long it’s going to last. That’s a big barrier to entry,” he said. “Once you’re able to have a repeatable effect where you can take a cannabis beverage and you know it’s going to hit you within ten minutes, it’s going to last 50 minutes and then it’s going to taper off for four hours similar to a beer or a glass of wine, that’s going to be a big market.”
CONSOLIDATION: When asked about the industry landscape moving forward, Brody said he believes there is going to be a lot of M&A activity in both the microcultivator and large-scale company segments of the space as the industry develops. “Like any CPG industry you’re going to have two or three majors at the top like the cola industry, your Coca-Cola (KO) and your Pepsi (PEP),” he said. “Our goal is not to be the Coke and Pepsi. We want to be on the side of the organic orange juice and dominate the entire organic segment of the market.”
OTHER CANNABIS STOCKS: Other publicly traded companies in the space include Aurora Cannabis (ACB), Aphria (APHA), CV Sciences (CVSI), CannTrust Holdings (CNTTF), Cronos Group (CRON), General Cannabis (CANN), Canopy Growth (CGC), Tilray (TLRY), Innovative Industrial Properties (IIPR), India Globalization Capital (IGC), ICC International Cannabis (KNHBF), Biome Grow (ORTFD), MediPharm Labs (MLCPF), Indiva (NDVAF), OrganiGram (OGRMF), KushCo (KSHB), MedMen Enterprises (MMNFF), Elixinol Global (ELLXF), Planet 13 Holdings (PLNHF) and Wayland Group (MRRCF).
“Rising High" is The Fly's recurring series focused on cannabis stock news.
Green Organic Dutchman
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Coca-Cola
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PepsiCo
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Aurora Cannabis
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APHA
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CV Sciences
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CNTTF
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Cronos Group
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Trees Corporation
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Canopy Growth
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Tilray
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Innovative Industrial Properties
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IGC Pharma
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ICC International Cannabis
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ORTFD
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INDIVA
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Organigram
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KushCo Holdings
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MedMen
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Elixinol Global
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Planet 13 Holdings
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Wayland Group
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