Canadian cannabis producer OrganiGram Holdings (NASDAQ:OGI) announced on Tuesday that it had secured its largest international deal ever. The company will supply up to 6,000 kilograms of dried cannabis flower to Canndoc, a medical marijuana producer in Israel. Only half the sale is guaranteed; OrganiGram is obligated to deliver that much to Canndoc by Dec. 31, 2021. The buyer will have the option of deciding whether it wants to receive the rest.
For OrganiGram, the deal is about more than just the Israeli market. In January 2019, the Middle Eastern country approved the export of medical marijuana, opening up opportunities for Israeli producers to ship to other countries nearby that have legalized cannabis for medical use.
OrganiGram CEO Greg Engel stated in the press release that "the agreement with Canndoc represents an important, significant leap into the global cannabis marketplace for Organigram, allowing us to support not only medical cannabis patients in Israel but also potentially in the other major international markets that Canndoc serves."
Coming off a lackluster quarter
In its fiscal second quarter, which ended Feb. 29, OrganiGram's net revenue fell 13.8% year over year to 23.2 million Canadian dollars. Sales in the Canadian market declined and international revenue was minimal -- just CA$200,000.
While the company notes that it has been supplying product to the Australian market, the opportunity to supply Israel and reach other markets through the deal with Canndoc could lead to much more sales growth down the road.
OrganiGram investors were bullish on the news of the deal as the pot stock was up almost 4% in late-afternoon trading Tuesday.