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Is OrganiGram Stock a Buy After British American Tobacco's Investment?

By Eric Volkman - Mar 28, 2021 at 4:00PM

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The big cigarette company now owns 20% of OrganiGram, following the latest major deal in the pot industry.

OrganiGram (OGI -2.61%) leaped into the spotlight recently on the news that British American Tobacco (BTI -0.05%) bought a big stake in the Canadian marijuana company. 

In this video captured from Motley Fool Live on March 12, veteran Fool contributor Eric Volkman and healthcare and cannabis bureau chief Corinne Cardina discuss whether OrganiGram is a now a buy in the wake of that deal.

 

 

Corrine Cardina: Do you have any thoughts on OrganiGram as a stock? Will this push it into buy territory for you, is it a good sign for OrganiGram investors?

Eric Volkman: They're getting better. What I like about OrganiGram is that they're not trying to attack the market like some of these bigger companies, like Canopy Growth (CGC -5.78%), like Tilray (TLRY) before the Aphria (APHA) deal. OrganiGram, still has a fairly modest footprint.

Are they a buy? I think they're worth looking at, among Canadian stocks. They are limited by that market. Let's remember, Canadian stocks, the problem is that weed is still not legalized [in the U.S.] or even decriminalized. They are so limited in what they can do in this country, it's almost nothing. And if you look at Canada, it's got what is almost one-tenth of the population of the U.S. It's not a huge country, and it's vast.

So you have a smaller market, first of all. Secondly, you have the challenges of that bigness. Also on top of that, you're dealing with provinces and in some cases municipalities that have all kinds of different licensing regimes and regulations. Some are quick to license -- Alberta, for example, was pretty effective in its rollout. Some are slow, unfortunately. One of the slow ones is Ontario, which just happens to be the biggest province. On top of that, you have other challenges such as the black market. The black market is still fairly prevalent in Canada.

Overall, I would say the Canadian market is probably going to remain challenging. I wouldn't generally be bullish on Canadian stocks, but if you had to rate OrganiGram among those, I think it's probably one of the more promising ones. And it's small, it's not going to suddenly collapse from its own weight.

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Stocks Mentioned

OrganiGram Holdings Stock Quote
OrganiGram Holdings
OGI
$1.12 (-2.61%) $0.03
British American Tobacco p.l.c. Stock Quote
British American Tobacco p.l.c.
BTI
$43.74 (-0.05%) $0.02
Canopy Growth Stock Quote
Canopy Growth
CGC
$4.89 (-5.78%) $0.30
Tilray Stock Quote
Tilray
TLRY
Aphria Stock Quote
Aphria
APHA

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