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Why OrganiGram Holdings Stock Crushed the Market Today

By Eric Volkman - May 17, 2021 at 5:38PM

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An important partner for the pot company notched a legal victory over a rival.

What happened

Marijuana stock OrganiGram Holdings (OGI 4.91%) was a winner on Monday, closing 6.6% higher. This wasn't because of any development with the company itself; rather, it seemed to be based on encouraging legal news for a big partner.

So what

That partner is British American Tobacco (BTI 0.79%), which earlier on Monday won an early victory in a patent infringement lawsuit against much larger peer Philip Morris International. A judge at the influential International Trade Commission (ITC) made an initial determination that Philip Morris' IQOS tobacco device infringed on British American Tobacco patents for its competing Glo device.

A marijuana leaf placed on a wooden board.

Image source: Getty Images.

The case now goes before a full ITC tribunal.

As its name implies, the initial determination is only a preliminary opinion by a judge. But these often set the tone for more concrete rulings by the tribunal. And it could lead to IQOS being barred from sale in the U.S., which would obviously be excellent news for British American Tobacco.  

Now what

While the tussle over IQOS doesn't directly affect OrganiGram, the fortunes of British American Tobacco do. The tobacco company bought a nearly 20% stake in the Canadian marijuana operator in March. Together, they are establishing what they have named a Center for Excellence at OrganiGram's New Brunswick, Canada, facility to co-develop cannabis products.

So most likely, the better OrganiGram's partner is doing, the better the chance that excellent products will be devised at the center. OrganiGram, still a frequent money-loser, could certainly use some help.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends OrganiGram Holdings. The Motley Fool has a disclosure policy.

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Stocks Mentioned

OrganiGram Holdings Stock Quote
OrganiGram Holdings
OGI
$1.24 (4.91%) $0.06
Philip Morris International Inc. Stock Quote
Philip Morris International Inc.
PM
$100.63 (1.40%) $1.39
British American Tobacco p.l.c. Stock Quote
British American Tobacco p.l.c.
BTI
$40.74 (0.79%) $0.32

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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