I'm appreciative of the fact that you wrote such a detailed post, and will respond quickly to the points you raised in a sort of stream-of-consciousness manner.
Weak management and no accountability. They are not and have never been transparent with their share holders at all.
Agreed with the transparency, however I think that before the recall everyone was quite impressed with the management team and the revenue OGI was recording. Since the recall, many have lauded the Greg Engel appointment. Personally, I wouldn't call the management team weak per se, but I accept that as your opinion.
They lost their organic certification. The one thing they had going for them to help acquire customers was striped away from them. Other organic companies are coming online and will take those remaining customers.
That statement is inaccurate, as their certification was suspended, not revoked. This is an important distinction because they are in the process of being re-certified at the moment.
Decent power rates in NB but they grow indoors and do not utilize the sun at all. Paying for more lighting does not equate to a lower power bill. On this point, their facilities are pretty shit. Other LP's are building state of the art hybrid greenhouses and OGI is growing in an old warehouse. Please recall they are among the lowest cost-per-gram producer to date; that's extremely important.
In a Northern climate, how much help will the sun actually provide, given the high-intensity light needed to produce quality cannabis. I've read in many investment reports that the low electricity costs are an important advantage and I agree with this assessment. You may prefer hybrid greenhouses for a number of reasons, however to call OGI's facility 'pretty shit' is an exaggeration to say the least. Time will tell whether newly-produced greenhouses or refurbished facilities will provide better return on investment. I agree with you that is an important consideration.
They lost customers because of the pesticides. They sold weed with pesticides to people that were looking for an organic product. Think about that. People that buy "Organic" are not customers you want to piss off. Most of them will not be back.
You are correct, they did. So did Mettrum, so did Aurora. True, this may hit OGI harder because of their organic branding. Point well taken. That being said, your suggestion that 'most of them [customers] will not be back' is just that, a guess. Personally, I believe their offer to provide replacement product free of charge has retained many customers. Even if you disagree, the fact remains that recreational is around the corner and it seems unlikely this recall will impact those future sales at all.
Class action lawsuit? Potential death sentence? No thank you!
You are absolutely wrong that the class action is a potential death sentence. First, they have insurance for this type of situation, second, the lawsuit is focused on obtaining refunds. OGI has 40mil cash on hand, a license (worth 100 million), a paid-for facility and expansion land, and biological assets. This lawsuit can (and has) punished them short-term, but will not even come close to sinking them.
TPB branding but the MJ task force recommends no branding, advertising or celebrity endorsement. I have also not heard a single thing about this since the initial NR. At this point do the TPB's even want to associate with them? I can't answer that. It may not matter either way.
The Task Force made non-binding recommendations, and it remains to be seen which recommendations the government will apply. It's good to consider all possibilities here. However, alcohol is a more dangerous drug and look at the advertising allowed here. Will there be limits on advertising? most likely? Will that mean you'll be served cannabis in a featureless bag/box/carton? Most likely not.
If some form of advertising is allowed (probable), then it's my opinion that the TPBs will become a hugely successful branding opportunity.
They took their own brand and shit all over it.
haha, not really a point to stand on it's own, but I get your frustration.
Just because the minimum wage in NB is lower than some parts of the country does not mean that OGI is benefiting from lower labor rates. Do you have evidence that OGI employee's are paid below the industry standard? If they are I doubt it adds up to much given its a relatively small operation. Were not talking thousands of employee's here.
Labour is and always will be one of the most expensive inputs. Yes, lower labour costs absolutely will make a material difference on the bottom line. As much has been stated by the management team in earlier interviews.
Market leader? ACB was out of the gates for 3 months and ended up with market cap that was triple that of OGI who had been in operation for 2 years.
I was speaking to the fact that OGI, before the recall, was one of two companies to report positive cash flow and earnings. That's what helped make them so popular amongst investors! ACB is expanding quickly but their stock is quite diluted and they cannot keep a decent selection of product on the shelf. Not so say I dislike ACB, but they have some issues to overcome and still need to deliver on their promises.
They released news of "Highest sales month" well what they didn't tell you is that most of those customers were getting their discounted weed. Highest sales maybe, lowest profit margin ever.
It shows they are retaining customers, which is important. The lowest profit margin (short-term losses) you speak of have been publicly stated by management to be in the 2.5 million range, so there should be no surprises there, and that loss is most probably reflected in the current stock price.
Overall, this is how I see it.
OGI has a license (100 million), they have 40 million in cash, they have biological assets, they have a great branding opportunity, low electricity costs, low labour costs, government support to the tune of 1 million and potentially more government subsidies to come, they have a partnership with The Green Solution which is important to keep in mind. They are also a potential buy-out candidate at these levels.
I try and remove emotions from investing. All I see is an undervalued company that has strong material foundations and a recreational market to look forward to. I read assessments like your and it strikes me that the company is currently undervalued given the emotional reaction of many retail investors. It screams buy.
I completely respect your own reasoning and analysis, mind just happens to differ on a number of key points and we therefore draw different conclusions. no big deal.