While there’s little shortage in the way of cannabis stocks these days, Organigram Holdings (TSE:OGI) is one that most may not have considered. And it’s taking a beating in Thursday morning’s trading, too, down over 3.5% after announcing plans to enter the U.S. market, along with a few other developments.
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Organigram Holdings noted that it was planning to make a run at the brass ring and enter the U.S. market. Though its legality is still somewhat in question, the combined market size of all the states that currently allow cannabis either medically or recreationally—or both—is actually sufficient to make the U.S. the largest market for cannabis in the world.
That likely proved sufficient appeal for Organigram to grab a minority stake in Open Book Extracts, a cannabis operation in North Carolina. Organigram has been interested in investing in Open Book for some time now and is putting roughly $2 million into the operation with this move.
An Ambitious Expansion Strategy
That’s not all Organigram has in mind, though; Organigram is looking to raise around C$25 million to expand its operations and carry out the always-popular “general corporate purposes.” However, it’s facing some pushback from regulators, as Health Canada declared that its Edison Jolts line of cannabis lozenges should be declared edibles instead of extracts.
That move will likely hurt some of Organigram’s plans, as extracts generally mean better cash flow than edibles under Health Canada’s classification system. Still, with an eye on the U.S. market, it’s a safe bet that Organigram can make up the shortfall elsewhere.
What Is the Price Forecast for OGI Stock?
Turning to Wall Street, analysts have a Strong Buy consensus rating on OGI stock based on three Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 237.08% rally in its share price over the past year, the average OGI price target of C$3.73 per share implies 23.61% upside potential.
