By: Tomas Ronolski - AllPennyStocks.com News

Tuesday, January 3, 2017

Canada is progressively simplifying the use of medical marijuana in the country. The Marijuana for Medical Purposes Regulations of 2013 brought clarity to the issue of obtaining medical marijuana products. Further in 2015, the Supreme Court of Canada allowed patients to obtain marijuana edibles, oils and teas from their suppliers. Such easing of the regulations will benefit medical marijuana companies such as OrganiGram Holdings Inc. (TSX-Venture:OGI). OrganiGram Holdings had a strong 2016, but the company recently hit a setback as it announced the voluntary recall of certain lots of medical marijuana products it supplied in the period between August and December 2016. The company reported that the recall has been done in response to its detection of amounts of an unapproved pesticide not registered for use on marijuana under the Pest Control Products Act.

OrganiGram Holdings has classified the recall as Type III, meaning that the product is not likely to cause any adverse health consequences. The company is now collaborating with Health Canada to determine the reasons behind the contamination.

While the recall is likely to have an impact on the financial standing of the company, the effect is expected to be minimal as the number of lots to be recalled is small. The company has engaged its client service department to send direct notification to all its clients which come under the scope of this recall.

The total financial impact is yet to be determined as the company may have to recall a larger number of lots since it is still carrying out additional screening. In such a case, the operating revenue may get hit in a significant way.

OrganiGram Holdings recently reported its annual earnings for the period ended August 31, 2016. The company improved its margin from 25.32% to 54.06%. Its revenue showed a multifold improvement to a strong $6.13 million. The company’s revenue for the previous year stood at $0.99 million.

The company seems to be on a solid path as its earnings per share showed positive figures for the year. OrganiGram Holdings reported earning $0.85 per share. For FY 2015, the company had incurred a loss of $1.28 per share while the loss for the year before that stood at $16.54.

These developments are likely to have a positive impact on the stock price in the future. OrganiGram Holdings stock showed a solid performance in 2016, growing by 208% during that time period. While the recent recall may take its toll on the stock price, it is expected that the company should be able to weather the storm.

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