Organigram Holdings Inc. has acquired cannabis extractor Motif Labs Ltd. for $90 million in a stock and cash deal.
The move, consisting of $50 million in cash and $40 million of Organigram common shares, says the company, makes Organigram the largest cannabis company with a combined market share of 12.4%. Motif holds 21.2% and 9.4% share of the Canadian vape and infused pre-roll markets, respectively, according to data from Hifyre.
This will mean the combined companies will have a combined market share of 21.7% for vapes, 9.6% for pre-rolls, including 16% for infused pre-rolls, 14.1% for concentrates, 21.6% in the hash category, 11.2% in cannabis flower and 47% in milled flower, and a 19.2% market share of cannabis gummies.
“This deal is about a leading public cannabis company joining forces with Canada’s top private licensed producer,” said Paolo De Luca, Chief Strategy Officer at Organigram in a press release. “We are extremely excited about leveraging our combined competitive advantages and respective market positions to continue to grow in Canada and beyond.”
Located in Aylmer, Ontario, Motif is a Canadian leader in the vape and infused pre-roll categories with a portfolio of brands like BOXHOT and Debunk, Boondocks, and Rizlers, and wholesale sales and services for external brands. The company grew from $35 million in net revenue in 2022 to $79 million in 2023 and has generated approximately $86 million in the past year. Motif also has a storage facility in London, Ontario, which Organigram plans to use as a distribution hub.
The Aylmer facility provides Organigram with monthly production of 1,350 kgs of distillate, 400 kgs of high-value hydrocarbon extracts, 750k infused pre-rolls capacity, and 1 million units of vape filling capacity.
The cannabis extractor can produce 1,350 kg of distillate per month and 400 kg of hydrocarbon-derived extracts. The company can also produce THCA, an increasingly popular cannabinoid among consumers.
Said Beena Goldenberg, CEO of Organigram: “The highly complementary acquisition of Motif establishes Organigram as Canada’s largest cannabis company by market share and accelerates our vision to be a leading cannabis company across all major categories, driven by a relentless focus on the consumer of today and tomorrow.”
Mario Naric, CEO and Founder of Motif, said: “This is a landmark transaction in our industry and the Motif team is thrilled to be joining forces with Organigram to create Canada’s undisputed leader with deep capabilities in all major cannabis categories.”
Organigram reported net revenue of $41.1 million for the third quarter of 2024 and net income of $2.8 million, compared to a loss of $213.5 million in the same reporting period in 2023.
The majority of the company’s net revenue for the three months ended June 30, 2024, came from sales in Canada’s non-medical “adult use” market ($36.5 million or 89%), while just 6% of sales ( $8.3 million) were to the international markets and 1% of sales ($325,000) were into Canada’s medical cannabis market.
Sale of cannabis flower was 58% of Organigram’s business in Q3 2024, at an average cost of $1.50 per gram, down from $1.67 per gram in the same quarter in 2023 and $1.51 from Q2 2024.
In May 2024, Organigram announced a three-year supply agreement with Avida Medical in the UK, with the potential to supply 1,700 kilograms of indoor-grown dried cannabis flower to Avida. In June, it announced a plan to acquire a minority stake in Berlin-based cannabis company Sanity Group, expanding Organigram’s footprint in Europe.
In August, Organigram announced new nanoemulsion technology in collaboration with British American Tobacco. Organigram was one of three Canadian cannabis companies named in a report from the Israeli government that proposes levies on Canadian cannabis products entering the country.
In September, Organigram closed on its second round of funding from British American Tobacco.
This is the second of three rounds of funding from BT DE Investments Inc., a wholly-owned subsidiary of BAT. Plans for the partnership between British American Tobacco and Organigram were announced in late 2023, with an investment of nearly $125 million from BAT.
At the time, Organigram said most of the $124.6 million investment would be used to create a strategic investment pool named Jupiter, focusing on emerging cannabis opportunities, including geographic expansion.
The first round of funding closed on January 23, 2024. The third round of funding is expected in early 2025.
Motif was the largest privately owned cannabis business in Canada prior to the completion of the transaction.