The Green Organic Dutchman Provides Corporate Update and Confirms Product Innovation Pipeline Expansion

Published: August 31, 2020

The Green Organic Dutchman Provides Corporate Update and Confirms Product Innovation Pipeline Expansion

The Green Organic Dutchman Holdings Ltd., a producer of premium certified organically grown cannabis, is pleased to provide an update on the progress of its corporate initiatives.

Highly Dutch Expansion
TGOD successfully launched its mainstream brand, Highly Dutch, in Quebec at the end of May. Given strong sales, the Company looks forward to expanding to the balance of Canada in late September once it can build sufficient finished goods inventory to provide consistent supply to the market.

TGOD also started production of Highly Dutch’s 2.0 line-up with concentrates expected to be launched, beginning in Quebec, at the end of September.

Product Portfolio
TGOD introduced multiple 2.0 products during the second quarter, including RIPPLE dissolvables, teas and vapes. Based on the popularity of certain SKUs, the Company accelerated its innovation pipeline by signing an expanded licensing agreement with Colorado-based Stillwater Brands to bring their entire RIPPLE product suite to Canada, including RIPPLE Gummies and RIPPLE QuickSticks.

By leveraging Stillwater Brands’ proven formulations and intellectual property, TGOD has been able to develop products that are compliant to Canadian regulations at a much faster pace. Commercialization of RIPPLE Gummies is expected in the fourth quarter.

TGOD also leveraged consumer insights to develop new product formats, including balanced CBD/THC and CBD only versions. Some of these new products are already in market, with the balance expected to be commercialized during the fourth quarter.

Valleyfield Processing Hub
The Company has reconfigured its Valleyfield facility, which is fully licensed, into a processing hub to support its product innovation pipeline and reduce its reliance on third parties. Processing of production has already commenced.

In light of some capacity challenges with third party processing, the Company has chosen to now bring its production of premium organic teas and Ripple dissolvable powders in-house to its Valleyfield facility. This will allow for better control of quality, agility in shift staffing and capacity and importantly over the longer term should enable cost reduction allowing for better gross margins. This along with hash and chewables production is expected to help with capacity utilization and fixed cost absorption in its Valleyfield facility during Q4 2020. The transfer of equipment is planned during September. The Company anticipates modest start up costs in connection with this in-sourcing of the production of certain of its 2.0 products.

TGOD has also signed co-packing and sales agreements with two licensed producers, further increasing the utilization and fixed cost absorption of Valleyfield.

Operations and Leadership Changes
Start-up commissioning and calibrations challenges within the energy center at the company’s Ancaster facility led to inconsistent climate controls in the hybrid greenhouse during the very hot weather in late July and early August which led to several recent August harvests not meeting the Company’s strict premium flower specifications. As a result, most of the flower from these harvests will now be used for extraction. The Company along with its equipment vendors have since significantly reduced the energy center downtimes resulting in improved climate controls and the Company expects future harvests to meet its specifications.

Some of the delays experienced by the Company resulted in lower than expected flower availability and a shifting of the national Highly Dutch expansion from Quebec to the balance of the country from August until the latter part of September. This is partially offset by further cost reductions identified by the Company, and the Company continues to expect to reach a monthly revenue run rate that delivers positive Canadian operating cash flow by the end of 2020.

TGOD has recently made changes to its operations leadership structure and appointed Michel Gagné as Vice President, Operations. Mr. Gagné brings over 30 years of experience in the food and natural health products industries, having occupied leadership roles at Cargill and Maple Leaf Foods.

International Exports
In July, TGOD obtained a European Union Good Manufacturing Practice (“EU-GMP”) certificate enabling it to commence exports to Germany for validation purposes. This process is expected to be completed by the end of the year, following which TGOD plan to begin exporting medical cannabis to Europe and other jurisdictions.

In parallel, TGOD signed an exclusive distribution agreement for international exports to Australia and New Zealand with LeafCann. The Australian distributor will act as TGOD’s exclusive agent for the Company’s range of medical cannabis
products in both countries. The Company expects its first commercial shipment during the first quarter of 2021.

The Green Organic Dutchman Holdings Ltd. is a premium certified organically grown cannabis company focused on the health and wellness market.

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