Organigram began a voluntary recall of a total of 74 products including both dried marijuana and cannabis oil produced between February 1 and December 16, 2016. These lots tested positive for two pesticides that aren't authorized for use on cannabis plants under the Pest Control Products Act but there are long term benefits for the recall.
The company was unable to identify the source of the contamination, but as an organic producer, it wasn't required to test for materials found in fungicides or pesticides that aren't employed in its production processes, which is why it slipped in under the radar.
Investors will get an idea of the full impact of the voluntary recall during the company's second quarter financial results coming out in April of this year, 2017.
Organigram announced that uninsured clients impacted by the recall with receive full credit for their affected purchases, which will represent around $2.26 million. By issuing these refunds, the company has proven their commitment to clients and may have created an even more loyal customer base over the long run.
With the stock having fallen nearly 30% over the past three months, now is the time to buy in.
Organigram has taken several measures designed to ensure that contamination of its products will never happen again. These changes could make the company one of the safest licensed producers in the future given these new guidelines. New consumers may appreciate these trends and management's openness in dealing with these issues.
The new measures being implemented include:
1. Testing of every product lot for pesticides before they're made available for sale.
2. Testing of all inputs from outside supplies, including seeds, fertilizers, water, etc.
3. Updated operating procedures for periodic live plant sampling for pesticides.
4. Formal program for receiving, securing, and testing critical inputs on a routine basis.
5. New screening process to pre-qualify suppliers before they're approved.
6. New closed-circuit cameras in areas of the facility that aren't required to be monitored.
7. New education and training program for all employees.
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