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

Rhea-AI Summary

The Green Organic Dutchman (TGOD) announced significant developments in its corporate initiatives. The company is set to launch its Highly Dutch brand across Canada in late September, supported by strong sales from Quebec. TGOD has expanded its product offerings, including new RIPPLE products, and enhanced its Valleyfield facility to reduce reliance on third-party processing. Leadership changes include the appointment of Michel Gagné as VP of Operations. Additionally, TGOD secured distribution agreements for international exports to Australia and New Zealand, marking a step towards international growth.

Positive

• Launch of Highly Dutch brand across Canada expected in late September.
• Expanded RIPPLE product suite to diversify product offerings.
• Reconfigured Valleyfield facility to enhance production efficiency.
• Strong sales reported for Highly Dutch in Quebec.
• Secured distribution agreements for exports to Australia and New Zealand.

Negative

• Inconsistent climate controls at Ancaster facility impacted flower quality.
• Delays in national expansion of Highly Dutch brand due to production issues.
• Some harvests will be redirected to extraction instead of sale due to quality issues.

• Launching Highly Dutch across Canada in the second half of September
• Bringing innovative products to market, including expanded RIPPLE suite of products
• Appointed new head of operations
• Signed distribution agreements for international exports to Australia/NZ

TORONTO, Aug. 28, 2020 /PRNewswire/ - The Green Organic Dutchman Holdings Ltd. (the "Company" or "TGOD") (TSX: TGOD) (US: TGODF), a leading 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.

About The Green Organic Dutchman Holdings Ltd.
The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (US-OTC: TGODF) is a premium certified organically grown cannabis company focused on the health and wellness market. Its organic cannabis is cultivated in living soil, as nature intended. The Company is committed to cultivating a better tomorrow by producing its products responsibly, with less waste and impact on the environment. Its two Canadian facilities have been built to LEED certification standards and its products are sold in recyclable packaging. In Canada, TGOD sells dried flower and oil, and recently launched a series of next-generation cannabis products such as organic teas, dissolvables and vapes. Through its European subsidiary, HemPoland, the Company also distributes premium hemp CBD oil and CBD-infused topicals in Europe. By leveraging science and technology, TGOD harnesses the power of nature from seed to sale.

TGOD's Common Shares and warrants issued under the indentures dated November 1, 2017 and December 19, 2019 trade on the TSX under the symbol "TGOD", "TGOD.WT", "TGOD.WS" and "TGOD.WR", respectively, and TGODF trades in the US on the OTCQX. For more information on The Green Organic Dutchman Holdings Ltd., please visit www.tgod.ca.

Cautionary Statements
This news release includes statements containing certain "forward-looking information" within the meaning of applicable securities law ("forward-looking statements"). Forward looking statements in this release include, but are not limited to, statements about new product launches, statements about the completion of validation of the Company's products for European export, statements about the export of the Company's medical products for commercial purposes to Europe and other jurisdictions, statements about the timing of international sales of the Company's products, statements about the Company's ability to offer certain products in certain jurisdictions and statements about the Company's ability to reach certain financial and operational milestones.  Forward-looking statements are frequently characterized by words such as "plan", "continue", "expect", "project", "intend", "should", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties (including market conditions) and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements, including those risk factors described in the Company's most recently filed Annual Information Form available on SEDAR. The Company is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

Neither the TSX nor the TSX's Regulation Services Provider (as that term is defined in the policies of Toronto Stock Exchange) accept responsibility for the adequacy or accuracy of this release.

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SOURCE The Green Organic Dutchman Holdings Ltd.

FAQ

When will TGOD launch Highly Dutch across Canada?

TGOD plans to launch its Highly Dutch brand across Canada in late September 2020.

What new products is TGOD introducing?

TGOD is expanding its product line with the RIPPLE suite, which includes new gummies and dissolvables.

What changes were made in TGOD's operations leadership?

Michel Gagné has been appointed as Vice President, Operations, bringing over 30 years of relevant experience.

What international markets is TGOD entering?

TGOD has signed distribution agreements to export products to Australia and New Zealand.

What issues did TGOD face with its Ancaster facility?

The facility faced climate control challenges that affected the quality of flower harvests.