Organigram Global Q3 2026 Earnings Report

Organigram Global EPS Results

• Actual EPS: N/A
• Consensus EPS: -$0.01
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Organigram Global Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $68.20 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Organigram Global Announcement Details

• Quarter: Q3 2026
• Date: 8/11/2026
• Time: Before Market Opens
• Conference Call Date: Tuesday, August 11, 2026
• Conference Call Time: 8:00AM ET

Organigram Global (NASDAQ:OGI) (NASDAQ: OGI) is a licensed producer of cannabis and hemp products headquartered in Moncton, New Brunswick, Canada. Founded in 2013, the company operates a state-of-the-art cultivation and manufacturing facility spanning more than one million square feet. Organigram holds licenses from Health Canada to produce and sell both medical and adult-use cannabis, and it pursues Good Manufacturing Practice (GMP) certification to support international exports.

The company’s product portfolio encompasses dried flower, pre-rolled joints, cannabis oils, capsules and soft gels, as well as vapourizer cartridges and extracts. Organigram distributes under a variety of brands, including Monjour, Edison and First Growth, targeting diverse consumer segments from value-focused to premium. Its cultivation methods combine indoor and greenhouse systems with automated processes designed to ensure product consistency, safety and quality.

Organigram serves markets across Canada and has established partnerships to access select international markets in jurisdictions that recognize Canadian GMP certification. The company’s leadership team is led by Chief Executive Officer Greg Engel, who has guided Organigram through its public listings on the Toronto Stock Exchange and the Nasdaq in 2020. Under his management, Organigram has focused on innovation in product formats, efficiency in cultivation, and strategic brand development to navigate the evolving regulatory landscape.

Organigram Global Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record financial performance: Q3 net revenue rose 49% year over year to CAD 105.8 million, while adjusted EBITDA reached a record CAD 13.4 million and adjusted gross margin expanded to 37%. Management expects fiscal 2026 revenue to exceed CAD 350 million, with margins and EBITDA meaningfully above fiscal 2025 levels.
• Positive Sentiment: Sanity Group is scaling as planned: The German business contributed €24.5 million of revenue during OrganiGram’s ownership period, and international sales represented roughly 35% of consolidated revenue. Management expects Sanity’s revenue growth to continue, with operating expenses remaining relatively stable and creating further P&L leverage.
• Positive Sentiment: Canadian product recovery is gaining traction: New vape hardware and higher-potency products helped improve vape share in June, while infused pre-rolls returned to growth. Flower share increased to 12.5% year over year, and beverages and concentrates also posted strong gains as the company reduces its SKU count and focuses on higher-performing products.
• Positive Sentiment: International supply and margin opportunities remain significant: OrganiGram is improving Canadian flower pass rates, adding suppliers, and pursuing EU GMP-compliant remediation pathways to meet tight German demand. EU GMP certification could meaningfully improve margins by reducing reliance on European processing, although no approval timeline was provided.
• Negative Sentiment: Cash flow remains a near-term concern: Free cash flow was negative CAD 3.9 million in Q3, and management expects negative free cash flow for fiscal 2026 because of working-capital investments supporting the larger Sanity-led business. Cash and cash equivalents were CAD 11.7 million at quarter end, although total liquidity including debt facilities was CAD 49.2 million.

Presentation

[Operator]

Good morning. My name is Matthew, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the OrganiGram Global Q3 Fiscal 2026 Earnings Conference Call. After the speakers' prepared remarks, there will be a Q&A session. Please limit yourself to one question and one follow-up. You may re-queue for additional questions. Thank you. I'll now turn the call over to Max Schwartz, Director of Investor Relations.

[Max Schwartz, Director of Investor Relations at OrganiGram Global]

Thanks, Matt. Good morning, everyone, and thanks for joining us today. As a quick reminder, this call is being recorded, and a replay will be available on our website within 24 hours. Today's call will include forward-looking statements, and actual results could differ materially due to a number of risk factors outlined in our filings and the cautionary statements included in our Q3 Fiscal 2026 press release and MD&A. We'll also reference certain non-IFRS measures such as adjusted EBITDA, adjusted gross margin, and free cash flow. Definitions and reconciliations are available in our disclosure materials. Unless otherwise noted, market share data is sourced from Hifyre, Weedcrawler, provincial boards, retailers, and our internal sales tracking. Discussing our results today are James Yamanaka and Greg Guyatt, CEO and CFO of OrganiGram Global. I once again welcome you to today's call. With that, I'll turn the call over to James.

[James Yamanaka, CEO at OrganiGram Global]

Thank you, Max, and good morning, everyone. Thank you for joining us today. Q3 represents an important milestone for OrganiGram. For the first time, our financial results include almost a full quarter of contributions from Sanity Group, providing a clearer picture of a larger, more diversified, and increasingly international cannabis business. Before I discuss the business, I'd like to recognize our teams across Canada and Germany. Together, they deliver the highest quarterly net revenue and adjusted EBITDA in OrganiGram's history. OrganiGram today is a fundamentally different company than it was earlier this year. We are larger in scale, broader in geographic reach, and better positioned for long-term profitable growth. This quarter demonstrates that our strategy is beginning to translate into stronger financial results, which we believe reset the trajectory of the company to achieve higher margins and profitability in the coming periods.

[James Yamanaka, CEO at OrganiGram Global]

I'll begin with Canada, where I'll discuss the progress we made recovering share in vapes and infused pre-rolls following the challenges we experienced in Q2, before turning to our international business and the integration of Sanity. Greg will then walk you through the financial results in greater detail. Starting us off with Canada. As of quarter end, OrganiGram held an 11.1% share of the Canadian recreational cannabis market. Several of our core categories continued delivering strong growth, while the corrective actions we implemented during Q2 related to vapes and infused pre-rolls began gaining traction in June. At the same time, we've become more disciplined with our portfolio. Compared to last year, we've reduced our SKU count by roughly 10%. Rather than chasing shelf space through product proliferation, we're positioning ourselves to gradually invest behind fewer, stronger brands with clearer consumer positioning and less overlap.

[James Yamanaka, CEO at OrganiGram Global]

We believe this approach reduces complexity, strengthens execution, improves operational efficiency, and ultimately creates more durable brands. Beginning with vapes, we completed the rollout of our new all-in-one hardware platform and higher potency liquid diamond products near the end of Q2. These products are now broadly distributed across Canada alongside the enhanced quality control processes we discussed on our previous call. The earlier results have been strong. During June, our all-in-one vape share increased by 1.1 percentage points month-over-month, while declines in the 510 segment began to reverse. While one month doesn't establish a trend, we believe it provides encouraging evidence that the product improvements we've made are resonating with consumers.

[James Yamanaka, CEO at OrganiGram Global]

Infused pre-rolls also returned to growth, gaining 0.3 share points month-over-month, while regular pre-rolls also improved, resulting in overall pre-roll growth while the category has become Canada's largest and most competitive segment, representing more than 36% of total industry sales. As quality, consistency, and potency continue improving, we believe there is opportunity to expand our share further. BOXHOT infused pre-rolls were a particular highlight this quarter, growing 0.8 percentage points year-over-year. Our strongest performance, however, continues to come from flower. Driven by continued advances in cultivation, genetics, and plant science, OrganiGram ended the quarter with a 12.5% share of the flower category, up two percentage points year-over-year. We also achieved our highest ever share in the important 3.5-gram format. These gains reflect years of investment in cultivation excellence.

[James Yamanaka, CEO at OrganiGram Global]

During Q3, average THC potency for month end reached a record 30.4%, while harvested kilograms remained above 30,000 per quarter, up approximately 25% year-over-year. Outside of flower, we also delivered strong growth in beverages and concentrates. In beverage, OrganiGram ranked fourth nationally, with an 8.6% category share, up 3.1 percentage points year-over-year, and exiting June above 10% share as SHRED Sodas and SHRED Shotz continued gaining consumer traction. In concentrates, we strengthened our leadership position as Canada's number one LP, finishing the quarter with 17.9% share, up 3.3 percentage points year-over-year, driven by continued success in whipped diamonds and hash. One category where performance softened modestly was edibles. While share remained relatively stable year-on-year, we experienced sequential pressure from lower priced live resin competitors. Our response is a broader rollout of our ingestible innovation platform across the edibles portfolio beginning in September.

[James Yamanaka, CEO at OrganiGram Global]

Looking ahead, we are entering what has historically been our strongest seasonal period, supported by successful summer retail programs, improving category momentum, and positive consumer response to our refreshed vape and infused pre-roll portfolios. Overall, we're gradually shifting the orientation of our Canadian business toward increased competitiveness and efficiency, and are progressing initiatives to reinforce revenue and margin stability here as we expand into more emerging markets internationally. Now turning to the international part of the business. Q3 marks the Q1 of consolidated financial results from Sanity Group, and the business demonstrated strong performance. As we indicated when announcing the acquisition, we expected Sanity Group to average approximately EUR 25 million of quarterly revenue. Since consolidating on April 15th, the business delivered EUR 24.5 million, contributing more than CAD 40 million of net revenue to our consolidated results, and generated EUR 25.5 million during the full fiscal quarter.

[James Yamanaka, CEO at OrganiGram Global]

While Canada remains the foundation of our business, approximately 35% of our consolidated revenues were generated internationally this quarter, compared to roughly 10% prior to the acquisition. This represents a structural evolution of OrganiGram's business model and significantly diversifies both our revenue base and future growth opportunities. We believe Europe increasingly represents the largest near and long-term growth opportunity for the company, and we now have a vertically integrated supply chain from Canada to Europe. Demand across Sanity's distribution platform continues to grow. Our priority is expanding access to compliant product through our own production improvements and additional supply partnerships. In Moncton, we're continuing to improve our international flower pass rates while standing up EU GMP-compliant remediation pathways. Facility-wide pass rate initiatives have been implemented while we simultaneously identify cultivars that have high levels innate resistance to microbes. Commercially, Sanity also continued expanding its platform throughout the quarter.

[James Yamanaka, CEO at OrganiGram Global]

The business continued preparations for an additional Swiss recreational pilot project, advanced its entry into Poland, launched branded products in the U.K. through new strategic partnerships, established a new Swiss medical partnership, and recorded its first medical cannabis sales in Switzerland. Regarding the recent German regulatory changes disallowing medical cannabis reimbursements, we expect minimal impact on Sanity, as approximately 1% of historical sales were reimbursed through government insurance programs. Outside Europe, Australia remains an attractive long-term growth market. Our Australian portfolio is now broadly available, and we're focused on driving physician adoption and prescription growth as the market continues to develop. In the U.S., the regulatory environment remains uncertain in light of the upcoming ban on hemp-derived THC products.

[James Yamanaka, CEO at OrganiGram Global]

Though there are efforts to delay the ban by four weeks to December 11th, which we view as a positive step, our business development activities in this segment are effectively paused until we receive regulatory clarity. That said, we are bullish on rescheduling and federal legalization efforts in the U.S., and we continue to closely monitor opportunities for OrganiGram to participate in relevant segments of the market as it evolves. Our primary international focus right now, however, will remain Europe and Australia, where we believe the opportunities are both larger and more visible over the medium term. To summarize, Q3 demonstrated three important things. First, the integration of Sanity is progressing according to plan, and it's already meaningfully reshaping OrganiGram's financial profile with record net revenue and adjusted EBITDA, and an improving margin profile.

[James Yamanaka, CEO at OrganiGram Global]

Second, the corrective actions we've taken across our Canadian business are beginning to produce encouraging results, particularly in categories where we experienced temporary execution challenges earlier this year. Third, OrganiGram today is a significantly larger, more diversified, and more internationally positioned company than at any point in our history. While execution remains our priority, we're confident in the opportunities ahead as we continue building a cash-generating global cannabis business.

[James Yamanaka, CEO at OrganiGram Global]

Finally, I would like to recognize Paolo De Luca, who will be departing OrganiGram after nine years of exceptional leadership and service. During his tenure as both Chief Financial Officer and Chief Strategy Officer, Paolo played an instrumental role in many of the company's most transformative transactions, helping lay the foundation for OrganiGram's evolution into a global cannabis company. On behalf of everyone at OrganiGram, I thank Paolo for his many contributions and wish him every success in the future. With that, I'll turn the call over to Greg to walk through the quarter in more detail.

[Greg Guyatt, CFO at OrganiGram Global]

Thanks, James. We are pleased to report that with the addition of Sanity to our consolidated results OrganiGram delivered the largest revenue quarter in the company's history, improved adjusted gross margin both sequentially and year-over-year, and generated record-adjusted EBITDA. As James noted, international revenue now represents more than one-third of our total revenue. That marks a fundamental shift in OrganiGram's business profile. We are now operating as a diversified global cannabis platform with meaningful scale across multiple markets. With that, let's turn to the detailed results. Net revenue for the quarter was CAD 105.8 million compared to CAD 70.8 million in the prior year period, representing a year-over-year increase of 49%.

[Greg Guyatt, CFO at OrganiGram Global]

The increase in net revenue was primarily attributable to contributions from Sanity Group, partially offset by slightly lower Canadian market share year-over-year due to lower vape and pre-roll share, as well as our intentional reduction in SKU count, an ongoing project to simplify our portfolio and ultimately improve margins. Sanity's contribution since the close of our acquisition on April 15, 2026, contributed EUR 24.5 million or approximately CAD 40 million to OrganiGram revenue. For the entire quarter, including the two weeks we did not own them, Sanity's revenue exceeded EUR 25 million, in line with expectations at the time of acquisition, with the stage set for additional growth over the course of the remainder of the year and into fiscal 2027. Adjusted gross margin was 37%, an increase of 300 basis points year-over-year and 600 basis points sequentially.

[Greg Guyatt, CFO at OrganiGram Global]

The increase was primarily driven by contributions from Sanity and improvements in Canadian operations compared to both comparison periods. It is important to note that the underlying cost structure of OrganiGram's Canadian operations is expected to continue improving. Cultivation yields, potency improvements, and portfolio rationalization remain positive contributors, and we expect these to become more visible as we continue optimizing the business. G&A expenses for the quarter were CAD 20.6 million, compared to CAD 15.7 million in the prior year period, an increase of 31%, primarily attributable to the inclusion of Sanity's expenses and the amortization of intangibles related to the acquisition, partially offset by a CAD 3 million recovery of a previously recorded bad debt provision. As a percentage of net revenue, G&A was approximately 19%, representing a decrease of approximately 300 basis points year-over-year and 600 basis points sequentially.

[Greg Guyatt, CFO at OrganiGram Global]

The reduction compared to both prior periods was primarily due to operational leverage from the consolidation of the Sanity Group. Sales and marketing expenses in the quarter increased to CAD 12.1 million versus the prior year period amount of CAD 8.8 million. The increase was once again driven by the inclusion of Sanity expenses, as well as higher investments in advertising and promotional activities in line with seasonality, our Summer of SHRED campaigns, and new product launches. Overall, SG&A in the quarter was CAD 32.7 million versus CAD 24.5 million in the prior year period. As a proportion of net revenue, SG&A declined from 34% in Q3 of last year to 31% in the current period, a decrease of approximately 300 basis points. Our record-adjusted EBITDA for Q3 was CAD 13.4 million, compared to CAD 5.7 million in the prior year period.

[Greg Guyatt, CFO at OrganiGram Global]

The 136% increase was primarily driven by Sanity Group, as well as efficiencies in Canada. Net income for the quarter was CAD 105.5 million, compared to a loss of CAD 6.3 million in the prior year period. This substantial increase in net income in the current period was primarily attributable to higher fair value gains on derivative liabilities, Preferred Shares, and other financial assets of CAD 105.8 million. Cash provided by operating activities before working capital changes was CAD 6.2 million, compared to cash used of CAD 0.7 million in the prior year period. This improvement primarily reflects stronger underlying operating performance, including higher net revenue, better product mix, and higher gross margin. Cash used in operating activities was CAD 4.3 million, compared to cash provided of CAD 14.6 million in the prior year period.

[Greg Guyatt, CFO at OrganiGram Global]

Despite stronger cash generation before working capital changes, operating cash flow was more than offset by working capital investments during the quarter, part of which was building inventory to address German demand and the timing of sales during the quarter. Free cash flow was an outflow of CAD 3.9 million for the quarter, compared to an inflow of CAD 5 million in the prior year period. Underlying cash generation improved meaningfully before working capital changes and capital expenditures were substantially lower than the prior year period. However, these benefits were more than offset by working capital investments associated with the company's increased scale and growth expectations. Regarding liquidity, as of June 30th, OrganiGram had cash and cash equivalents of CAD 11.7 million and total liquidity of CAD 49.2 million, including our debt facilities.

[Greg Guyatt, CFO at OrganiGram Global]

To conclude, we are very pleased with our strong financial performance this quarter, highlighted by record revenue, record-adjusted EBITDA, and resumed margin expansion. We are delighted with the performance of Sanity Group thus far, as well as the growth we are expecting in the coming quarter, which we believe will further strengthen our earnings profile while expanding our international platform. Although working capital investments impacted cash flow during the quarter, they were largely a function of supporting a substantially larger and growing vertically integrated global business. We continue to expect revenue to exceed CAD 350 million for the full-year of fiscal 2026. Adjusted gross margin and adjusted EBITDA to meaningfully exceed fiscal 2025 levels.

[Greg Guyatt, CFO at OrganiGram Global]

The underlying earnings profile of the business has strengthened, but working capital requirements associated with integrating Sanity and supporting a much larger business are expected to result in negative free cash flow for the full-year this year. Importantly, we continue to expect positive free cash flow in the Q4, which we believe is a better indicator of the business's ongoing cash-generating capacity. With that, we will open the call for questions.

[Operator]

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Aaron Grey with A.G.P./Alliance Global Partners. Your line is now open. Please go ahead.

[Aaron Grey, Analyst at A.G.P./Alliance Global Partners]

Hi, good morning, and thank you very much for the questions. First off, Paolo, I just want to obviously wish you best of luck in your future endeavors. First question from me, just in terms of now that you have closed Sanity Group, it would be great to get any early learnings or what you are seeing now as a wholly consolidated entity for a longer period of time in a full quarter, and what opportunities you might feel present themselves well internationally as it remains a top priority for you as well as many of your other Canadian LP peers. Thank you very much.

[James Yamanaka, CEO at OrganiGram Global]

Sure. Thanks, Aaron. This is James. I will tackle the first part of that and maybe let Greg say a little more at the end if he would like to. I think over the first several months of having Sanity in the group, there are a number of key learnings, I think, so far. Number one is that it has completely changed the profile of the group, where the focus is more on the international, although Canada remains the core of the business. Two, I think the growth rate there is putting stress, not just on OrganiGram, but I think a lot of other suppliers in terms of flower supply.

[James Yamanaka, CEO at OrganiGram Global]

But we are addressing those through our activities in Moncton, as well as looking at different suppliers partnerships that we can do to make sure we satisfy that. I think the cultural fit between the two companies and the lack of overlap is making it easier for us to move forward. Although I think, like any new partnership, there are teething problems along the way, but I think we sorted through most of those. Greg, I do not know if you wanted to add anything else to that.

[Greg Guyatt, CFO at OrganiGram Global]

No. I would just add that we were really happy with the performance in the Q1 of consolidation. Getting to that EUR 25 million benchmark was really an important achievement for us. Now that we have sorted out some of our flower challenges that we had last quarter, we are expecting that growth to continue. So we are really looking forward to a strong Q4 that is going to outperform what we did in Q3.

[Aaron Grey, Analyst at A.G.P./Alliance Global Partners]

Okay, great. Really appreciate the color there. Then just on the Canadian side, maybe talk about how you are prioritizing capacity allocation. Obviously, you have international as a driver, but you have made it clear you want to maintain your market leadership within Canada. So talk about how you are allocating capacity accordingly to be able to do that. Thank you.

[James Yamanaka, CEO at OrganiGram Global]

Okay. Yeah, thanks. It is a good question. First of all, I think when we are looking at the overall Canadian portfolio, as I mentioned earlier, what we are trying to do is simplify the portfolio. We have already reduced the SKU count by about 10% to simplify, both to reduce the complexity on the back end across all the different product categories. You can see that we have been able to address a lot of the issues from last quarter around vape and IPRs, and it is only a month, but the trajectory is good.

[James Yamanaka, CEO at OrganiGram Global]

I think in terms of the allocation, it's always going to be a trade-off between international and domestic, but we're confident that with the different activities we're doing, both within our own supply, with partnerships, and other mechanisms where we are increasing the flower supply, we'll be able to satisfy the needs of both Canada as well as the international markets. Greg?

[Greg Guyatt, CFO at OrganiGram Global]

No, I totally agree with that. Obviously, looking at how we optimize our margins and balancing our mix between internally sourced flower and sourcing flower from third parties. But clearly, there is a strong benefit towards allocating as much as we can to Sanity while protecting Canada.

[Aaron Grey, Analyst at A.G.P./Alliance Global Partners]

Okay, great. Thank you very much. I'll jump back in the queue.

[Operator]

Your next question comes from the line of Frederico Gomes with ATB Cormark. Your line is now open. Please go ahead.

[Frederico Gomes, Analyst at ATB Cormark]

Thank you. Good morning. Congratulations on a record quarter here, and thanks for taking my questions. First question I want to ask again about Sanity performing in line, I guess, with your revenue expectation. I am curious if you could talk about margins from Sanity, and how is the competitive environment for distributors in Germany looking like from a margin perspective, and how do you expect that margin profile to evolve over the next two quarters? Thank you.

[Greg Guyatt, CFO at OrganiGram Global]

Yeah, maybe I can tackle this.

[James Yamanaka, CEO at OrganiGram Global]

Greg, why don't you take it?

[Greg Guyatt, CFO at OrganiGram Global]

James, if you have anything to add, feel. Yeah. So as of right now, our margins are operating in line with what we expected as well, along with revenue. To your point about the competitive environment in Germany, right now there is a ton of demand, and we haven't seen significant price compression over the last quarter. In fact, we probably haven't been able to even satisfy all of the demand that was there. So there had been talk, I think, a quarter or two about potential risk of price compression in Germany. We have expected some, but really it's been minimal at this point. So at the moment, margins continue to be solid, and we continue them to be stable going forward, over the course of the next couple of quarters.

[Greg Guyatt, CFO at OrganiGram Global]

In terms of margins in Canada, overall we hit 37% this year or this quarter, which was a significant improvement over last quarter. The drivers are both the contributions from Sanity, but also in Canada, you may recall in Q2, we had a higher than normal rate of return, particularly with some of our vapes in Canada. Those issues have now been resolved. We've launched new vape hardware. As James mentioned in his comments, those products, the initial results have been very strong. We expect margins to continue improving as we go into Q4 and into next year.

[Greg Guyatt, CFO at OrganiGram Global]

Obviously, we're always looking at efficiency improvements and how we can produce from Moncton more efficiently, but also from our manufacturing operations. Some of the SKU rationalization initiatives we're looking at, we expect that to really provide some optimization where we eliminate some of the lower performing profitability products, and really double down on the strong performers to improve our margins over the course of the rest of this year and going into next year as well.

[Frederico Gomes, Analyst at ATB Cormark]

Thank you. Appreciate that. Second question. You mentioned the EU GMP, I guess, audit at Moncton. Can you give us an update on that in terms of maybe some timelines here? Also remind us how much of an impact on margins could that have once you get the EU GMP certification. Thank you.

[James Yamanaka, CEO at OrganiGram Global]

Right. Unfortunately with the EU GMP, we don't have any new news. As you recall from the last quarter, we put in the application in April. What we've been doing since then, we had an audit back in November last year. We've addressed any issue that was raised at that time. We resubmitted in April, and we are speaking constantly to the regulator to try and get a response. I'm wary of giving a timeline because we're just waiting on when the regulator will do it. We know they are looking at it, starting this month. We'll give you updates as soon as we know. Greg, why don't you go on the margin side?

[Greg Guyatt, CFO at OrganiGram Global]

Sure. From a margin perspective, we've never actually quantified, on any of our calls, the exact impact we expect other than to say that it is meaningful once the EU GMP comes in, by not having to use a processor in Europe as we ship to Germany. In terms of margin expectations going forward though, we think that it's probably going to start as soon as the EU GMP comes in, and we'll see the improvement then.

[Frederico Gomes, Analyst at ATB Cormark]

Thank you very much.

[Operator]

Your next question comes from the line of Kenric Tyghe with Canaccord Genuity. Your line is now open. Please go ahead.

[Kenric Tyghe, Analyst at Canaccord Genuity]

Thank you. Good morning, and allow me to echo the congratulations on the beaten quarter. If I could, just with respect to the comment on flower, is it as simple as a supply or a quality of supply issue? Because one of the discussions that has come up through this earnings season has been one of pushback by the German authorities. If you could sort of speak to both the quality of supply into Germany and then perhaps also address the quality of supply within the domestic market, just so we can help tease out the dynamics there.

[James Yamanaka, CEO at OrganiGram Global]

Sure. I did mention, I think with the growth of the German market over the last several years, there is certainly a tight supply for EU GMP flower going into Germany. With that said, we are addressing it with the improvement in flower that passes microbial counts out of Moncton, where we have new suppliers as well, and we have opened up different remediation pathways into Europe. Some of the German authorities have tightened up EU GMP to an extent. But with the new activities we have been doing, we are confident we can supply most of the demand that Sanity Group requires. But it is a tight market for the EU GMP quality supply into Germany at the moment. For Canada, the EU GMP issue doesn't exist, so the quality is sufficient for the Canadian market. I don't know if you wanted to add anything onto that, Greg.

[Greg Guyatt, CFO at OrganiGram Global]

No, totally agree with that. Obviously, we have seen some significant improvements over the last four or five months. We expect that to really drive future profitability as we get into Q4 and Q1 of next year.

[Kenric Tyghe, Analyst at Canaccord Genuity]

Great. Thank you. Greg, just a thought with respect to sort of the cadence of spend. How much of the sort of spend in Germany, was there any pull forward? Was there any sort of spend required that we won't see being repeated in this first sort of full quarter post-integration? Just trying to sort of work through expected SG&A type cadence or SG&A type margins out of that business.

[Greg Guyatt, CFO at OrganiGram Global]

Yeah. I think the spending there was in line with what was expected, and I think that on a normalized basis, the spend that we have seen there is probably what we would expect going forward. If anything, I would expect revenue to increase meaningfully, but operating expenses to stay sort of relatively low. So we will really start to see that P&L leverage start to come into effect. So when we look at our SG&A as a percentage of sales, we have seen that coming down fairly consistently over the long term here, and we expect that to continue going forward. So I wouldn't forecast major increases in expenditures there.

[Kenric Tyghe, Analyst at Canaccord Genuity]

Great. Thanks very much. I will get back in queue.

[Operator]

There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.

Participants

Analysts

• Max Schwartz, Director of Investor Relations at OrganiGram Global
• James Yamanaka, CEO at OrganiGram Global
• Greg Guyatt, CFO at OrganiGram Global
• Aaron Grey, Analyst at A.G.P./Alliance Global Partners
• Frederico Gomes, Analyst at ATB Cormark
• Kenric Tyghe, Analyst at Canaccord Genuity