It’s no secret that the cannabis industry has been smoked so far in 2020. Out of this group, Organigram Holdings Inc. (NASDAQ: OGI) seems to have fared the best, and by a wide margin too. Although the popularity of these cannabis stocks has waned as the lawsuits have piled on, there is a path forward. The only question is how long this will take.

The Dow Jones industrial average, S&P 500 and Nasdaq have each seen significant pullbacks since the beginning of the year, over 20%, excluding Monday’s move. It might be hard to believe that a pot stock has bested these averages, but Organigram shares had actually outperformed each one up until last week.

While some controversy surrounding Organigram’s stock remains, it could be taken as a good omen that it was beating the stock market. However, near-term hurdles remain for both Organigram and the market in the form of the novel coronavirus.

The path to profit in the long term is not certain yet. Yet, since Organigram expanded its leadership team, things are beginning to take shape.

At the Root of the Problem: One Corona for the Road

Organigram recently gave a COVID-19 update to its employees and customers. In mid-March, the company announced that it would temporarily lay off some workers to incorporate social distancing into its operations. It’s not hard to see that this will negatively affect the company’s production capacity, supply agreements and gross margins. At the same time, the company will be temporarily closing its stores across Canada.

Prior to this, Organigram was rolling out a new line of Edison-branded vape pens as part of its cannabis 2.0 initiative. These pens are designed and sold by a Canadian firm, Feather. However, the pens themselves are made in China. Considering Chinese manufacturing was one of the first struck by the coronavirus, this could become a greater hurdle for Organigram.

Feather’s CEO, Pat Lehoux, told Bloomberg that shipments of the Edison pens are running two to four weeks behind schedule. Feather’s largest customer is Organigram, which has exclusive Canadian distribution rights to the Edison pens. Lehoux said he convinced Organigram to place an order for the pens to avoid the usual disruption surrounding Chinese New Year. At that time, no one anticipated the factory shutdowns due to the coronavirus outbreak.

Here’s another twist. People that smoke or vape are generally affected more harshly by the coronavirus than those who don’t.

Tobacco companies are already seeing some fallout. A New York doctor has called for the banning of cigarette sales during this pandemic. While vaping isn’t smoking, it is a close cousin. The health-conscious will have something to say about it before this whole pandemic is through.

It also is not reassuring that other vaping partnerships, such as Altria Group Inc. (NYSE: MO) and Juul, have faced some major problems.

Prestigious Litigious

Organigram is one of many marijuana stocks facing a lawsuit. While cannabis products are not federally legal in the United States, the law and precedent are set in Canada. Organigram joins the prestigious list of Aurora Cannabis Inc. (NYSE: ACB), Canopy Growth Corp. (NYSE: CGC) and Tilray Inc. (NASDAQ: TLRY), to name a few.

In some way, shape or form, a lawsuit is being brought against each of these companies, for different reasons.

For Organigram, it is a class-action lawsuit stemming from two different recalls of medical cannabis Organigram made. One recall came in late 2016 and the other in early 2017.

According to the case, myclobutanil was discovered in a medical marijuana product that was recalled. This pesticide is not approved in Canada for use on plants that are combusted, such as cannabis or tobacco.

Organigram already has pointed out that the lawsuit also deals with the reimbursement of funds paid to the cannabis company in 2016. However, the firm already voluntarily refunded money to many of the customers.

Cannabis 2.0

Apart from the Edison pens, Organigram is also rolling out Edison Bytes. This is Organigram’s premium cannabis-infused chocolate truffles, the first of the company’s chocolate products available to Canadian consumers. Products are available as single chocolates containing 10 mg of cannabis each and sets of two truffles that contain 5 mg each.

Separately, this licensed producer of cannabis’ next-generation product portfolio includes infused chocolate and a dissolvable powdered beverage product. They are created using nanotechnology and provide a discreet and customizable experience for the consumer. First shipments of chocolate and dissolvable powder products were expected in the calendar first and second quarter of 2020, respectively.

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