Over the past year, shares of Canadian marijuana grower OrganiGram (NASDAQ: OGI) have rallied close to 60% despite what’s been a pretty lackluster business performance. To add fuel to the fire, British American Tobacco (NYSE: BTI) announced this March that it would make a strategic investment in the company. The tobacco giant will infuse CA$221 million in cash into OrganiGram in return for just under a 20% equity stake.
As exciting as that may sound, an investment in a firm that is rapidly losing money isn’t likely to turn around its operations. Many of OrganiGram’s woes still remain unresolved, and I think it’s only a matter of time before new and old investors come to their senses. In fact, its shares are already down about 16% from the time when its collaboration with British American Tobacco went public. This is definitely a stock to pass on due to its mounting losses, especially before its earnings release in the coming weeks.