Filed by newsfilecorp.com Organigram Holdings Inc. Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") For the three months ended

ORGANIGRAM'S PORTFOLIO OF ADULT RECREATIONAL CANNABIS BRANDS:

This Management's Discussion and Analysis dated January 12, 2020 (this "MD&A"), should be read in conjunction with the condensed consolidated interim financial statements (the "Interim Financial Statements") of Organigram Holdings Inc. (the "Company" or "Organigram") for the three months ended November 30, 2019 ("Q1 Fiscal 2020") and the audited consolidated financial statements for the year ended August 31, 2019 (the "Annual Financial Statements"), including the accompanying notes thereto.

Financial data in this MD&A is based on the Interim Financial Statements of the Company for the three months ended November 30, 2019 and are expressed in thousands of Canadian dollars ("$"), except for share and per share calculations, references to $ millions, per gram ("g") or kilogram ("kg") of dried flower and per milliliter ("mL") or liter ("L") of cannabis oil calculations, and prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), unless otherwise stated.

Financial figures relating to prior periods in the eight-quarter comparative table captioned "Summary of Quarterly Results" have been restated due to the reclassification of discontinued operations (see note 25 of the Annual Financial Statements), the reclassification of shipping expense from selling and marketing expense to cost of sales (see note 26 of the Annual Financial Statements), the reclassification of sales recoveries and returns into gross revenues (see note 18 of the Annual Financial Statements), the reclassification of indirect production to cost of sales (see note 18 of the Interim Financial Statements).

The financial information in this MD&A contains certain financial and operational performance measures that are not defined by and do not have any standardized meaning under IFRS and are used by management to assess the financial and operational performance of the Company. These include, but are not limited to, the following:

Yield per plant (in grams);

Dried flower equivalent ("DFE", in grams or kilograms);

Target production capacity;

Cost of cultivation per gram harvested (both "cash" and "all-in"); and

The Company believes that these non-IFRS financial measures and operational performance measures, in addition to conventional measures prepared in accordance with IFRS, enable investors to evaluate the Company's operating results, underlying performance and prospects in a similar manner to the Company's management. The non-IFRS financial performance measures are defined and reconciled to IFRS in the sections in which they appear.

As there are no standardized methods of calculating these non-IFRS measures, the Company's approaches may differ from those used by others, and accordingly, the use of these measures may not be directly comparable. Accordingly, these non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

The Company's wholly-owned subsidiary, Organigram Inc. ("OGI"), is a licensed producer of cannabis and cannabis derived products (a "Licensed Producer" or "LP") under the Cannabis Act (Canada) and the Cannabis Regulations (Canada) (together, the "Cannabis Act") and regulated by Health Canada.

The Company's head and registered offices are located at 35 English Drive, Moncton, New Brunswick, E1E 3X3. The Company's common shares ("Common Shares") are listed on the Nasdaq Global Select Market ("NASDAQ") and on the Toronto Stock Exchange ("TSX") under the symbol "OGI". Any inquiries regarding the Company may be directed to its Vice President, Investor Relations, Amy Schwalm, at (416) 704-9057 or by email to investorrelations@organigram.ca.

Additional information relating to the Company, including the Company's most recent Annual Information Form (the "AIF") is available under the Company's issuer profile on the Canadian Securities Administrators' System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com. Our reports and other information filed with or furnished to the United States Securities and Exchange Commission ("SEC") are available on the SEC's Electronic Document Gathering and Retrieval System ("EDGAR") at www.sec.gov.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain information herein contains or incorporates comments that constitute forward-looking information within the meaning of applicable securities legislation ("forward-looking information"). Forward-looking information, in general, can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "could", "would", "might", "expect", "intend", "estimate", "anticipate", "believe", "plan", "continue", "budget", "schedule" or "forecast" or similar expressions suggesting future outcomes or events. They include, but are not limited to, statements with respect to expectations, forecasts or other characterizations of future events or circumstances, and the Company's objectives, goals, strategies, beliefs, intentions, plans, estimates, projections and outlook, including statements relating to the Company's plans and objectives, or estimates or predictions of actions of customers, suppliers, partners, distributors, competitors or regulatory authorities; and, statements regarding the Company's future economic performance. These statements are not historical facts but instead represent management beliefs regarding future events, many of which, by their nature are inherently uncertain and beyond management control. Forward-looking information has been based on the Company's current expectations about future events.

Certain forward-looking information in this MD&A includes, but is not limited to the following:

Expectations regarding the extension or renewal of the License (as defined below);

Moncton Campus (as defined herein) expansion plans, licensing and target production capacity and timing thereof;

Expectations regarding production capacity, facility size, costs and yields;

Expectations around demand for cannabis and related products, future opportunities and sales including the relative mix of medical versus adult-use recreational products, the relative mix of products within the adult-use recreational category, the Company's financial position, future liquidity and other financial results;

Legislation of additional cannabis types and forms for adult-use in Canada including regulations relating thereto and the implementation thereof and our future product forms;

Expectations around ANKR-branded products and derivative-based products with respect to timing, launch, product attributes and composition;

The general continuance of current, or where applicable, assumed industry conditions;

Changes in laws, regulations and guidelines, including the recreational cannabis market and the advent and development of the cannabis-derived products market and changes in the regulation of medical cannabis;

Price of cannabis and derivative cannabis products;

Impact on the Company's cash flow and financial performance on third parties, including its supply partners;

Fluctuations in the price of Common Shares and the market for the Common Shares;

Treatment of the Company's business under governmental regulatory regimes and tax laws, including the Excise Act

(as defined herein);

The Company's growth strategy, targets for future growth and forecasts of the results of such growth;

Expectations concerning access to capital and ability to finance in the public markets to fund growth;

The ability of the Company to generate cash flow from operations and from financing activities; and

The Company's competitive position.

The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking information. Forward-looking information is provided for the purposes of assisting the reader in understanding the Company and its business, operations, risks, financial performance, financial position and cash flows as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and the reader is cautioned that such statements may not be appropriate for other purposes. Forward-looking information does not guarantee future performance and involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in the forward-looking information. In addition, this MD&A may contain forward-looking information attributed to third party industry sources. Undue reliance should not be placed on forward-looking information, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By its nature, forward-looking information involves numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the expectations, predictions, forecasts, projections, conclusions will not occur or prove accurate, that assumptions may not be correct, and that objectives, strategic goals and priorities will not be achieved. Factors that could cause actual results to differ materially from those set forth in forward-looking information include, but are not limited to: financial risks; dependence on senior management, the board of directors of the Company (the "Board of Directors"), consultants and advisors; availability and sufficiency of insurance; the Company and its subsidiaries will be able to, where applicable, cultivate cannabis pursuant to applicable law and on the currently anticipated timelines; industry competition; general economic conditions and global events; product development, facility and technological risks; changes to government laws, regulations or policy, including environmental or tax, or the enforcement thereof; agricultural risks; ability to maintain any required licenses or certifications; supply risks; product risks; construction delays; packaging and shipping logistics; expected number of medical and adult-use recreational cannabis users in Canada and internationally; potential time frame for the implementation of legislation to legalize cannabis internationally; the Company, its subsidiaries and investees' ability to, where applicable, obtain and/or maintain their status as Licensed Producers or other applicable licenses; risk factors affecting its investees; availability of any required financing on commercially attractive terms; compliance with debt covenants; the potential size of the regulated adult-use recreational cannabis market in Canada; demand for the Company's cannabis and related products, including the Company's Rec 2.0 products, and the sufficiency of the retail networks to supply such demand; ability to enter and participate in international market opportunities; general economic, financial market, regulatory and political conditions in which the Company operates; the ability of the Company to compete in the cannabis industry; a material decline in cannabis prices; the Company's ability to manage anticipated and unanticipated costs; the Company's ability to implement and maintain effective internal controls over financial reporting and disclosure and procedures; and, other risks and factors described from time to time in the documents filed by the Company with securities regulators. Material factors and assumptions used in establishing forward-looking information include that construction and production activities will proceed as planned and demand for cannabis and related products will increase in the manner expected by management. All forward-looking information is provided as of the date of this MD&A. The Company does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise, except as required by law.

ADDITIONAL INFORMATION ABOUT THE ASSUMPTIONS, RISKS AND UNCERTAINTIES OF THE COMPANY'S BUSINESS AND MATERIAL FACTORS OR ASSUMPTIONS ON WHICH INFORMATION CONTAINED IN FORWARD-LOOKING INFORMATION IS BASED IS PROVIDED IN THE COMPANY'S DISCLOSURE MATERIALS, INCLUDING IN THIS MD&A UNDER "RISK FACTORS" AND THE COMPANY'S CURRENT AIF UNDER "RISK FACTORS", FILED WITH THE SECURITIES REGULATORY AUTHORITIES IN CANADA AND AVAILABLE UNDER THE COMPANY'S ISSUER PROFILE ON SEDAR AT WWW.SEDAR.COM AND FILED WITH OR FURNISHED TO THE SEC AND AVAILABLE ON EDGAR AT WWW.SEC.GOV. ALL FORWARD-LOOKING INFORMATION IN THIS MD&A IS QUALIFIED BY THESE CAUTIONARY STATEMENTS.

NATURE AND HISTORY OF THE COMPANY'S BUSINESS

The Company is a Licensed Producer of cannabis under the Cannabis Act.

Since commencing operations at its main facility located in Moncton, New Brunswick, the Company has continued to expand the main facility to create additional production capability. The Company has also strategically acquired land and buildings adjacent to the main facility (together, the "Moncton Campus") that, when fully developed and licensed by Health Canada, will result in a differentiated cultivation and production facility. Within its cultivation rooms at the Moncton Campus, the Company grows on three levels and therefore its capacity is of greater size if compared to other cultivation facilities of similar square footage without tiered growing.

Patients order medical cannabis and cannabis oil from the Company primarily through the Company's online store or by phone. Medical cannabis dried flower and cannabis oil is and will continue to be delivered by secured courier or other methods permitted by the Cannabis Act. The Company's prices vary based on grow time, strain yield and market prices.

The Company is also authorized for wholesale shipping of cannabis plant cuttings, dried flower, blends, pre-rolls and cannabis oil to approved retailers and wholesalers for adult-use recreational cannabis under the individual provincial and territorial regulations as per the Cannabis Act.

The Company continues the ongoing development of its Moncton Campus to add additional capacity to allow for increased production of cannabis, cannabis oil and related products including new classes of cannabis products allowed for legal sale by Licensed Producers such as the Company under amendments to the Cannabis Act ("Rec 2.0").

BUSINESS ENVIRONMENT

The Company's business and activities are heavily regulated. Our AIF contains a more detailed description of the regulatory framework of our business as of the date of the AIF. The following provides a description of recent regulatory developments that have the potential to impact the Company's performance.

Current Regulatory Landscape

Medical cannabis has been legal in Canada since 2001 under various regulatory regimes. On June 20, 2018, the Government of Canada passed the Cannabis Act to allow regulated and restricted access to cannabis for adult-recreational users. The Cannabis Act came into force on October 17, 2018.

The Cannabis Act creates a strict legal framework for controlling the production, distribution, sale and possession of cannabis in Canada. The Cannabis Act allows adults to legally possess and use cannabis and therefore the possession of small amounts of cannabis is no longer a criminal offence. It also made it a specific criminal offence to sell cannabis to a minor and created significant penalties for those who engage young Canadians in cannabis-related offences.

On November 9, 2018, Health Canada issued license to the Company under the Cannabis Act for standard cultivation, standard processing and sale for medical purposes ("the License"). On October 21, 2019, Health Canada amended the License to expand the classes of cannabis products that may be sold to adult recreational use sales channels or sold for medical purposes, to include cannabis topicals, cannabis extracts and edible cannabis. The License has also been amended to add additional growing rooms. The License, as amended, has an expiry date of March 27, 2020. The Company has applied to renew its License. It is anticipated that Health Canada will extend or renew the License at the end of its term.

The Company also holds a cannabis license under the Excise Act, 2001 (the "Excise Act") effective October 17, 2018 and expiring October 16, 2020. All holders of a license under the Cannabis Act who are authorized to cultivate, produce and package cannabis products are also required to hold a cannabis license under the Excise Act from the Canada Revenue Agency. The Company intends to renew this license prior to expiry.

The Company received its research and development license from Health Canada on October 23, 2019 to conduct further in-house research. The activities authorized under this research license will support the Company's plans to commercialize cannabis products for Rec 2.0.

Edibles and Derivative Products Regulation

The Cannabis Act was amended with provisions that came into force effective October 17, 2019 for the legal sale by Licensed Producers, such as the Company, of "edibles containing cannabis" and "cannabis concentrates" thereby enabling a range of cannabis product forms by regulating three new product classes: "edible cannabis", "cannabis extracts" and "cannabis topicals".

Certain provinces have announced delays or other restrictions on the launch and sale of edible and vaporizable products in their markets including Quebec, Newfoundland and Labrador and Alberta. The Company is adjusting its distribution plans accordingly. As the market and regulations are rapidly developing the impact of these announcements is not readily determinable at this time.

A limited selection of Rec 2.0 products began to appear gradually in physical or online stores in the latter half of December 2019. Federal license holders are required to provide 60-days prior notice to Health Canada of their intent to sell any new products and such notice could not be given until the new product forms were legalized on October 17, 2019. The Company provided notice for its vaporizer pen portfolio and cannabis-infused chocolates in 2019. The Company's first vaporizer pens were shipped in December 2019.

See "Canadian Adult-Use Recreational Market 2.0"in this MD&A.

KEY QUARTERLY FINANCIAL AND OPERATING RESULTS

Note 1: Equals gross margin before fair value adjustments (as reflected in the condensed consolidated interim financial statements) and gross margin before fair value adjustments divided by net revenue, respectively.

Note 2: Adjusted EBITDA is a non-IFRS measure that the Company defines as net income (earnings) from continuing operations before: interest expense, net of investment income; income tax; depreciation, amortization, impairment, and gain (loss) on disposal of PP&E (per the statement of cash flows); share-based compensation (per the statement of cash flows); share of loss and impairment loss from investments in associates; unrealized loss (gain) on changes in fair value of contingent consideration; expenditures incurred in connection with the NASDAQ cross-listing; and the fair value adjustment to biological assets and inventory. See the cautionary statement regarding non-IFRS financial measures in the "Introduction" section at the beginning of this MD&A.

Note 3: Cost of cultivation per gram harvested is a non-IFRS measure and includes "cash" costs such as direct labour, direct materials and manufacturing overhead (e.g. maintenance) as well as "non-cash" expenses such as employee share-based compensation for cultivation employees and depreciation related to buildings and equipment of the production facility. Cost of cultivation does not include packaging costs and other post-harvesting costs, which are added to arrive at the cost for inventory, nor distribution costs (shipping), both of which are included in the cost of sales. See the cautionary statement regarding non-IFRS financial measures in the "Introduction" section at the beginning of this MD&A.

Note 4: Dried flower equivalent, or DFE, is a non-IFRS measure, and is based on the conversion of oil sales to an equivalent measure at a standard rate of 9.0 mL/g for recreational oil and 4.5 mL/g for medical oil. See the cautionary statement regarding non-IFRS financial measures in the "Introduction" section at the beginning of this MD&A.

For the three months ended November 30, 2019, the Company recorded $25,153 in net revenue. Of this amount $12,867 (51%) was sold to the adult-use recreational market, $2,667 (11%) to the medical market, and $9,213 (37%) to the wholesale market and $320 (1%) to the international market with the balance of sales generated from other sources. Q1 Fiscal 2020 net revenue increased from Q1 Fiscal 2019 net revenue of $12,439, primarily due to a full quarter of adult-use recreational cannabis revenue in Q1 Fiscal 2020 compared to a partial quarter in Q1 Fiscal 2019 as well as significant wholesale revenues during Q1 Fiscal 2020.

Net revenues for Q1 Fiscal 2020 were composed of sales during the quarter of $26,218 (net of excise), less a provision for product returns and price adjustments of $1,065 (net of excise). The majority of the product returns and price adjustments were due to tetrahydrocannabinol (THC) oil that has seen less than anticipated demand in the adult-use recreational market. The lack of a sufficient retail network and slower than expected store openings in Ontario continued to impact sales in Q1 Fiscal 2020, which was further exacerbated by increased industry supply. The Company no longer formulates THC recreational cannabis oil and as a result this category is not expected to be a significant part of the Company's revenue prospects going forward. The Company is cognizant that in this new and emerging market, the size of the customer base, its demands, and preferences cannot yet be ascertained with any level of certainty or reliability and future demand for existing and new products remains to be seen as the market develops and matures.

The average net selling price of product declined $1.28 per gram DFE to $4.57 per gram DFE on a quarter-over-quarter basis as the Company's sales volumes increased 159% as a result of a full quarter of adult-use recreational and significant wholesale revenue compared to Q1 Fiscal 2019, which was offset by a lower average net selling price as the market matures and customer and product mix evolved. Selling prices are prone to fluctuation and there may be further price compression as the market and Company's customer mix evolves.

Cost of sales for the three months ended November 30, 2019 increased to $15,811 compared to $3,618 in the prior year comparative period, primarily as a result of the significant increase in sales volumes, but also due to higher post-harvest costs, inventory provisions, and write-offs.

GROSS MARGIN BEFORE FAIR VALUE ADJUSTMENTS (ADJUSTED GROSS MARGIN)

The Company realized gross margin before fair value adjustments for the three months ended November 30, 2019 of $9,342, or 37% as a percentage of net revenue, compared to $8,821, or 71%, in the prior year comparative period. The decrease in gross margin before fair value adjustments as a percentage of net revenue is largely due to: (i) a lower average net selling price as the market matures and customer and product mix evolved; and (ii) higher cost of sales on higher sales volumes and higher post-harvest costs, inventory provisions, and write-offs.

Selling, general and administrative expenses (including non-cash share based compensation) increased to $11,040 for Q1 Fiscal 2020 from $5,500 in Q1 Fiscal 2019 due to an increase in staffing, commissions on sales, office and general expenses, building depreciation, and professional fees and public company-related costs as the Company continued to scale up its operations in connection with the adult-use recreational market, which includes the cannabis derivatives market that launched in December 2019.

Adjusted EBITDA1 was $4,867 in Q1 Fiscal 2020 compared to $6,839 in Q1 Fiscal 2019. The decrease in adjusted EBITDA is primarily attributed to higher cost of sales and selling, general and administrative expenses as described above, as the Company continues to build its operations and achieve economies of scale.

Working capital as at November 30, 2019 declined to $142,793 from $152,417 as at August 31, 2019 as the Company invested its cash into the build-out of its Moncton Campus property, plant and equipment.

COST OF CULTIVATION PER GRAM HARVESTED

"Cost of cultivation" per gram harvested2 includes "cash" costs such as direct labour, direct materials and manufacturing overhead (e.g. maintenance) as well as "non-cash" expenses such as employee share-based compensation for cultivation employees and depreciation related to buildings and equipment of the production facility. Cost of cultivation does not include packaging costs or other post-harvesting costs, which are added to arrive at the cost for inventory, nor distribution costs (i.e. shipping), both of which are included in the cost of sales. Thus, readers are cautioned against comparing cost of cultivation per gram harvested with cost of sales for the same period(s) for at least two reasons: (1) Cost of sales includes packaging costs and distribution (i.e. shipping) costs, the production cost of late-stage biological assets that are disposed of, provisions and write-downs for inventory that does not pass the Company's quality assurance standards and obsolete products and packaging, and other production overhead which "Cost of cultivation" does not (see "Cost of Sales and Gross Margin" in this MD&A for illustrative schematic), and (2) there is a delay between when product is harvested and when it is sold. Sometimes that delay is one or two quarters (and longer with extraction material).

The Company experienced a cash cost of cultivation of $0.61 ($0.87 including non-cash depreciation and share-based compensation) per gram harvested in Q1 Fiscal 2020 ($0.56 and $0.74, respectively, for Q1 Fiscal 2019). Cost of cultivation is an input cost for our cost of goods sold, which was $2.87 per gram DFE for Q1 Fiscal 2020 ($1.70 per gram DFE for Q1 Fiscal 2019). Cost of goods sold is higher than cost of cultivation for the reasons noted above in this MD&A.

The Company harvested 12,759 kg of cannabis during Q1 Fiscal 2020 compared to 8,042 kg in Q1 Fiscal 2019 due to the cultivation of product from Phase 4A.

KEY DEVELOPMENTS DURING THE QUARTER AND SUBSEQUENT TO NOVEMBER 30, 2019

On September 6, 2019 the Company received approval from Health Canada for the licensing of 17 cultivation rooms within Phase 4B. The approval of the new cultivation rooms represents 15,000 kg per year of additional target production capacity3.

On November 15, 2019, the Company amended its Credit Facility with BMO to: i) extend the final draw deadline of the term loan from November 30, 2019 to March 31, 2020; (ii) postpone the commencement of principal repayments on the term loan from February 28, 2020 to May 31, 2020; and (iii) realign the financial covenants structure, effective November 30, 2019, to be more consistent with industry norms up to and including May 31, 2020, which will also provide the Company with greater flexibility around the timing and quantum of any incremental draws. The financial covenants will revert to the original structure on August 31, 2020.

On November 22, 2019, the Company filed a base shelf prospectus for an amount up to $175 million through the issuance of common shares, preferred shares, debt securities, subscription receipts, warrants or units. The purpose of filing the base shelf prospectus is to shorten the timeline to raise funds for growth opportunities and working capital which could be done subject to market and other conditions, by way of filing one or more prospectus supplements from time to time over a 25-month period.

On December 4, 2019, the Company established an at-the-market equity program (the "ATM Program") pursuant to a prospectus supplement to the November 22 base shelf prospectus which allows the Company to issue up to $55 million (or its U.S. dollar equivalent) of Common Shares from treasury to the public from time to time, at the Company's discretion. Any Common Shares sold in the ATM Program will be sold through the TSX, the NASDAQ, or any other marketplace on which the Common Shares are listed, quoted or otherwise traded, at the prevailing market price at the time of sale.

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1 Adjusted EBITDA is a non-IFRS financial measure. See the cautionary statement regarding non-IFRS financial measures in the "Introduction" section of this MD&A.

2 Cost of cultivation per gram harvested is a non-IFRS financial measure. See the cautionary statement regarding non-IFRS financial measures in the "Introduction" section of this MD&A.

3 Target production capacity once fully operational. Several factors can cause actual capacity to differ from estimates. See "Risks and Uncertainties" in this MD&A.

Subject to securities laws and stock exchange requirements, the volume and timing of distributions under the ATM Program are determined in the Company's sole discretion. The ATM Program is effective until the earlier of December 25, 2021 and the issuance and sale of all of the Common Shares issuable pursuant to the ATM Program, unless terminated prior to such date by the Company or the agents referred to below. The Company has used, and continues to intend to use, the net proceeds to fund capital projects, for general corporate purposes and to pay indebtedness. As Common Shares distributed in the ATM Program will be issued and sold at the prevailing market price at the time of the sale, prices may vary among purchasers during the period of the distribution.

Distributions of the Common Shares through the ATM Program are made pursuant to the terms of an equity distribution agreement dated December 4, 2019 among the Company, BMO Nesbitt Burns Inc., as Canadian agent, and BMO Capital Markets Corp., as U.S. agent (collectively, the "agents").

As of the date of this MD&A, the Company had issued 7,302,600 Common Shares for gross proceeds of approximately $22.9 million at a weighted average price of $3.14 per Common Share under the ATM Program. Net proceeds realized were approximately $22.4 million after agents' commissions of approximately $0.5 million. Proceeds have been raised in both USD (for shares sold through the NASDAQ) and CAD (for shares sold through the TSX) and the weighted average share price was calculated using the spot rate on the day of the settlement.

On December 12, 2019, the Company received Health Canada's approval for the licensing of the remaining 16 cultivation rooms within Phase 4B, which represents approximately 13,000 kg per year of increased target cultivation capacity. The amendment of the License also includes approval for an expanded site perimeter for Phase 4C as well as Phase 5 and approval for the operations area that houses the Company's chocolate production line. Additional drying and storage areas have also been added to the License.

On December 23, 2019, the Company announced that the first of its Rec 2.0 products have been released, including Trailblazer Spark, Flicker and Glow 510-thread Torch vape cartridges. Shipments of the custom-designed cartridges were sent to Manitoba, Saskatchewan, Ontario, New Brunswick and Nova Scotia, starting December 17, 2019 from the Company's Moncton production campus.

MONCTON CAMPUS EXPANSION

The complete Phase 4 the Moncton Campus facility expansion represents a total of 77,000 kg per year of additional annual target production capacity and has been divided into a series of stages (4A: 25,000 kg; 4B: 28,000 kg; and 4C: 24,000 kg).

Construction of Phases 4A and 4B has been substantially completed and licensing approval from Health Canada received. The remaining 16 cultivation rooms in Phase 4B received licensing approval from Health Canada in December 2019, which brings the Company's total target licensed cultivation capacity to 89,000 kg per year (once fully operational) as of the date of this MD&A. The Company's management has decided to fill these new rooms at a slower pace in response to less than anticipated consumer demand at this time which the Company believes is largely due to the lack of an adequate retail store network, particularly in Ontario. The Company will continue to monitor market conditions on an ongoing basis.

As previously reported with the release of Organigram's Q4 Fiscal 2019 results on November 25, 2019, the Company's management made a strategic decision to delay final completion of Phase 4C (the final stage of the Phase 4 expansion), previously targeted for the end of calendar 2019, largely due to less than anticipated consumer demand noted above and to more effectively manage and prioritize cash flow as well as potentially use the space in 4C for other opportunities (if strategic and/or market factors dictate). In December 2019, the Ontario government announced it is taking steps to move to an open market for retail cannabis stores beginning in January 2020. Store authorizations from this open application process are expected to be issued beginning in April 2020, at an initial rate of approximately 20 per month. Management will assess its decision to delay the completion of Phase 4C on an ongoing basis based on the progress and extent of store openings and the impact on consumer demand. To date, the Company has completed a significant portion of Phase 4C, such that the Company's management believes the remaining construction can be completed in a relatively short timeframe to be ready to respond to an increase in consumer demand which may result from more store openings.

If Phase 4C is completed and assuming it is fully licensed and operational, the entire Moncton Campus facility is expected to have annualized target production capacity of approximately 113,000 kg of dried flower and sweet leaf.

The Company continues to expect the estimated capital cost of the entire Phase 4 expansion (including Phase 4C) to be in the range of $135 to $145 million. The construction schedule has been relatively predictable due to the nature of the Company's systematic and modular approach whereby grow rooms are largely replicas of previous ones. In addition, the Company generally has used contractors, many of whom have been part of the construction team for previous Phases. The estimate to complete all of Phase 4 (including the remaining construction of Phase 4C) was approximately $16 million as at quarter-end.

Phase 4 has an advanced mechanical system and an improved irrigation system as compared to previous Phases that are designed to capture, treat and re-use the water from dehumidification which is central to the cultivation process. The Company's fully customized irrigation system that will serve all of Phase 4 is being installed and is expected to be commissioned in Q2 Fiscal 2020. Once operational, the system is expected to be among the most sophisticated indoor cannabis cultivation irrigation systems in North America. The system includes condensation recovery and a reverse osmosis system.

PHASE 5 REFURBISHMENT

Phase 5 plans include refurbishing 56,000 square feet of interior space within the Company's existing facility for design under European Union GMP ("EU GMP") standards for additional extraction capacity, a derivatives and edibles facility and additional office space. Each area of Phase 5 has different expected completion dates.

The estimated total capital cost of Phase 5 is expected to be approximately $65 million. The estimate to complete was approximately $20 million as at quarter-end.

Phase 5 plans include expanded vaporizer pen filling and automated packaging, additional extraction by both CO2 and hydrocarbons as well as more area for formulation including short path distillation for edibles and vaporizer pen formulas.