One year after Canada completed the federal legalization of recreational marijuana, the nation will now open its market to novelty products infused with the drug. This includes edibles such as cookies and gummies, as well as cannabis beverages, which will be introduced to the market in an attempt by legal producers to tap into a replacement product for alcohol.

As such, on the eve of the launch of this second phase of the marijuana market in Canada, the Investing News Network brings investors a collection of stories and interviews on the impact this opening will have.

As marijuana extraction companies bulk up for a projected increase in business operations in Canada, experts are sharing key points for investors in this space.

The extraction market is set to see a turnaround in prominence as Canada legalizes edibles and concentrates; meanwhile, these products are seen expanding across the fractured US market.

The cannabis market has seen metrics vary with time as some gain more importance in the minds of investors. With that in mind, the Investing News Network (INN) asked two leading companies what investors should track when it comes to the cannabis extraction space. Here’s what they said.

Cannabis extraction companies gain traction

As the second round of cannabis legalization in Canada approaches, extraction companies have launched initiatives to expand their footprints and the capabilities currently seen in operations in order to meet consumer demand.

Extraction firms operate alongside the producer space. These companies offer services to attain the cannabis oils used to infuse marijuana items such as edibles and cartridges for vape pens.

The market has seen the entry of new companies dedicated to extraction as well as the rise of existing companies in the minds of investors.

During this year’s Lift & Co. (TSXV:LIFT,OTCQB:LFCOF) Cannabis Expo in Toronto, Rosy Mondin, CEO of World Class Extractions (CSE:PUMP), said investment interest is moving towards extraction plays.

“I’ve been kind of banging this extraction drum for four years,” she said. “We see the markets moving towards that. That is where a lot of the money is going now, so extraction is really that next play.”

Companies offering extraction services to marijuana firms are gearing up as the October 17 date for the legalization of edibles and concentrates nears in Canada. Many are expanding their operations and capabilities in the country.

However, Health Canada, the federal agency tasked with regulating the market, has indicated that sales won’t start until mid-December. This delay is related to the 60 day notice needed for any new marijuana-based products looking to hit the market.

SUBMITTED: An inside look at the extraction facilities of Neptune Wellness Solutions.

In June, business research firm Deloitte issued a report projecting annual sales for the entire cannabis edibles and infused product market at C$2.7 billion.

Everett Knight, executive vice president of strategy and investments with Valens GroWorks (TSXV:VGW,OTCQB:VGWCF), told INN that this year marks the real start of the race for extraction companies.

Michael Cammarata, president and CEO Neptune Wellness Solutions (NASDAQ:NEPT,TSX:NEPT), told INN that he elected to leave Schmidt’s Naturals, a health and wellness brand, in favor of the cannabis market since the timing of his move was aligned with the rising role for extraction firms.

“I think the extraction market was something that a lot of people who invested in the cannabis industry were not focused on,” he told INN.

Knight explained that for investors, the extraction market is very appealing because of the margins seen from development and operations, whereas traditional cannabis plays in Canada have offered lackluster results recently.

The Valens executive said if investors compare the development of the extraction market to innings in a baseball game, the sector is only about to enter the first inning.

What are the key metrics for a cannabis extraction company?

The Neptune executive told INN he is seeing a rise in interest in extraction companies as investors realize this process leads to the production of key products, such as vape pen cartridges.

“I think that people (will) start seeing extraction as much more than just consumption … Ultimately the extraction process is a key to the formulation,” Cammarata said.

Cammarata is interested in investment in new intellectual property from extraction companies, and the ability to meet growing consumer demand with expanded capacity.

Capacity for an extraction firm is related to the amount of cannabis product these companies can receive and turn around with large-scale processing for the development of products such as vape pens, infused cookies and other novelty items.

“You’re seeing us rapidly expand as we’re trying to keep up with demand from our customers,” Knight said. He confirmed that the firm currently has a capacity of 425,000 kilograms, with a projected increase to 1.1 million kilograms by the first half of 2020.

Knight explained that, while capacity remains at the top of investors’ minds when it comes to evaluating these companies, he expects that rationale to evolve very quickly.

“(Extraction capacity) matters in the sense of your capabilities. But what matters is what you can actually extract, and what everyone is talking about today is, ‘What contracts are you doing? How much are you actually going to extract going into the next year?’” Knight said.

Despite the natural interest in capacity numbers, both Cammarata and Knight agree the key is the quality of extraction.

SUBMITTED: An inside look at the extraction facilities of Neptune Wellness Solutions.

Quality will determine the winners in the space

“The capacity is one thing, but the quality inside the capacity has to stand out,” Cammarata said.

Knight added that he is also expecting the extraction capacity metric to instead develop into a question about distillate capacity.

“What everyone should be focusing on and (what) they will be focusing on six months from now — they are not going to be asking what your input capacity is anymore. They are going to be asking what your distillate capacity is.”

Cannabis distillates are oils produced from the extraction process. This oil is potent in its compound content and is used for a variety of edibles and topicals.

“You can’t have edibles and concentrates without extraction, and you can’t have high-quality product development and products on the market without high-quality extraction,” Knight said.


Want more details? Check out these articles for more INNdepth coverage.

Want an overview of investing in cannabis stocks? Check Investing in the Cannabis Industry

This article was originally published by the Investing News Network in August 2019.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: World Class Extractions and Valens GroWorks are clients of the Investing News Network. This article is not paid-for content.

The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

Better Plant Sciences Inc. (CSE: PLNT) (OTCQB: VEGGF) (FSE: YG3) (“Better Plant”) or (the “Company”) Is pleased to announce its partially owned subsidiary NeonMind (CSE: NEON) (“NeonMind”) has common shares now trading on the Frankfurt Stock Exchange (the “FSE”) under the symbol “6UF”. As a result, NeonMind’s common shares are now cross-listed on the Canadian Securities Exchange and the FSE. Shares of Better Plant are available on the FSE under the symbol “YG3”.

Cannot view this image? Visit:

Keep reading... Show less

Chemesis International Inc. (the “Company”) (CSE: CSI) (OTC: CADMF) (FRA: CWAA) is pleased to announce that all matters submitted to the shareholders of the Company at the Annual General and Special Meeting of the Company’s shareholders held on December 31, 2020 were approved.
In addition, the Company has granted, pursuant to its Equity Incentive Plan, options to purchase 1,500,000 shares of the Company exercisable for a period of 5 years at USD$0.70 per share to the directors, officers and consultants of the Company. The Company has also granted, pursuant to its Equity Incentive Plan, restricted share rights to acquire 1,500,000 shares of the Company to the directors, officers and consultants of the Company. One-half of such restricted share rights shall vest in three months from the grant date and the remaining one-half shall vest in six months from the grant date.
On Behalf of The Board of Directors
Josh Rosenberg
Investor Relations:
1 (604) 398-3378
The CSE has not reviewed, approved or disapproved the content of this press release


Keep reading... Show less

Nextleaf Solutions Ltd. (CSE: OILS) (OTCQB: OILFF) (“Nextleaf”, “OILS”, or the “Company”), the world’s most innovative cannabis extractor, announced today that the Canadian Intellectual Property Office has granted the Company a patent for the acetylation of cannabinoids. More specifically, the patent covers a process for acetylating cannabidiol (“CBD”), and subsequent refinement of CBD-O-Acetate using a proprietary extraction and distillation technique.

Keep reading... Show less

Codebase Ventures Inc. (“Codebase” or the “Company”) (CSE:CODE)(FSE:C5B)(OTCQB:BKLLF) The Company announces that it has recently negotiated an extension to its option to purchase another 21% of Arcology for another year by an investment of $1,000,000. If the company exercises that option, it would then own 51

The Company is clarifying that in its press release of January 15th regarding the signing of a definitive agreement to acquire bit mining infrastructure, that the first phase will deliver 9,450 terahash per second, not 9,450 petahash as stated.

Keep reading... Show less

Appointment of Philip Young as CEO and director adds a seasoned executive with a track record of new device and therapeutics development, FDA/regulatory approvals, capital markets, M&A and operational success

 Lobe Sciences Ltd (CSE: LOBE) (OTC Pink: GTSIF) (“Lobe” or the “Company”) is pleased to announce the appointment of Mr. Philip J. Young as Chief Executive Officer, Corporate Secretary and a director of the Company, effective January 15, 2021. Mr. Young replaces Thomas Baird, who resigned as CEO as of the same date.

Keep reading... Show less