Cannabis Extracts: The Next Evolution of the Cannabis Edibles Market

The global cannabis industry is expected to reach US$97.35 billion by 2026 with a CAGR of 32.92 percent over that period. However, while cannabis (and its by-products) are used in a variety of recreational and medical capacities, from medicinally prescribed flower and oils to single dose edibles — initial sector growth has demonstrated that the real profits will be made through products that require additional processing and specialized techniques to manufacture, such as edibles, oils, and beverages.

The accessibility of cannabis products and the seemingly limitless range of applications continue to push this growing industry forward every year. Some of the biggest companies are exploring, researching, and partnering with cannabis companies to create new product lines in both the recreational and medical segments of this industry.

As more regulatory changes through Health Canada and supportive federal legislative action in the cannabis space take place, cannabis extraction companies are paving the way for extraordinary innovation and creativity to bring consumers of all backgrounds products never seen before.

Employing product development best practices and expertise on the market, cannabis extraction companies fuel the next generation of cannabis edibles and ground-breaking economic investment opportunities.

What are cannabis extracts?

Cannabis extracts refer to a broad range of products containing higher THC and CBD levels than typical levels found in the cannabis plant. THC and CBD levels in cannabis extracts can vary widely, with extracts reaching 99 percent THC or high CBD.

THC, or tetrahydrocannabinol, is a cannabinoid that gives the user a high, euphoric and intoxicating experience. On the other hand, CBD, or cannabidiol, is a non-intoxicating cannabinoid that has become increasingly popular as a therapeutic solution for pain, mental health issues and more. Research is needed to confirm its potential medical use and benefits.

In the market of cannabis edibles, cannabis extracts present an incredible opportunity for infusion that is efficient, cost-effective and offers controlled potency. Not only can extracts be ingested through edibles, but they can also be smoked, vaped and infused into topicals, which only adds to its versatility.

Its increased potency also means edible producers and manufacturers need less actual cannabis extract infusion than traditional cannabis plant incorporation. With the global cannabis edibles market promising to become a significant piece of the overall cannabis market, investing in these cost-effective, high-potency alternatives could become the new norm of nutraceuticals.

Opportunities in the cannabis extract market

An October 2018 report by ArcView Market Research and BDS Analytics projects the North American cannabis edibles market to hit more than US$4.1 billion by 2022. According to the report, food and drink products accounted for approximately 11.4 percent of total cannabis spending in Canada and the United States in 2017.

With an understanding of the exceptional growth and scalable potential of the cannabis market, extraction companies are also diversifying their portfolio of services and avenues of revenue to enhance their value. Many companies like Hempsana and the Valens Company (TSX:VLNS,OTCQX:VLNCF) have created more vertically integrated business models to increase their autonomy in the cannabis market but also control more of its exposure in the growing nutraceuticals space, among others.

In recent years, technological advancement and formulation engineering has developed cutting-edge tools for manipulating cannabis at the molecular level for greater bioavailability. This innovation allows edibles manufacturers and extraction providers to deliver a more predictable product for easier regulatory compliance and greater consumer trust.

Companies with significant positioning and robust portfolios of profit centers in Canada, including cannabis extraction and processing facilities, present investors with exceptional investing opportunities. They seek to gain exposure in the growing cannabis edibles market and the potential to leverage trends in the medical cannabis sector, which analysts also expect to rise. Of course, choosing the right extraction companies to invest in is key.

Introducing the cannabis extraction companies of tomorrow

Just like edible cannabis products vary dramatically in quality, so do cannabis extraction companies. Some companies have demonstrated strong economic growth and advanced positioning to get an edge on the competition.

The Colorado-based CBD hemp extraction company HempFusion Wellness Inc. has developed an innovative and diversified proprietary formulation using the power of whole-food hemp. With key partnerships and developmental processes, the company offers a wide variety of CBD products across multiple distribution platforms.

Another dominant player in the Canadian cannabis extraction space is Hempsana Inc., a Canadian cannabis company specializing in high-purity cannabinoid and processing, with a full suite of services including formulation and private-labelling. Unlike other extraction companies, Hempsana focuses on extracting rare cannabinoids through high-quality processing to deliver products to market. This product portfolio includes innovative cannabinoid formulations for cosmeceuticals, nutraceuticals and pharmaceutical use.

Hempsana’s broad portfolio also includes “as-a-service” offerings, wholesale distribution and white labeling. Under this offering, a number of partnerships have been established for the development and manufacturing of CBD products for distribution to the medical-patient and the retail consumer channels.

Rare cannabinoids such as CBG, CBN, THCV, THCA and others have significantly better and more specific health benefits than just CBD on its own. This next level of cannabis extraction and potency points to a future of cannabis investing where rare cannabinoids become the vehicle driving a new cannabis market revolution.

In recent years, the space of cannabis edibles, CPG, cosmetics and medical care has opened up to the use of rare cannabinoids as a biosynthesis technology solution, which offers significantly better health benefits, extraction practices and higher profit margins. The unique qualities of these highly competitive alternatives to cannabis and CBD present enormous investment opportunities to create cutting-edge new drugs and edible applications at a massive global scale.

Takeaway

There’s no denying the outstanding growth potential of the cannabis edibles market. As cannabis extraction companies continue to innovate and develop new products using high-purity extraction techniques and formulations, investors and consumers alike can see countless possibilities across the market. After all, the cannabis industry is still young in many ways, which brings investors the opportunity to benefit from the long-term growth of this industry as it matures.