The market for cannabis oils has been much stronger than many expected, and that has fueled the increased demand for extraction services. Extraction refers to the process of extracting and concentrating the most potent compounds of the plant. Extraction removes the oil found in the trichomes in the cannabis plant; the resulting extracts are super-concentrated.
These extracted concentrates can then be used to produce different cannabis delivery formats, including oils, tinctures, gel caps, sprays, dabs, wax…and are also used to make edibles and infused beverages.
What’s behind this growth? Relaxation of the barriers to entry for medical and/or recreational use is a big part of it…a significant number of people are more open to trying cannabis given the new legal environment in a growing number of US states and Canada. This, coupled with the health concerns and the simple inconvenience around smoking, means that new and experienced consumers are looking for alternative ways to consume cannabis.
More specifically, the seemingly overnight and broad awareness of the potential of CBD to help a wide variety of health and wellness issues, everything from pain and anxiety relief, sleep aid and skin rashes, has also helped fuel the demand for extracted oils.
In the US, the DEA has agreed to expand the number of marijuana growers for federally authorized cannabis research. This includes research into edibles and oils and include proposals for new regulations that would govern the program and help the agency evaluate the applications. This is a step in the right direction in supporting cannabis businesses throughout the supply chain.
Given the shift away from burning flower, cannabis analysts and insides are paying close attention to the extraction businesses in the cannabis supply chain.
Here are a few companies to keep an eye on:
MediPharm Labs Corp is a leader in specialized, research-driven cannabis extraction, distillation, purification and cannabinoid isolation. MediPharm was the first licensed Canadian LP and they pioneered cannabis extraction. Today they supply some of the most recognized names in cannabis: Canopy Growth, Emerald Health Therapeutics, The Supreme Cannabis Company and more.
Westleaf Inc., a Canadian retail-focused brand which takes an innovative approach to the retail experience and provides cultivation, production and extraction of cannabis products.
Well known in the investment community for its mission to become one of Canada’s largest premium marijuana retailers, Westleaf isn’t stopping there, putting in place a strategy to become a significant vertically integrated player in the cannabis industry north of the border. A proof point is their partnership with Colorado-based Xabis, aworld leader in the design, construction, and management of cannabis extraction and manufacturing facilities.
Valens GroWorks Corp. a multi-licensed cannabis product provider maintains proprietary extraction methodologies and boasts over 400,000 square feet of cultivation greenhouse space in development and capacity of 240,000 kg of dried cannabis per year. They have extraction contracts with industry leaders: Canopy Growth, Tilray, The Green Organic Dutchman and Organigram.
Indiva Limited a Canadian cannabis company with a new 40,000 square ft. facility to serve as the centre for the company’s extraction, processing and product innovation activities. Cannabis extraction companies and their technologies are emerging as a really important part of the supply chain, especially given the consumer’s growing interest in the alternatives to smoking.