NEW YORK, June 20, 2019 /PRNewswire/ -- With each new market cannabidiol (CBD) expands into, an ever greater need for regulatory safeguards come into play to ensure safety and consistency of the quality of products in the market. This draws attention to the innovative extraction and production methods being developed and employed by CBD companies such as StillCanna Inc. (CSE:STIL) (OTC:SCNNF), Radient Technologies Inc. (TSX.V:RTI) (OTC:RDDTF), Valens GroWorks Corp. (CSE:VGW) (OTC:VGWCF), Neptune Wellness Solutions (NASDAQ:NEPT) (TSX:NEPT) and MediPharm Labs Corp. (OTC:MEDIF) (TSX.V:LABS).
The latest major chain to announce the coming arrival of CBD products on its shelves is national grocery chain, Kroger, which is set to begin carrying CBD topical products in 17 states. In order to maintain a level of quality sufficient for customers of these major chains, many are looking to extraction experts like StillCanna Inc. (CSE:STIL) (OTC:SCNNF) to ensure these needs are met.
StillCanna has already established itself as a major player in the CBD supply market, having already secured CBD assets in countries within the European Union, such as the UK, Romania, and Poland, which have led to lucrative global supply deals. Back home in North America, the company benefits from a proprietary turnkey extraction and distillation solution that converts hemp (containing less than 0.3% THC present) into high-value distilled cannabinoid oil.
StillCanna Inc.'s (CSE:STIL) (OTC:SCNNF) bespoke extraction process has effectively dropped production costs of CBD isolate to one of the lowest in the industry – around $500 per kg. Given that the wholesale price for hemp isolate is currently an eye-watering $6,077 per kg, the company is able to enjoy generous margins without compromising on quality.
CBD isolates are becoming the key ingredient used in new products that are being sold on the shelves of an increasing number of major retailer chains, commanding premium pricing and top-line margins. In comparison, most grocery-store food or beverage items generate meager profits, giving these chains plenty of incentive to promote these new CBD products across all their stores.
Analysts are predicting the CBD market will grow from a $600 million sector this year to $22 billion by 2022. Currently, the average price for broad-spectrum CBD is approximately $350 per 1000 milligrams — an extremely high price, compared to the commoditized value of raw hemp biomass.
Reinventing the CBD Supply Chain
As new CBD products are both developed and legalized for new markets, extraction leaders are emerging for their ability to produce isolates for their clients.
StillCanna Inc. (STIL-SCNNF) has assured its clients that it can maintain the highest quality of CBD oils. In Poland, StillCanna has acquired legacy hemp production experts Olimax, giving the company a vertically-integrated licensed cultivator, extractor, and formulator of CBD, and more than 3,700 acres of prime Polish land in Poland to grow large quantities of premium-quality organic hemp.
This has led the company to secure lucrative CBD supply contracts on both sides of the Atlantic, starting with UK-based Dragonfly BioSciences, LLC, which in March increased its monthly order to over 170 kgs per month, and later a CAD$36 million deal with Bioscience Enterprises of California.
With the impending legalization of cannabis edibles in Canada, major LPs are already securing their isolate supplies ahead of time.
Getting ahead of the opening up of a Canadian cannabis edibles market, Radient Technologies Inc. secured its own strategic relationship with a major LP to extract cannabinoids from both industrial hemp and cannabis plants. Working together for the last few years, Radient and its major partner continue to develop the relationship and new products involving cannabis oils.
Not to be outdone, Neptune Wellness Solutions signed on to provide extraction, formulation, and packaging services to a major cannabis producer. Through the deal, the partner will supply more than 230,000 kg of cannabis and hemp biomass to Neptune over a three-year period.
In terms of capacity, Valens GroWorks Corp. just announced the successful expansion of its extraction capacity to 425,000 kg of dried cannabis and hemp biomass. Built to be the largest third-party extraction company in Canada, Valens aims to bring its 2020 extraction capacity to over 1 million kg per year.
The range of products that these isolates are used for continues to increase, including in the pharmaceutical sector. In fact, MediPharm Labs Corp. recently announced its role in manufacturing CBD gel caps for a 500-patient clinical study to develop a treatment for opioid addiction.
New Markets Means New Demands
As the US opens its doors to CBD isolates at both the state and federal levels, where the supplies come from, and how they are extracted become important issues. Low-grade CBD oil may not offer the same levels of therapeutic benefits as premium-quality CBD oils, like the ones developed by StillCanna Inc. (STIL-SCNNF).
Some poor-quality CBD products even contain harmful toxins. Due to its nature as a "bio-accumulator", the hemp plant easily absorbs anything that is present in the ground, including pesticides and heavy metals, such as mercury and lead. CBD oils that are contaminated this way is unsafe for human consumption, especially for children or others who are vulnerable to toxins.
Spreading the High-Quality CBD Message
CBD advancements are also being driven by research like that being aided by MediPharm Labs Corp. (OTCQX:MEDIF) (TSX.V:LABS), which is supporting studies conducted by New York City's Icahn School of Medicine at Mount Sinai and renowned global researcher Dr. Yasmin L. Hurd, Ph.D. The clinical trial will include at least 500 patients spanning the United States, Canada, Australia, Europe and Jamaica.
Earlier this year, Radient Technologies Inc. (TSX.V:RTI) (OTCQX:RDDTF) commenced production of cannabis extracts on a commercial scale. After receiving its Standard Processing license from Health Canada, Radient is now processing cannabis biomass with its patented, industrial-scale MAP extraction technology, for its major LP partner.
After cutting a deal with its own major LP partner, Neptune Wellness Solutions (NASDAQ:NEPT) (TSX:NEPT) began looking towards boosting its extraction capacity. These plans came after the company reported its fourth-quarter and annual fiscal results earlier in June. Neptune already recently expanded its capacity through the acquisition of SugarLeaf Labs, a US-based hemp processor with an extraction capacity of 1.5 million kgs.
Canada's largest third-party extractors Valens GroWorks Corp. (CSE:VGW) (OTCQB:VGWCF) recently expanded its extraction deal with its own major LP partners. According to the terms of the previous deal, Valens processed 15,000 kgs of hemp biomass and cannabis. After the agreement's expansion, the supply deal has increased 300% to 60,000 kgs of the same product for the next two years.
On the back of what's looking to be a bumper hemp crop in Poland, StillCanna Inc. (STIL-SCNNF) has forged forward with yet another major supply deal, this time with Sequoya Cannabis. Through a letter of intent signed, StillCanna is looking to provide Sequoya with CAD$1 million worth of hemp that is surplus to StillCanna's needs.
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