It’s about time! In our final Live from Lift episode, we caught up with Vitalis co-founders Joel Sherlock and James Seabrook to talk all things extraction. Follow the process from plant to oil, learn all about Supercritical CO2, and so much more. This is extraction, explained.
In a hypercompetitive market, it can be easy for cannabis companies to forget some of the science that underpins the plant’s effects. But for the extraction companies that process this unique crop, any scientific oversight can be costly. So how can those involved in extraction keep up to date on the latest cannabis science?
When asked just that, Pete Patterson, founder of the Canadian CO2 extraction equipment manufacturer Vitalis Extraction Technology, said that his company will “continue being students of the science of this plant.”
Having kept a keen eye on international research, Patterson notes that “Israel has been playing a pioneering role. But a strain in Israel versus one in California – the differences in bud size and potency are huge. Through consistent cross-breeding over time, some of these have 32 percent THC and more.”
“The Drug Enforcement Agency in the US is allowing more research these days, but there are always going to be genetic freaks. More hybrids cause greater potency. As global borders drop, we can look to sharing more genetics and research. An average tree used to be four-to-five percent THC, and now this has grown remarkably.”
According to Patterson, creativity is at an all-time high in the extraction industries, with more of it witnessed in the US where groups are using ice cold water to make bubble hash. High-performance liquid chromatography software allows more detailed high-pressure liquid chromatography defining standards to measure potency. Testing consistency remains a big challenge in the US, along with procuring biomass. But often the results vary and improve over time.
The extraction process of cannabis is critical because it helps a manufacturer obtain the highest concentration of THC and CBD with a mostly clear and viscous fluid. Extraction time, flow rate, temperature and pressure along with crossover pressure combine to determine the factors influencing the quality of extract.
“We uphold the best practices for extraction equipment companies,” Patterson says. “Pharmaceutical companies are coming in and asking about standards. How does our equipment help our customers be GMP (good manufacturing practice) compliant? Do we have the critical measurement? We need to provide the right information and guidelines.”
Of his own extraction company, Patterson is proud that “[Vitalis is] a big organization. We have long surpassed 100 employees, we do our own manufacturing, and can hence change quickly.” Indeed, Vitalis plans to expand into Europe and the Americas, followed by the field of botanicals, and eventually utilization of its tech in non-botanical sectors to lead globally in equipment. Like Vitalis, companies are actively investing (or considering investing) in the ancillary industries to be sustainable.
While there are more legal cannabis products and types in US dispensaries, it’s Canada that has a full national market to provide the capital and liquidity. Many US companies have gone public on the Canadian Securities Exchange, for instance, and it’s estimated or anticipated that within two-to-three years, the US Congress will de-schedule cannabis. But how will it roll out federalization?
“The US is also a sleeping giant of a market,” says Patterson. “When it gets recreational federalization, lots of capital will flood into the industry which will change how we view different facets of the industry.”
Beyond the US borders, Patterson says cannabis can only be strengthened by working towards clarity on regulations, safety, and standards across markets. “In the cannabis/extraction business, we need a voice that helps the government adopt safe regulations and helps them see clear direction on next steps, because it can be a very fragmented voice,” he adds.
With international markets, a joint venture group offers the right mix of expertise but not always the cultural values unique to its regions of operation. An interested party can sell directly into market and develop local expertise, or can hire staff locally, Patterson advises.
Arundati Dandapani is the founder and CEO of Generation1.ca, a cross-sectoral resource and outlet that taps into the outlook and experience of Canada’s newest residents.
Join us for this episode of The Cannabis Conversation where we sit down with Joel Sherlock - Co-founder and Chairman of Vitalis Extraction Technologies to explore the ‘ins and outs’ of the cannabis extraction process, how different grades of cannabis are processed, and how important extraction is to the industry.
Top takeaways from the MjBizCon International 2019 cannabis conference.*
*You must be 19+ years to view this content.
The Marijuana Business Daily hosted its annual MjBizCon International Conference in Toronto this past week. The global showcase of experts brought a largely North American audience closer to distant corners of the globe including pioneer nation Uruguay, experts in LATAM, Europe, the Middle East, Asia, Africa and Australia. Day one was a pre-conference aimed at investors, while days two and three focussed on keynotes, breakout panels, individual presentations and expo hall display events.
Investors look for crazy founders who will never give up — founders’ depression and giving-up being all too common and soul-crushing, and the top reason companies fail. Investors must attack the “balance sheets” and look for founders obsessed with making a fortune more than fame. Strong teams are critical for success. Intimate knowledge of companies and their founders, past performance and the competitive landscape are other qualities you need to analyze the performance potential of a firm.
Codie Sanchez of Cresco Capital Partners, Paul Rosen of Breakwater Venture Capital, Melissa Diaz of Rebel Rock Accounting, and many others were especially vocal about optimizing investor matches and backing next-level ideas to harmonize global consumption, production and sale of cannabis. This is an industry that’s pegged to bring in $32 billion (USD) in worldwide legal cannabis spending by 2022! Cannabis is the fastest growing sector with a 17% CAGR (US led) when compared to sectors like organic food (14%), food (7%), pet food (4%) and alcohol (3%) – Arcview Research & BDS Analytics. This is also a sector where a lot of companies are or should be rushing to develop their intellectual property (IP) to set the precedent and grow their claims in a cash-intensive industry.
Be careful! You’ll lose more money than you’ll make in this industry…. This is a very expensive industry to be in.
PAUL ROSEN, BREAKWATER VENTURE CAPITAL
The Canadian Securities Exchange(CSE) works with entrepreneurs and companies looking to access looking to access the Canadian public capital markets. CEO Richard Carleton works with companies to maintain a policy of ongoing disclosure. There are a lot of rules in the Securities Act, so they work with companies to develop their disclosure statements without being promotional, and vet companies strictly prior to listing them on the CSE. Cannabis companies have been their driver of growth in the past 5 years.
Disclosure is the best disinfectant!
RICHARD CARLETON, CEO, CANADIAN SECURITIES EXCHANGE
The end of Canadian domination (in cannabis) is near, we learn. Federal legalization of cannabis looks increasingly likely in the US, as popular US opinion reigns in favour of full legalization and re/de-scheduling of cannabis. Canada must turn to her mature capital markets and be prepared to act as multi-state operators. We shouldn’t be afraid of buying or setting up companies in the US and injecting Canadian capital in US markets or elsewhere. Still, it will be increasingly tough to compete with US brands and companies as we navigate the regulatory processes of “Legalization 2.0”. Mergers and acquisitions are on the horizon. Companies must bring together the board they want to grow with in their pre-revenue stage than wait till when their growth spirals out of control.
Go after your niche.
Building a niche may take a lifetime (or less), but knowing who you serve and who you don’t, makes it a lot easier for your customers, and also helps you target more effective messaging. Seeing that as a pact of honesty with your abilities (and consumers), makes the mission surmountable. Be exclusionary. Don’t try doing 37 things where you can do just 1 or 2.
In Canada, brands are limited by regulatory standards in how they can and cannot market cannabis. Successful brands in Canada capitalize on ancillary products, and also market with communities and experiences. Cannabis brands enjoy more recognition in the US, where advertising is a lot more mainstream and product variety exciting and normalized. Walk into a CVS and Walgreens in the US to witness many varieties of infused confectionaries and concentrates in their legal markets. So long as no health claims are being made on your cannabis products, you are free to advertise in states where adult-use is legal in the US. North America and Europe are leading the way with CBD (even if only 14% of Americans consume CBD), with Japan showing promise in Asia as a CBD market. Asia is consistently referred to as the sleeping giant of opportunity in cannabis owing to its ancient ties with farming, and medicinal, pharmaceutical, spiritual, religious or social use of the plant.
The industry is growing too fast, so plan well ahead. International markets will catch up with North America eventually. Trying to keep pace with the rapidly changing cannabis trade or regulatory frameworks in different markets is challenging. Of an approximate 195 countries in the world, nearly 40 have some legalization framework, and 9 have noteworthy commercial markets including US, Canada, Germany, Australia, Brazil, Chile, Israel, Italy and the Netherlands, according to the Brightfield Research Group, Prohibition Partners and the Marijuana Business Daily. The current international market size is led by the US with estimated medical and recreational sales in 2018 between US $8.5-10 billion, followed by Canada at between US $700-800 million, followed by Australia, Brazil, Chile, Italy, Israel and the Netherlands with combined sales at US $10-20 million.By 2023, they project between $25-30 billion sales in the US, $7.1 billion in Africa, and over $8 billion in Asia by 2024.
Canada’s 19th Prime Minister Kim Campbell in her opening keynote had also earlier that day urged everyone to challenge knowledge gaps with more consumer advocacy and clear communication, a commitment to ongoing education, partnership and business integrity.
Jonathan Zaid, Director of Corporate Social Responsibility at Aurora, talked about the importance of establishing CSR processes and engaging with data for impact. No matter what stage of firm you were, you could always adopt more sustainable practices to grow your green footprint while serving stakeholders. For a nascent industry as cannabis, it was a good idea to draw from the CSR successes of other industries, said Zaid. You can take Aurora’s survey here, to offer inputson their materiality assessment survey.
An open, collaborative industry leads by example into the future, where legal cannabis is the new “internet” and will far exceed the success of companies that made trillions off the dot-com boom. Pot stocks might be down right now, but the future of legal cannabis is in creating strategic partnerships. Strong knowledge of regulations and strong relationships with the regulators, measurable targets and benchmarking will ensure our success in this industry. Cannabis is interdisciplinary and inclusive, and we need to keep it that way to grow exponentially. Embedded below is a video excerpt with the British Columbia based Co-founder and COO of Vitalis Extraction Technologies, Pete Patterson, from a larger upcoming feature on the economics of extraction that points to a global industry outlook.
Europe and LATAM spell opportunity, trailing behind North America.
Germany and Netherlands are leading the way in consumer sales in Europe. Netherlands already enjoys high social acceptability around cannabis consumption, so it is only a matter of regulatory catch-up. Canada already exports medical cannabis to Germany. Greece and Portugal are important from low-cost large-scale cultivation stand-point, largely owing to their sunny climates where farming cannabis yields higher returns than elsewhere, so these will be markets to watch. EU-GMP (Good Manufacturing Practices) was a hot topic that every company was trying to understand whether plant touching or ancillary and the CCI presented on the challenges and opportunities in being GMP and GPP compliant. Every company wants to show they uphold the gold standard in compliance. The Latin American market is full of interesting players, and like Europe is dominated by medical cannabis, with the exception of Uruguay, the first country in the world to legalize medical and recreational cannabis in 2013. You can access the detailed breakdown of activity in the Latin American and Carribean markets here.
Independent or Consolidated?
Cannabis brands might often find themselves in a target market quandary. What constitutes craft or artisanal? A substantial portion of the labour that goes into the production of the good must be manual in order for an item to be truly considered “craft” or artisanal. In times when there is no Big 5 or Pepsi/Coke yet, brands must leverage their immediate customers and target hyper-locally. Ted Whitney of NUG, Travis Lane of Levity Cannabis and Kristin Nevedal of the International Cannabis Farmers Association drew on a lot of symbiosis and partnerships when trying to define how cannabis opened more opportunity in the craft and artisanal markets, resembling craft beer. The three mentioned that craft cannabis demonstrated batch variance unlike other cookie-cutter formats and categories. In cannabis, consistency was hard to find with every experience being highly curated, every user-experience being different.
Communicating the “why” of your brand craft was key in putting it to market, said Whitney, and using data to drive further value. Hyperlocalization of cannabis was less of a problem and more of an opportunity, said Lane, who believed that so long as he never ran out of provincial customers in BC, he would continue to thrive. If this meant pooling resources with neighbourhood brewers and cannabis producers who otherwise comprised competition, he was all for community building and experience seeking consumer initiatives: “Let’s all brainstorm over beer about how to sell weed.” Fragmented markets co-exist as communities in the competitive landscape, but consolidation is an imminent opportunity or threat depending on your situation, network, community and outlook, as a lot of processes get automated and machine-human interactions evolve.
A “delicious” category, but know your consumers.
Regulations aside, consumer cannabis conversations have now bifurcated around CBD and THC products regardless of their uses (medical, recreational, pharmaceutical). Lawyers and doctors like Trina Fraser (Canada), Daniel Podesta (Uruguay), Matt Maurer (Canada) and Deepak Anand (Canada) shared detailed overviews of what’s allowed and what’s not and also their primer for what’s ahead in Cannabis 2.0 as the Canadian market opens up to edibles, extracts and topicals. Omar Yar Khan, VP of Public Affairs at Hill + Knowlton shared that although 20-25% of Canadians have a significant interest in edibles and infusables, 20% of Canadians say that they would stop purchasing a favourite brand if it started producing cannabis-infused products! Interest in THC and CBD infused beverages are at 51%, CBD-infused beverages at 58%, THC and CBD infused foods at 56% and CBD-infused foods at 59%, according to Hill + Knowlton Strategies’ May 7th-15th, 2019 online survey release of 1500 adult Canadian residents weighted to representation. Price, potency and prolongation of effect remain the top drivers of cannabis purchase, according to the same survey.
In Canada, dried flower remains the most popular form of consumption, being used by 57% of cannabis users, but 41% reported using edibles that they either made themselves or acquired through black market sources.
Knowledge is about moving conversations in what is primarily a “people business” where you place your bets on people not ideas. High degrees of ambition, creativity, openness, attention to detail, discipline, commitment to equity and ability to connect across governments, industries, talent and technologies will drive this momentum forward. Keep growing your brand, but never confuse it with your reputation, the larger sum of your brand’s impact along with many other measures. Acquiring deep speed – our ability to react to change with thoroughness quickly – will reward us in this high velocity and fast changing industry, as we grow our waters and green print as global leaders.
(Editor’s note: This is the third in a series of Q&As with speakers at MJBizConINT’L, Sept. 4-6, in Toronto. Kostas Ioannou’s panel will discuss hemp and cannabis opportunities in Europe. To read the previous Q&A in this series, click here.)
Kostas Ioannou has advice for North American companies interested in expanding into Europe’s booming medical marijuana market.
“I am a firm believer that the selection of local partners who have the same vision, core values and attitude about the industry is the key for a successful partnership,” the cannabis regulatory expert told Marijuana Business Daily.
Ioannou, based in Athens, Greece, helps clients of Canada-headquartered Vitalis Extraction Technology navigate the various European Union frameworks. That includes helping them select suitable extraction equipment for their facilities and achieving EU-Good Manufacturing Practice (GMP) compliance.
Ioannou urges companies to stay on top of laws and regulations as they evolve in the fast-growing industry.
“What I am curious to see is how EU countries fine-tune their legislation and regulations to attract investments in the months ahead,” he said.
Ioannou spoke about cannabis opportunities in Europe during an interview with MJBizDaily ahead of his panel discussion at MJBizConINT’L next week.
Which European countries promote the domestic production and export of medical cannabis, attracting foreign investment?
It’s important to first define medical cannabis.
In most European countries, we see the distinction between medical cannabis and hemp-based on the THC potency of the strains, varying from 0.2% THC in most EU countries to 1% in Switzerland.
In markets such as Switzerland, we see a very big growth of cultivation of high-CBD strains over the last few years. Such products target the wellness and retail markets.
In the medical sectors, these are the countries welcoming production:
Denmark allows for the cultivation of high THC-potency strains and for toll processing. Products are already being prescribed.
The Netherlands, through the Office of Medical Cannabis, is the largest supplier of flower in various EU countries.
Malta has been very favorable to the industry, and there are quite a few Canadian and U.S. companies that have received a (letter of intent) from Malta Enterprise.
In Greece, there are about 30 companies that have gotten approval for the installation license.
In Portugal, we are expecting to see a lot of flower being cultivated in the country.
Cyprus has already announced that it will be issuing three licenses for unified production.
In Spain, there should be three to five companies that already have a license to cultivate flower.
Another producer in Europe, but not in the EU yet, is North Macedonia, where the biggest challenge is the EU-GMP certification of the facilities.
How should North American companies interested in producing in Europe choose from so many options? Lowest cost? Best regulatory framework?
Synergies will be of the essence in the EU. The regulatory framework in most EU countries are different from one another.
In most cases, companies from overseas partner with local groups when entering those markets, and usually the local partners are the ones with less experience in the industry.
Partnering with the right local people in any country will add value to a foreign company and help them understand and adopt the cultural differences of the new markets, both in operations as well as market characteristics.
Choosing a geographical location solely based on cost of production is not the only determining factor of success.
What are the biggest challenges for companies setting up their facilities across Europe?
For a company to be sustainable, it has to be able to make a profit. Sales and distribution channels must be established, but more importantly, demand must be there for their products. Doctor and patient education is key.
I also adopt the opinion that flower will eventually be commoditized, resulting in a significant price decrease.
New, innovative products, with precise dosing and supported with clinical trials, will remove the hesitation both from the medical community and retail buyers and allow for people to gain trust in the plant.
The most important ingredient for success is the right corporate attitude. Modularity and flexibility, both in production practices and product manufacturing – but also to navigate throughout the EU – is essential in the still-shaping EU framework.
What’s the advantage of producing in low-cost European countries when you could just produce in even lower-cost Latin American or African countries?
From a cost-benefit analysis, it would be very tempting to import biomass from a low-cost producing country instead of growing locally.
However, the profit margins, at least now, allow for higher-cost cultivation/production in order to enter new markets such as Germany and Denmark.
As with many products, “Made in Germany” or “Made in Italy” signifies something, and people are willing to pay extra for that.
Let’s not forget that consistency is very important in the industry.
Also, production has various stages. You could be producing biomass, flower, active pharmaceutical ingredients, inhalers, lifestyle products.
Platforms that aim to connect verified buyers and sellers will play a significant role bringing to the surface such opportunities, both local and international.
This interview has been edited for length and clarity.
The Central Okanagan’s Economic Development Commission (COEDC) has announced the appointment of five new advisory council members.
Each new member brings a wealth of knowledge and experience from different industry sectors across the Okanagan and will be tasked with providing valuable insight towards growing the region.
Here is the 2020 COEDC Advisory Council:
Nikki Csek, CEO of Csek Creative, representing the Professional Services and Communications sector
Pete Patterson, COO & Co-Founder of Vitalis Extraction Technology Inc, representing the Manufacturing and Technology sector
Paula Quinn, Executive Director of the KF Aerospace Centre for Excellence Association, representing the Aerospace sector
Brian Wall, CEO at AEM (Anodyne Electronics Manufacturing Corp), representing Aerospace and Manufacturing sector
Noel Wentworth, VP Education and Media at Wentworth Music, representing Arts and Culture sector
“Economic Development is a team sport and the COEDC Advisory Council brings the various players – industry leaders, government, educational institutions and business service providers– together to boost economic growth in the Central Okanagan," said Brad Klassen, 2020 COEDC Advisory Council Chair and CFO of Troika Developments.
"The appointment of this year’s new members adds valuable new insight and perspective to the council. We look forward to making an impact in 2020 and beyond.”
All together, the 45 member Advisory Council is comprised of industry leaders, elected officials, local government staff and community organizations representing a cross section of industries.
What is it like living and working in the Okanagan, the home of Vitalis Extraction Technology? Our own Director of Marketing, Shana Korotash, recently published a blog on that exact question, now available online at Invest Kelowna.
Raised in rural BC, and having career experience in both Toronto and Vancouver, Shana's thoughts on Okanagan living are insightful and speak to the amazing opportunities to be found.
From the article:
"The Okanagan offers the perfect balance of work/life integration. Before or after work you can squeeze in a quick paddleboard; no matter where you reside you’re no more than 20 minutes from a lake, with boating, wake surfing and several docks downtown to cruise up to and enjoy some of the best restaurants per capita in the country."
To read further, follow this link to Invest Kelowna.
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The latest episode of the Cannabis Potcast hit the airwaves last week, featuring an interview with Vitalis CTO James Seabrook.
The show, available on Apple Podcasts and across the internet, explores the ever-changing landscape of Canadian cannabis culture, and features interviews and topics specific to the industry and lifestyle across the country. Hosted by radio personality, Gary Johnston, the show is 21 episodes strong.
In the latest installment, Gary and James discuss the Vitalis story - how the company came to be, and what's on the horizon for the growing company. From a more technical perspective, James discusses how the Vitalis ownership group developed the original plan and how the team continues to innovate, addressing the current and future needs of the ever-expanding extraction industry.
With a focus on safety, compliance, and throughput, the company was able to carve out a specific niche and satisfy the needs of extractors. Applying concepts from the oil & gas industry to the manufacturing of high-quality equipment, James' work raised the bar for the innovative approach to engineering design that is a hallmark of Vitalis products.
The discussion addresses several topics, including the future of the company, the impact of Canadian legalization, and the opportunities for growth in other botanical markets.
A great listen, the full episode can be heard by clicking the button below.