Nextleaf Solutions Ltd. has been granted a patent for its proprietary filtration stack used in the post-extraction processing of THC and CBD oils by the Canadian Intellectual Property Office. Nextleaf has been issued a total of 11 patents by four international patent offices in the key markets of Canada, the United States of America, Australia, and Colombia.
“Given the abundant supply of lower-grade dried cannabis, we believe processors that establish a competitive advantage by utilizing superior technology to transform otherwise unsellable biomass into high-purity THC and CBD oils at a lower cost than competitors, will generate better margins and build a sustainable long term business,” said Paul Pedersen, CEO of Nextleaf Solutions. “As we close out 2019, I’m extremely proud of our R&D team for obtaining its 11th patent, protecting what we believe to be the most efficient methods for producing distilled THC and CBD oil at scale within a regulated environment,” continued Pedersen.
While Canada became the first developed country to federally legalize cannabis and cannabis-infused products, Nextleaf became the first public company granted multiple patents for industrial-scale extraction and purification of cannabinoids. Other key milestones in 2019, include:
Completion of Custom Extraction Plant
In December, the Company received its high-capacity, proprietary extraction plant, the final component of the Company’s patented end-to-end processing system. The phase 1 plant, operating within the Nextleaf Labs Ltd. licensed production facility, can process the same amount of cannabis biomass into a refined oil as eight large supercritical CO2 extractors. With the recent legalization of cannabis 2.0 products combined with a supply glut of nearly 400 tonnes of cannabis biomass, there has been a strong demand for efficient, high-throughput extraction and refinement processing. Cost per milligram of THC and CBD, as well as fulfillment time, are the primary decision drivers when licensed companies decide to outsource their extraction.
In November, Nextleaf completed the commissioning of its automated vape cart filling line that can fill 3,000 vape cartridges per hour. The Company believes its patented large-scale extraction and refinement plant will position Nextleaf as a low-cost supplier of THC and CBD distillate. The Company expects to announce revenue from toll processing and the supply of bulk concentrates in the first calendar quarter of 2020.
Water-Soluble Technology for Cannabis Beverages
In September, Nextleaf acquired intellectual property pertaining to water-soluble cannabinoid formulations. Based around a nano and micro emulsification process, the technology utilizes food-grade emulsifiers already approved by Health Canada to create water-soluble cannabinoids that are shelf-stable and deliver fast onset time. Nextleaf believes fast-acting THC and CBD emulsification technology in cannabis beverages will prove disruptive to the beverage alcohol industry. The Company expects to monetize this technology in 2020.
Acquiring and Licensing Intellectual Property
In June, Nextleaf acquired a U.S. patent pending hydrocarbon extraction process and award-winning formulation for THC concentrate, commonly known as “shatter”. The unique patent-pending butane hash oil (BHO) extraction process and formulation produce a broad spectrum concentrate with a rich terpene profile. Nextleaf remains committed to developing and monetizing its intellectual property for innovative cannabis 2.0 products. The Company started generating licensing royalties in 2019 and expects to realize $5MM-$10MM in licensing royalties in 2020. (i)(i) This estimate is based on management’s current views, strategies, expectations, assumptions, and forecasts, and has been calculated using accounting policies that are generally consistent with the Company’s current accounting policies. The estimate is derived from the expected gross revenues from IP licensing globally and assumes the commercialization of various aspects of Nextleaf IP portfolio and the achievement of projected product sales forecasts. This estimate is considered a financial outlook under applicable securities laws. The estimate and any other financial outlooks or future-oriented financial information included herein have been approved by the management of the Company as of the date hereof. Such financial outlooks or future-oriented financial information are provided for the purposes of presenting information about management’s current expectations and goals relating to the future business of OILS. Readers are cautioned that actual results may vary materially as a result of a number of risks, uncertainties, and other factors, many of which are beyond the Company’s control.