Nextleaf Solutions Ltd (CNSX:OILS) CEO Discusses Industrial Scale Refined Distillate Extraction
Nextleaf Solutions Ltd (CNSX:OILS) (FRA:L0MA) is the first public company to be issued a patent for the extraction and purification of cannabinoids in Canada. CEO Paul Pedersen explains that by acquiring existing technology, Nextleaf was able to beat the large licensed producers and pharmaceutical companies to the first extraction patent. While Nextleaf has the capability to extract minor cannabinoids, Pedersen notes the company is focused on THC and CBD extraction because that is more profitable at scale currently. He emphasizes the importance of tasteless, odorless, clear extracted oil as an ingredient for regulated edibles, as less pure results have to cover up with sugar. Nextleaf’s ethanol-based solvent system is proprietary and unlike many competitors, is industrial scale because the company can process material continuously at high throughput. Pedersen emphasizes that the company’s highly-refined distillate provides a consistent and reliable ingredient for large existing CPG companies and is even more important in the medical sphere. Nextleaf’s process is so efficient it allows the company to take lower grade biomass and refine it at considerable cost savings.
Narrator: Nextleaf Solutions Ltd is an extraction technology company that has developed a portfolio of issued and pending patents for producing purified cannabinoid distillate, a tasteless, odorless cannabis concentrate.
Nextleaf has completed construction of its dedicated extraction and processing facility in Greater Vancouver, British Columbia, which also includes research laboratory infrastructure. Nextleaf Solutions Ltd has 96 million issued and outstanding shares with a management ownership at 17 percent. The company is listed on the Canadian Securities Exchange under the symbol OILS.
James West: All right, Paul Peterson joins me now. He’s the CEO of Nextleaf Solutions trading on the CSE under the symbol OILS. Paul, welcome.
Paul Pedersen: Thanks for having me .
James West: Paul, you are the first public company to be issued a patent for extraction and purification of cannabinoids in Canada. Tell me about your business and why are you so good at extraction and purification?
Paul Pedersen: I think the reason that we’ve been able to beat all these billion dollar licensed producers and big pharma to the first issued patent is that we acquired existing technology, we did what I like to call the technology transfer, so extraction technology that had been created out in British Columbia out in the MMAR market by a fellow who had been in that industry for about 10 years and it gave us an ability to get a head start on a lot of players that have been focused over the last five years on building a cultivation facilities and selling dried bud. We said as a business, when we started the company in 2016, that we would never grow a plant. But we wanted to be the absolute best in extraction and purification of cannabinoids and really being able to separate isolate and reformulate cannabis oil, THC, and CBD molecules so that they can be manufactured into the edibles and the vapes and all these products that are coming in October.
James West: Okay. So have you actually, it sounds like you’re a next-generation extractor and concentrator. Are you able to isolate the minor cannabinoids and concentrate them into commercial quantities?
Paul Pedersen: Absolutely. What I think the issue with that right now is that you can only take out the biomass what’s in there. So right now at scale that is in a very efficient method and I think there’s there’s certainly a market for you know, the CBNs and CBGs of the world. Our focus is on the THC and CBD molecules because we like to say that’s the low-hanging fruit in this industry. I mean if you walk into any legal retailer in Ontario or BC or any of these other provinces, you’re not able to buy even CPG or CBD, excuse me, CBD oil. So it’s a huge issue right now in the space and while our technology is able to isolate separate and reformulate the minor cannabinoids. Our focus is as a business is really to be that provider of highly purified oil, THC and CBD.
James West: So you want the market where there’s already some customers? [laughter]
Paul Pedersen: Absolutely, absolutely, yeah.
James West: So now I consume one milliliter of 48 milligrams per milliliter CBD concentrate, broad-spectrum isolate. And I find it interesting that you can say broad-spectrum isolate but it is isolated from a lot of the other elements in the cannabis plant. It’s a product that is very clear, very mild tasting, and I find it just very delightful to do relative to other CBD oils I’ve tried which are typically a lot greener tasting and there’s more of an effort to include more of the plant matter –
Paul Pedersen: Absolutely.
James West: You know, and there’s different schools of thoughts around that. So like which category does your product fall into?
Paul Pedersen: It falls into the category that we believe, moving forward, this industry as the focus shifts away from just selling dried bud and into these derivative products that are legal in October. Our technology falls into the thought process that is all about getting that tasteless, odorless, highly-refined molecule that can then be added to food, can be added to vape products. You know, the issue is you walk down to Kensington Market find a guy in a back alley selling edibles. The issue is with that edible, which is currently illegal in Canada, is that there’s filled with fats, lipids, and chlorophylls and that chlorophyll is what that green kind of color is that you’re talking about. That’s fine when you’re when you have a product that isn’t highly regulated. But in Canada, when edibles become legal in October, producers are going to need to be able to have the technology to get to that tasteless, odorless, clear molecule and be able to infuse their edibles, the beverages, without having to cover that bad taste up with sugar. And that’s when our technology, I think is going to be a very disruptive here, to the infused product manufacturing market.
James West: Okay, so this is not supercritical CO2?
Paul Pedersen: This is not supercritical CO2 and we run an ethanol-based system. Our system is proprietary. So unlike some of the other companies are doing we’re not using off-the-shelf CO2 equipment. The reason is that it is not simply a scalable form of extraction at scale. It’s fine when you’re when you’re running a small scale, but as we know this industry is going to larger and larger scales with now outdoor cultivation, industrial hemp that you can now process for CBD oil. So we run a system that is more scalable and it’s an industrial scale. So it allows us to get to that highly refined molecule that the reality is anyone that, whether they run CO2 as their primary extraction or they run ethanol, the reality is everyone’s using ethanol because you’re going to have to introduce ethanol later in the process.
James West: Okay, so that falls into the category of solvent extraction primarily and then you have secondary and tertiary processes that participate in the function of purification and clarification?
Paul Pedersen: Absolutely, and to your earlier point about some different schools of thought around whole plant or you know different terms that people throw out in the industry. I mean what we what we look at is we look at the consumer packaged goods and you look at a company like PepsiCo and and PepsiCo and any of these large CPGs, they want molecules. They want molecules that are standardized that can then be reformulated into products that have a consistent, reliable experience for the consumer and obviously with medical cannabis it’s even more important. If you’re not going to a highly refined distillate, the issue is that you’re not removing fats and lipids and chlorophylls and these are what causes issues around taste and smell and dosage. So in a highly regulated market like we have here in Canada, being able to get to a high-purity extract is going to be very important as the market opens up in October with all these products become legal.
James West: Yeah, I understand that, especially when it comes to the issue of cannabinoids as ingredients in medicines, obviously, the issue of purity and concentration levels is key to
the formulation of what are essentially medicines. So I’m curious as to the patent itself. What is the…so you it’s primarily a solvent extraction with ethanol as the solvent. What is the secret sauce? Can you describe it?
Paul Pedersen: So the secret sauce is post-extraction. I like to say, it’s like moonshine versus a premium vodka, you know, the difference is in the filtration and the refinement, it’s the same with cannabis oil. So the secret sauce of our patented process is all what we do post-extraction. That’s refinement, filtration, and then molecular distillation. What that all means is we go beyond crude oil, we go beyond crude cannabis extract that has the chlorophylls and the issues with taste and smell and get to this highly-refined molecule. I like to say that what we’re running is a molecule factory.
What we care about is the chemistry that’s in the plant. We don’t care how the plant smells or looks. I think a big advantage is that we can take lower-grade material, lower-grade biomass, and run it through our proprietary patented process and allow us to capture those molecules and allow us to capture those molecules more efficiently, higher yield, higher process efficiency than what others in the industry are doing. We think our intellectual property portfolio of issued and pending-patents, give us a tremendous advantage over a lot of companies that simply haven’t invested in the extraction and purification side right there business.
James West: So one of the things that I’m looking out for as an investor in the space is, as you say, the industry is moving towards larger-scale extraction and so far the problem, I agree with super critical CO2 and methodologies approaches like that, is that it’s batch-oriented. You have to do a batch, then you have to clean up the machine, you sanitize machine, and start again. Is your system a continuous process system or is it is that the direction you’re going or is it also batch-oriented?
Paul Pedersen: Yeah, so we’re able to run both. I see things the same way you do, that a big challenge in this industry is when you’re looking at extraction as the way to scale up is just add more lines and purchase more CO2 machines, that that’s not true scalability. What we have a PhD chemical engineer on staff and what Kerpal said early on when we were starting this company was that we really need to focus on scaling up existing technology, but scale it up in a way that the same amount of mind power can now run larger and larger systems, by increasing the size of the component.
So we really believe that with outdoor cultivation now legal in Canada and industrial hemp now legal to get CBD oil from. We think that the processing industry is changing very rapidly and that companies that can process a very large scale and high throughput with an efficient process that allows you to process lower-grade biomass, are going to be companies that win at the end of the day.
You know I love a great cannabis flowers as much as the next guy but the reality is that’s not mass-market. Mass-market is when we look at the CPGs, big alcohol, big consumer packaged goods companies that get into the space, they all have one thing in common. They want molecules that are standardized, that are predictable, and that can be added to a variety of infused products. For us, we really view ourselves as a company that can connect the dots and that, we like to say, we bridge the gap from soil-to-oil, meaning that we work with cannabis cultivators and hemp farmers that are growing biomass and able to take that chemistry out of the biomass and purify it, isolate it and be able to get to that formulation that our downstream customers, the CPG companies, want to get to as far as then being able to use that as an ingredient in their in their infused products
James West: You bet. All right Paul, that’s a great introduction to the company. We’re going to follow along with interest and have you back the next time you’re in town. Thanks for joining me today.
Paul Pedersen: Thank you very much for having me. Appreciate it.
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