Nextleaf Solutions takes aim at infused beverages and edibles with patented cannabis extraction technology


Nextleaf is developing technology for distilling THC and CBD oils used to formulate 2.0 products at scale within a highly regulated environment

cannabis extraction


Price: 0.18 CAD

Market: CSE
Market Cap: $21.5 m
  • Nextleaf has patented cannabis extraction technology, which is both scalable and repeatable
  • Sees ample supply of low-quality cannabis and hemp biomass and a lack of extraction and processing capacity
  • Has won 14 patents, with 60 pending in the Mexico Jamaica and Europe

What Nextleaf Solutions does: 

Nextleaf Solutions Ltd (CSE:OILS) (OTCMKTS:OILFF) is a cannabis-extraction-technology company that has a patented process for the commercial-scale production of high-quality cannabinoid distillate, the precursor to every cannabis-infused products. 

In short, the British Columbia-based company is bridging the gap from soil to oil, a reflection of its technology, which allows for low-quality, dried cannabis biomass to be processed into a high-purity distilled oil. A front-runner in the extraction space, Nextleaf is also getting into infused beverages and edibles.

The fact is that there is ample supply of low-quality cannabis and hemp biomass -- but there's a lack of extraction and processing capacity in the industry. Nextleaf is developing intellectual property around converting the cannabis plant into infused products through a scalable, repeatable process.

Nextleaf focuses on a premium distillate and believes the secret to producing standardized and impurity-free cannabis extracts is in the purification and refinement steps, which goes above and beyond the typical crude extraction. Its highly concentrated THC or CBD distillate is odorless, tasteless, and standardized for potency. 

Nextleaf provides toll processing for licensed cultivators and wholesale of distilled THC and CBD to qualified Canadian and international B2B partners and manufacturers of edibles, beverages and other infused products. The company delivers its proprietary technology through its Health Canada Licensed Standard Processing facility in greater Vancouver.

How is it doing: 

For the last 18 months, Nextleaf has been expanding its technology portfolio while building partnerships within the cannabis industry.

The company has been granted 14 patents in key markets of Australia, Canada, Colombia and the US related to the production of high-purity, cannabinoid-rich distillate for vapes, edibles, and beverages.

The company has over 60 patents pending across Europe, Jamaica and Mexico for ethanol and butane hash oil (BHO) extraction, distillation and formulation of cannabinoids. Nextleaf is the first publicly traded entity to be issued multiple US patents for industrial-scale extraction and distillation of cannabinoids.

In July, the firm expanded its investor base, when its shares started trading on the OTCQB Market. The move has helped boost liquidity as it gains access to a broader US institutional and retail investor audience.

The company in September achieved another milestone when it received its Standard Processing Licence from Health Canada that allows it to begin production of its intellectual property portfolio. The company has already set up a vape oil cartridge manufacturing line, with the capacity to fill 3,000 vape cartridges per hour.

To date, Nextleaf - via its commercialization partner Nextleaf Labs - has secured two Research Licenses from Health Canada. The licenses allow Nextleaf Labs, which has a 6,540-square foot facility near Vancouver, to conduct R&D activities, including stability trials on the company's nano-emulsified water-soluble THC and CBD formulations.

The water-soluble cannabinoids utilize food-grade emulsifiers already approved by Health Canada and are shelf-stable, resulting in no constituent separation, and boast a rapid onset time of less than ten minutes - a quantum leap for the industry.

The company also uses partnerships -- whether with the government, universities or other companies -- to help develop its technologies, earn royalties and grab a piece of the retail-end of the post-extraction process.  

The company worked for a year with the National Research Council of Canada Industrial Research Assistance Program to develop a treatment process to remove chlorophyll, carotenoids and other elements from crude cannabis extract.

Nextleaf has also worked with The University of British Columbia and the British Columbia Institute of Technology on a project to repurpose cannabis biomass after extraction. The company discovered that burning hemp biomass creates ash that can be used as an ingredient to make cement, thus keeping tons of biomass out of landfills and creating a revenue-generating by-product.

The company recently entered into a patent licensing agreement with a British Columbia-based cannabis process equipment distribution company that allows the licensee to commercialize and distribute three of Nextleaf’s issued and pending patents related to post-extraction cannabis processing equipment. Nextleaf will receive a 20% royalty, which could yield more than $3 million in 2020.

Inflection points:

  • Anticipates $3 million in royalties in 2020 under patent licensing agreement
  • Acquisition of disruptive patent-pending water-soluble technology
  • Commencing B2B sales of distilled THC and CBD molecules
  • Expects to announce additional commercial agreements during the first calendar quarter of 2020
  • Continue to develop new technologies, while improving upon existing IP
  • Become turnkey extraction and manufacturing partner to clients from biomass to consumer-packaged products

What the boss says: 

Nextleaf CEO Paul Pedersen commented: "Our strategy from day one was to be the absolute best at developing disruptive extraction technology and focus as a business, not worrying about growing or developing brands or retail, but to just focus on the underlying technology that goes from plant into product and being able to deploy that in a highly scalable way." 

What the broker says:

A pair of analysts with Ubika Alpha are bullish on Nextleaf, arguing that the Canadian cannabis extraction company is “ready to be a cash-flowing machine” and tagging it with a Buy rating and a one-year target price of $1.75. 

Progress achieved at Nextleaf’s production facility in the second half of 2019 “points to” a stronger production run heading into 2020, Patrick Smith and Christopher Bednarz wrote in a note to investors in December.

Processors like Nextleaf are also set to benefit from the fact that cutbacks across the industry’s largest cultivators should result in a significant increase in third-party processing needs, the analysts said.

Nextleaf’s current capacity suggests its white-label vaping business could theoretically support $127 million in revenue over time and $14 million to $15 million in annualized revenue over the next three years, they added. 

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