Cannabis Concentrates Production Gearing up in Canada
Canada’s ban on the sale of concentrates and edibles is set to expire this coming October. With about six months to the day, activity has steadily begun to heat up. Microprocessors and LPs across the country stand well situated to start producing solventless concentrates thanks to lower startup costs and the high demand for concentrates and edibles.
Such high demand also gives hope to a market that many consider underperforming. Looking at the performance of states in the U.S., Canada could get a glimpse into what its future holds. What many see does appear to be positive. That is indicated in the activity by major players, who have taken on R&D as well as M&A activity to position themselves as the leaders of rosin in Canada, as well as a number of other concentrates.
Canada’s Companies Getting Involved in Concentrates
People have been wondering and demanding a variety of cannabis products ever since it was announced the edibles and concentrates would be banned during the first year of legal sales in Canada. From candy to hash to hot drinks, the anticipation over the arrival of these products on sales shelves is trending high and should continue to do so until legalization arrives in October.
The buzz has been heard loud and clear by much of Canada's LPs. Since the ban went into place, they knew this day would come. Now, as it approaches, additional competitors have entered the market for their slice of the action. They include large- and smaller-scale productions in Canada. Rosin stands to be a prominent choice, as does ice water hash and a series of other concentrates made with and without solvents.
It doesn’t take much searching around Canada to see the activity underway. For example, in April Toronto-based accessory distributor humble+fume entered the concentrates market, forming a partnership with 48 North. Talaal Rshaidat CSO of humble+fume explained why concentrates and extraction matter to the industry going forward.
"We believe the cannabis industry has evolved to a stage where the demand in the supply chain has shifted towards extraction and manufacturing and our strategic partnership with 48 North puts us in a very powerful position. With 48North providing Fume Labs high-quality input material, combined with our extraction expertise and robust distribution network, Fume Labs is set to become the 'one-stop-shop' for cannabis concentrates and cannabis products."
Under current regulations, Canadian producers are relegated to only one form of allowable finished cannabis oil products, liquid soft gels. A few legal workarounds are out there, but otherwise, consumers have few legal options to choose from. The landscape will change with the updated laws.
Various points on the supply chain will be able to apply to produce a series of concentrates and other extracted items. Producers will need to obtain a license for either a micro processor or standard processor. A micro processor license is allowed to process a maximum of 600kg of dry flower each year. With a standard processor license, there is no cap. Facilities are permitted to obtain a license for both
Cannabis Compliance Inc. said, "It is anticipated that most small facilities will desire both a Micro Cultivation and a Micro Processor License, however the framework was designed to allow a facility to only process (without cultivation), dried flower purchased from a licensed cultivator."
If a company wishes to both grow and sell wholesale to a province, it must have both its cultivation and processing license.
Obtaining a license requires completing an application package with supporting documentation, in addition to recommending providing additional documentation. CCI wrote, "CCI provides strong recommendations around the proposed site and floor plan, physical security design, Standard Operating Procedures (SOPs) for the operations of the facility, security clearances for key personnel, guidance for notifying local authorities, quality assurance reports, recruitment of the Quality Assurance Person (QAP) and ongoing communication with Health Canada post-submission."
Sales, Investment and Opportunity
Looking at the U.S. market, concentrates continue to eat into the market shares of flower and other consumption options. This trend is likely to remain there and in Canada. Those who are supporting this notion up North point towards figures in the medical market. In March, it was reported that sales of medical cannabis oil rose in the months after adult use laws went into effect.
That said, the effects of legalized sales will require more time for a complete analysis. Due to a series of regulatory hurdles, product selection and store openings were limited. So, its actual impact will likely not come for some time. The expansion of concentrates should only help the market. However, for now, recreational sales haven't been as in demand as some may have anticipated.
However, revenue should not be the prime indicator of the industry's revenue. Looking at the industry as a whole, we can see that Canada's cannabis companies are winning on the stock market. The vast majority are receiving neutral to favorable ratings. Meanwhile, shares of many major names are on the rise.
While market fluctuation will happen, Canada’s market offers much promise. As evidenced by big companies entering the space, concentrates and extraction technology should play a prime part in the industry. With more activity expected to happen, the opportunity for gains should come with it.
We believe that cannabis concentrates will help ignite Canada’s sales. Solventless processing in Canada should play a significant part in the production of commercial and personal use concentrates. This should help usher in the emergence of rosin in Canada, as well as other popular concentrates and consumable items.
With every large LP either already working in solventless processing, or considering getting into the space, Canada looks poised to capitalize on concentrates. This should only prove itself to be more evident as the market matures and the demand for concentrates grows.
If you are a producer or processor looking to set up your operation in Canada or anywhere else, our team at Pure Cannalabs is ready to assist you. Contact us today.