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EXTRACTION, THE NEXT HIGH
The legalization of cannabis In Canada, on October 17, 2018 created an unheard of economic bonanza across the country, with more companies than ever lining up to become licensed producers, and facilities licensed to cultivate cannabis surpassing 1 million square metres, according to data from Health Canada.
While opportunities of this breadth rarely knock, the promise of cannabis extracted products is even rosier.
CBD, which can be derived from hemp or cannabis plants, has recently been cropping up in everything from oils and vaping pens to edibles and gummies, with its proponents claiming that CBD treats ailments as diverse as inflammation, pain, acne, anxiety, insomnia, depression, post-traumatic stress and even cancer. The allure is irresistible.
As witnessed by total sales of OTC (over-the-counter) drugs, humans do not like pain.
In 2017, it is estimated that OTC sales in the United States reached around 34.3 billion U.S. dollars, an increase of 104% from 2008 when it was 16.8 Billion (Statista). But for many, the benefits of OTCs, particularly analgesics, are often outweighed by their negative side effects and interactions. Enter the promise of CBD, offering myriads of potential health benefits, with little side effects.
The problem is that just like cannabis, CBD is strictly regulated in Canada. The legalization of cannabis on Oct. 17 did not change the fact that only licensed producers may make it, and only registered dispensaries may sell the products, which explains why extracts have become a major growth driver for the LPs. While flower sales still dominate, extracts make up the fastest growing segment of the cannabis industry.
What is extraction? Extraction techniques are used to separate the components of cannabis and remove them from the plant matrix.
Cannabidiol, or CBD, can be extracted from both the industrial hemp and cannabis parts of the plant. CBD extracted from the cannabis plants is only sold through Licensed Producers across Canada. Cannabis CBD oil typically has a 20% CBD concentration. CBD extracted from industrial hemp is not yet legal in Canada.
Extracting cannabinoids like THC and CBD as well as terpenes can be done in a variety of ways. Some of the more popular methods include hydrocarbons like butane, CO2, alcohol and even water. The machinery used to perform extraction is sold by many companies, including global public companies like Waters (NYSE: WAT). The industry has seen some early cannabis-focused equipment makers emerge too, including Canada-based Advanced Extraction Systems, and Apeks Supercritical, Eden Labs and MRX in the US.
Of the five main extraction companies in Canada, two - Radient and Quadron Cannabis -are publicly traded companies while the remaining three - Pure Extraction, Vitalis and Advanced Extraction Systems Inc. (AESI) - are private.
The extraction method favoured by all five of these companies is CO2 Supercritical with each company claiming its ascendancy over the others.
The CO2 Supercritical process doesn't require any chemical solvents which is the reason many prefer it. The extracts are made with carbon dioxide, using high pressure and heat to turn the CO2 supercritical, meaning it is simultaneously like a liquid and a gas. This fluid then strips the essential oils from the cannabis plant in a similar way to the hydrocarbons (BHO, propane, hexane). This method requires very expensive equipment, but it produces higher yields and less valuable material is lost. Plus, this method can be adjusted to extract specific compounds by changing the temperature, pressure or runtime.
David Campbell, Co-Founder & COO of Advanced Extraction Systems Inc (AESI), started AESI in 2015. The company - which was featured in a New York Time article in October 2018 and received the Emerging Business Excellence Award at the 2018 greater Charlottetown area chamber of Commerces Presidents Excellence Awards - has grown steadily since then. It is still privately-owned and Campbell has no plans to go public in the near future.
WaterToday reached out to Campbell by email asking him what differentiated his company from the others in Canada and what made AESI "the cleanest, most advanced company in the industry", as touted on its website.
"Our CO2 Supercritical Fluid Extraction (SFE) methods avoid use of any flammable petroleum-based hydrocarbons, such as butane or ethanol therefore creating pure and clean extracts virtually free of toxins," wrote Campbell.
"AESI CO2 extraction systems are unique in design, efficiency, and ease of operation. Specifically, AESI systems can be differentiated from the competition in several technical ways; our systems are modular and expandable for future growth; our superior diaphragm pump is both highly reliable and low maintenance; all our vessels are rated at 5000 psi allowing for superior fractionation capabilities; and our cGMP recipe development software Is unique," he says. "AESI also leads the industry in innovation with a direct focus on research and development looking at pre-extraction, extraction and post-extraction product offerings."
In January 2019, AESI unveiled its latest innovation, the highest throughput CO2 extraction system for the global cannabis and hemp markets; a 2X1000L, expandable to 4X1000L, supercritical CO2fluid extraction system capable of processing approximately 3,000kg of dried biomass per day which translates to over 1.6 Million kilograms per annum.
While Co2 Supercritical dominates the market in Canada, not everyone agrees with its superiority over other extraction methods. According to FS Cannabis owner, Randy Flemming, who admits to having strong opinions, "CO2 is dominant because of the way the market was pushed rather than the experience of knowledge". His preferred method is Ice Water which although it has been around since about" the cavemen has been developed more recently than all the other processes."
According to Flemming, the Ice water method is comparatively inexpensive, it can process undried cut down plants, it has a more robust terpene profile meaning more medicinal benefits, and a yield of 10 to 25%, which is higher than other methods.
Meanwhile, new extraction processes such as microwave and ultrasonic extraction, are constantly being developed.
In September 2017, Organigram, an Atlantic Canada licensed producer of medical cannabis, entered into a memorandum of understanding with the New Brunswick Innovation Research Chair in Medical Technologies (NBIRC), to jointly develop an industry leading method of microwave extraction of cannabinoid extracts from marijuana plants. The project is headed by Dr. Jocelyn Paré, a researcher at the Atlantic Cancer Research Institute (ACRI) whose current focus is in the use of microwaves for the selective ablation of tumours.
The objective of this MOU is to develop a more efficient manner of extracting cannabinoids for use in extracts and edibles. The project will aim to drive down production costs resulting in higher quality and more accessible medical cannabis products for patients.
According to Dr. Paré, "Supercritical fluid extraction (SFE) is capital and operational cost intensive. This is especially true if one uses CO2 as the solvent...it offers advantages to those with less practical experience in terms of ease of removing the solvent, thus ensuring low or no-residual solvent - a definite marketing benefit. However, obtaining selective extracts from SFE is not that straightforward and can prove costly and time-consuming.
Microwave-assisted extraction on the other hand offers unparalleled selectivity." (See Q&A)
All in all, the extraction of cannabis is a simple process, which has been around for centuries. There are many records of people using cannabis tea, hash or tinctures in ancient times. What is new is the extent of the current market and the equipment that has to be developed to serve it better and faster.
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