P.E.I. cannabis-oil extraction business is flowing
'We expect that to drastically increase as we move toward the recreational market'
A P.E.I. company that makes cannabis oil extraction systems is claiming its place in Canada's green rush.
Advanced Extraction Systems, which works with Diversified Metals Engineering (DME) in Charlottetown to manufacture the equipment, began back in 2015.
"Things have been moving tremendously fast in this industry," says chief operational officer David Campbell, who's also one of the company's three major shareholders.
"We're very excited about the possibilities for this company."
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Cannabis oil is the fastest-growing segment of Canada's fledgling pot industry, Campbell said, because oil can be used in many products such as candy, sprays and creams.
Advanced sold its first system in 2015 to Canopy Growth in Smiths Falls, Ont., where Tweed brand weed products are created. (Tweed partners with entertainer and prodigious pot smoker Snoop Dogg.)
'Demand is so high'
Advanced spent a lot of time working on that first system — it was the largest one in the world, Campbell said, — and the company wanted to make sure it was not only safe, but also yield enough oil for Tweed to be profitable.
It was designed by the company's chief technology officer, who is also a mechanical engineer with a PhD in supercritical fluid extraction.
Since then, Advanced has made and sold three more systems and is in the process of manufacturing and installing nine more — including an expansion of its original system for Tweed.
It could be $100 million company in a few years.— David Campbell
"And we expect that to drastically increase as we move toward the recreational market," Campbell said.
The company is building a handful of systems on its own, without having received orders.
"The demand is so high in the marketplace right now we've been able to actually build some systems on spec, to meet the recreational market which is coming this July," Campbell said.
Canada's Island Garden, P.E.I.'s only licensed pot producer, recently had what it considered a successful trial run with its newly installed system from Advanced. It plans to be in full production for cannabis oil soon. Organigram in Moncton, N.B., also has one of the P.E.I.-made systems.
Don't try this at home
The extraction systems are huge, automated industrial machines made of stainless steel — they're about two metres tall, 2½ metres long and 90 centimetres deep.
They sell for between $500,000 and $2 million.
Making cannabis oil uses extremely high pressure, which requires a certified facility — in other words, Campbell says, don't try it at home. "People have blown up their homes trying to do this," he noted.
The company's sales jumped from $1 million to $5 million in its first two years, and Campbell said 2018 is looking very good for continued rapid growth.
"It could be a $100-million company in a few years," Campbell said.
Advanced has been approached by several brokers who are interested in taking the company public. "We're looking at all of our options," Campbell said.
Advanced has hired six more mechanical engineers, in addition to Campbell, in the last two years — jobs that pay between $50,000 and $70,000.
The company also plans to hire several more engineers in the next few years, as well as adding technical support, accounting, software development and sales and marketing jobs for a total of about 20 new hires, Campbell said.
The company hopes to break into the U.S. market, Campbell said, as well as outside North America.
'Industry that is in its infancy'
The major challenge for Advanced, he said, is coming up with designs for equipment for pre extraction (milling and decarboxylation) and post extraction (purifying the oil).
"The market is moving so quick and a lot of our customers are looking for a turn-key solution, and we want to be that provider," to create cannabis oil from marijuana plants, Campbell said.
"This is an industry that is in its infancy, so there's lots of possibilities for new designs and just more efficient ways of doing things," Campbell said.
They're also offering certification of their equipment for those who are interested in meeting Current Good Manufacturing Practices (CGMP) regulations for pharmaceutical-grade oil. That requires extra calibration of the systems.
The company does have competition in Canada — a couple of manufacturers on the west coast, and as the market continues to heat up, Campbell believes more will enter the market. But he's not too worried — the market is very specialized, he pointed out, requiring a team of educated engineers and a specialized, certified manufacturing facility.
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