The Chamber of Deputies, Mexico’s lower house of Congress, has received an extension on a Supreme Court-imposed Dec. 15 deadline to approve a cannabis legalization bill, again delaying the country’s much-anticipated legalization vote, according to Border Report.
Mexico President Andres Manuel Lopez Obrador said during a news conference that lawmakers asked for an extension because they needed more time to make revisions to the bill, the news outlet reported. Lopez Obrador now expects approval on the legislation in early 2021.
The Mexico Senate approved the legalization bill last month, sending it to the Chamber of Deputies for consideration. The legislation would legalize the possession of up to 28 grams of cannabis, allow adults to grow up to six plants at home and allow licensed businesses to sell cannabis products under the oversight of a newly created Mexican Institute for Regulation and Cannabis Control.
The Mexico Supreme Court ruled in 2018 that an absolute ban on adult-use cannabis was unconstitutional, which prompted lawmakers to pass legislation to regulate cannabis at the federal level.
The Senate initially considered a bill last year to legalize and regulate cannabis, but missed a Supreme Court-imposed deadline to pass the legislation by the end of October 2019, and the deadline was extended to April 30, 2020.
In light of the latest deadline extension, the Chamber of Deputies is expected to take up the legislation again in early February, according to Border Report.
“There is no opposition to what the Senate authorized regarding the medicinal and limited use of marijuana,” Lopez Obrador said in his news conference. “It’s just a matter of errors, lack of precision about the amounts and other contradictions in the law itself, and that’s what will be resolved."
Aphria and Tilray Combine to Create Largest Global Cannabis Company
A robust supply chain and operational efficiencies are expected to generate approximately C$100 million of pre-tax annual cost synergies.
Leamington, Ontario and Nanaimo, British Columbia – December 16, 2020 – PRESS RELEASE – Aphria Inc., a global cannabis company, and Tilray, Inc., a cannabis research, cultivation, production and distribution company, today announced that they have entered into a definitive agreement to combine their businesses and create the world’s largest global cannabis company based on pro forma revenue. The deal is pursuant to a plan of arrangement under the Business Corporations Act, and the implied pro forma equity value of the combined company is approximately C$5.0 billion, based on the share price of Aphria and Tilray at the close of market on Dec. 15, 2020. Following the completion of the arrangement, the combined company will have principal offices in the United States (New York and Seattle), Canada (Toronto, Leamington and Vancouver Island), Portugal and Germany, and it will operate under the Tilray corporate name with shares trading on NASDAQ under ticker symbol “TLRY.”
The combined company, supported by low-cost, state-of-the-art cultivation, processing and manufacturing facilities, will have a complete portfolio of branded Cannabis 2.0 products in Canada. Internationally, the combined company will be well-positioned to pursue growth opportunities with Aphria’s medical cannabis and distribution footprint in Germany, and Tilray’s European Union Good Manufacturing Practices (EU-GMP) low-cost cannabis production facility in Portugal, which has export capabilities and tariff-free access to the European Union (EU) to meet increasing global demand for medical cannabis. In the United States, the combined company will have a strong consumer packaged goods presence and infrastructure with two strategic pillars, including SweetWater Brewing Company, a cannabis lifestyle branded craft brewer, and Manitoba Harvest, a leading hemp food manufacturer and a pioneer in branded CBD and wellness products. The combined company is expected to have a strong, flexible balance sheet, cash balance and access to capital giving it the ability to accelerate growth and deliver attractive returns for stockholders.
Under the terms of the arrangement, the shareholders of Aphria will receive 0.8381 shares of Tilray for each Aphria common share, while holders of Tilray shares will continue to hold their Tilray shares with no adjustment to their holdings. Upon the completion of the arrangement, Aphria Shareholders will own approximately 62% of the outstanding Tilray Shares on a fully diluted basis, resulting in a reverse acquisition of Tilray, representing a premium of 23% based on the share price at market close on Dec. 15, 2020 to Tilray shareholders. On a pro forma basis for the last twelve months reported by each company, the combined company would have had revenue of C$874 million (US$685 million).
Proven Leadership Team
The combined company will be led by a best-in-class management team and board of directors, with strong track records in consumer-packaged goods and cannabis experience internationally. Upon completion of the arrangement, Aphria’s current Chairman and Chief Executive Officer Irwin D. Simon will lead the combined company as chairman and chief executive officer. The board of directors will consist of nine members, seven of which, including Simon, are current Aphria directors and two of which will be from Tilray, including Brendan Kennedy, and one of which is to be designated. Aphria and Tilray are confident that the leadership team and proposed board of directors of the combined company provides a strong foundation for the combined company to accelerate growth. Additional senior leadership positions at the combined company will be named at a later date.
“This is an exciting day for both companies including our 2,500 employees, for the cannabis industry, and for patients and consumers around the world. We are bringing together two world-class companies that share a culture of innovation, brand development and cultivation to enhance our Canadian, U.S. and international scale as we pursue opportunities for accelerated growth with the strength and flexibility of our balance sheet and access to capital,” said Simon. “Our highly complementary businesses create a combined company with a leading branded product portfolio, including the most comprehensive Cannabis 2.0 product offerings for patients and consumers, along with significant synergies across our operations in Canada, Europe and the United States. Our business combination with Tilray aligns with our strategic focus and emphasis on our highest return priorities as we strive to generate value for all stakeholders.
“I am honored to work with Brendan Kennedy, a pioneer in the cannabis industry, and the Tilray team as they join forces with our talented employees at Aphria,” continued Simon. “I look forward to leading the talented teams of both Aphria and Tilray as we seek to create a leading global cannabis and consumer packaged goods company with a portfolio of medical, wellness and adult-use brands consumers love.”
Kennedy, Tilray’s chief executive officer, commented, “We are thrilled to bring together two cannabis industry leaders. At this nascent stage of development and expansion of the global cannabis market, we believe companies with leading geographic scale, product range and brand expertise are most likely to benefit long-term. By leveraging our combined strengths and capabilities, we expect to be able to meet the needs of consumers more effectively all over the world and advance patient care. With a strong financial profile, low-cost production, leading brands, distribution network and unique partnerships, we believe the combined company will be well-positioned to deliver sustainable, attractive returns for stockholders. I look forward to working with Irwin and the combined company’s management team to make our consumer products more accessible around the world.”
Strategic and Financial Benefits
The combined company will be the largest global cannabis company based on pro forma revenue for the last twelve months reported by each company with scale and breadth across major geographies and a complete portfolio of market leading brands in the major Cannabis 2.0 product categories. Aphria and Tilray each believe the business combination pursuant to the arrangement will provide the following financial and strategic benefits, among others:
Financial Strength and Flexibility: The combined company will enjoy an attractive financial profile with pro forma revenue of C$874 million (US$685 million) for the last twelve months reported by each company, the highest in the global cannabis industry. In Canada, the combination of Aphria and Tilray will create the leading adult-use cannabis company with gross revenue of C$296 million (US$232 million) in the adult-use market for the twelve months reported by each company. Aphria has generated positive adjusted EBITDA over the last six quarters, which in combination with the synergies to be realized, provides a robust platform for future profitability and cash flow generation for the combined company. This, collectively with the strength of the combined company’s balance sheet and access to capital, is expected to help accelerate global growth and value for the combined company’s stakeholders.
Creates the Leading Canadian Adult-Use Cannabis Licensed Producer: Together, Aphria and Tilray will be the leading adult-use cannabis Canadian Licensed Producer based on revenue for the last 12 months by combining their respective brands, distribution networks and world-class facilities. In Canada’s C$3.1 billion adult-use, retail market, the combined company will have one of the lowest cost production operations with its state-of-the-art facilities. In addition, the combined company will have a portfolio of carefully curated brands across all consumer segments that are sold through its distribution partners. On a pro forma basis, for the period August to October 2020, the combined company would have held a 17.3% retail market share, the largest share held by any single Licensed Producer in Canada and 700 basis points higher than the next closest competitor.
Increases Product Breadth and Commitment to Innovation: Leveraging both Aphria and Tilray’s commitment and culture of innovation and brand building, the combined company will serve clients with a complete portfolio of Cannabis 2.0 products and sales and service infrastructure supported by leading distribution partners. Aphria and Tilray’s complementary brands will be available across economy, value, core, premium and premium plus product offerings. In addition, the combined company will have a complete breadth of products in every major cannabis category, including flower, pre-roll, oils, capsules, vapes, edibles and beverages.
Establishes an Unrivaled European Platform: The combined company will be well-positioned to pursue growth opportunities with its end-to-end EU-GMP supply chain and distribution, which includes Aphria’s German medical cannabis distribution footprint and Tilray’s 2.7-million-square-foot European EU-GMP low-cost cannabis cultivation and production facility in Portugal. In Germany, Aphria’s wholly-owned subsidiary, CC Pharma GmbH, will provide the combined company with distribution capabilities for the Aphria and Tilray medical cannabis brands to more than 13,000 pharmacies. In Portugal, Tilray’s EU-GMP cultivation and production facility will provide the combined company with the capacity to cultivate and produce medical cannabis products in order to meet international demand and has export capabilities, which provides tariff-free access to the EU.
Enhances Consumer Packaged Goods Presence and Infrastructure in the U.S.: In the United States, the combined company will have a strong consumer packaged goods presence and infrastructure with two strategic pillars, including SweetWater, a cannabis lifestyle branded craft brewer, and Manitoba Harvest, a pioneer in branded hemp, CBD and wellness products with access to 17,000 stores in North America. The combined company is expected to leverage SweetWater’s craft beer manufacturing and distribution network to build brand awareness for the combined company’s brands via craft beers, hard seltzers and other beverages as it seeks to take advantage of opportunities for both the adult-use and health and wellbeing beverage trends. The combined company also expects to pursue the opportunity to expand with new or existing CBD or other cannabinoid brands leveraging Manitoba Harvest’s strong hemp and wellness product platform. When U.S. regulations allow, the combined company expects to be well-positioned to compete in the U.S. cannabis market given its existing strong brands and distribution system in addition to its track record of growth in consumer-packaged goods and cannabis.
Positions Combined Company to Continue to Grow in the Beverage Segment: The combined company believes it will be well-positioned to pursue an accelerated rate of growth in the Canadian and the U.S. beverage industries by leveraging SweetWater’s innovation, knowledge and expertise to introduce adult-use cannabis brands via craft beers and other beverages. This includes leveraging Aphria and Tilray’s proven distribution networks in Canada to sell SweetWater’s 420 cannabis lifestyle brand in Canada.
Substantial Synergies: The combination of Aphria and Tilray is expected to deliver approximately C$100 million of annual pre-tax cost synergies within 24 months of the completion of the transaction. The combined company expects to achieve cost synergies in the key areas of cultivation and production, cannabis and product purchasing, sales and marketing and corporate expenses. This is expected to include the opportunity for Aphria’s Leamington, Ontario operations to provide additional volume for Tilray’s brands and to replace the need for Tilray to use wholesale cannabis purchases from other licensed producers. Tilray’s London, Ontario facility will also provide Aphria with excess capacity to increase production of additional form factors including their branded edibles and beverages. The combined company is considering utilizing Tilray’s existing Nanaimo, British Columbia facility for Aphria’s premium Broken Coast brand to increasingly meet consumer demand for its products. The combined company plans to capitalize on opportunities for growth through a broadened product offering and additional form factors, with the aim of increasing adult-use cannabis brand availability across certain Canadian provinces to an expanded customer base with the combined company’s scalable infrastructure. Internationally, the combined company will have the opportunity to reach additional pharmacies and patients via distribution relationships. The combination is expected to unlock significant shareholder value.
Agreement Details
Under the terms of the agreement, the arrangement will be carried out by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario) and will require the approval of at least two-thirds of the votes cast by the Aphria Shareholders at a special meeting. Approval of a majority of the votes cast by Tilray stockholders will be required to, among other things contemplated by the agreement, authorize the issuance of Tilray shares to Aphria shareholders pursuant to the arrangement. Following completion of the arrangement, Aphria will become a wholly-owned subsidiary of Tilray, with Aphria shareholders owning approximately 62% of Tilray.
Completion of the arrangement is subject to regulatory and court approvals and other customary closing conditions. Regulatory approvals expected to be required include Competition Bureau (Canada), U.S. HSR and Germany FDI. The agreement includes certain reciprocal customary provisions, including covenants in respect of the non-solicitation of alternative transactions, a right to match superior proposals and C$65 million (US$50 million) reciprocal termination fee payable under certain circumstances. The arrangement is expected to close in the second quarter of calendar year 2021 following the receipt of such regulatory approvals, as well as court approval of the arrangement.
Each of Aphria’s and Tilray’s respective directors and officers and certain principal Tilray Stockholders have entered into voting support agreements agreeing to vote their Aphria Shares or Tilray Shares, as applicable, in favor of the resolutions put before them pursuant to the agreement.
For further information on the terms and conditions of the arrangement, please refer to the agreement in its entirety, which will be available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Full details of the arrangement will be included in a management information circular of Aphria and in a proxy statement of Tilray to be delivered to Aphria Shareholders and the Tilray Stockholders, respectively, in the coming weeks.
Board of Directors’ Approval
Each of Aphria’s and Tilray’s respective board of directors has unanimously approved the agreement and the arrangement. Jefferies LLC provided a fairness opinion to the Board of Directors of Aphria on Dec. 15, 2020, stating that, as of the date of such opinion and based upon the scope of review and subject to the assumptions, limitations and qualifications stated in such opinion, the Exchange Ratio is fair, from a financial point of view, to the Aphria Shareholders. Cowen provided a fairness opinion dated Dec. 15, 2020 to the board of directors of Tilray stating that, as of the date of such opinion and based upon and subject to the assumptions, limitations and qualifications stated in such opinion, the Exchange Ratio is fair, from a financial point of view, to Tilray.
Advisors
Jefferies LLC is serving as financial advisor and DLA Piper LLP (US), DLA Piper (Canada) LLP and Fasken Martineau Dumoulin LLP are acting as legal counsel to Aphria. Cowen is serving as financial advisor and Cooley LLP and Blake, Cassels and Graydon LLP are acting as legal counsel to Tilray.
Conference Call & Webcast Presentation
Aphria and Tilray executives will host a conference call and webcast with a supplemental presentation to discuss the strategic business combination today, Dec. 16, 2020 at 8:30 a.m. Eastern Time.
To listen to the live call, dial (647) 427-7450 from Canada and the U.S. or (888) 231-8191 from international locations and use the passcode 4334816. A telephone replay will be available approximately two hours after the call concludes through January 13, 2021. To access the recording dial (855) 859-2056 and use the passcode 4334816.
There will also be a simultaneous, live webcast and supplemental presentation available on the Investors section of Aphria’s and Tilray’s website at aphriainc.com and Tilray.com. The webcast will be archived for 30 days.
Seun Adedeji
Photo courtesy of Elev8 Cannabis
Lessons in Leadership and Management from Elev8 Cannabis
Led by Seun Adedeji, the expanding organization has its sights set on supporting people while earning profits.
Seun Adedeji calls his entry into the cannabis industry an “American Dream story.” He moved from Nigeria to the U.S. at the age of 5, settling in Chicago, then in Dallas; as an adult, he spent time on both the West and East coasts. He was drawn to the industry in the interest of social justice, generational wealth and a drive to succeed. But he didn’t have the amount of capital, resources or connections as many others looking to launch their own business. He stuck to his plan, or, as he tells Cannabis Dispensary, “did not take ‘no’ for an answer.”
Adedeji launched Elev8 Cannabis in 2017. Three years later, at age 27, he is still the youngest African American man to own a cannabis dispensary in the U.S that he knows of. And Elev8 doesn’t only have one store. It’s a multi-state operator with locations in Eugene, Ore., and Athol, Mass.
Describing the work that went into getting to this point, Adedeji shares, “I tell people I became the COE—the ‘chief of everything.’ I became my attorney, I became my contractor, application writer, whatever was needed. I did it because I was passionate about getting into the cannabis industry; I was passionate about being a beacon of hope for so many other people that might have come from [a] similar situation. And I just wanted to give people—hustlers, people from my background—hope and show them that this is actually doable.”
Adedeji says he and his team made the decision to expand from the West Coast to the East Coast in light of Oregon becoming more saturated and Massachusetts having requirements that prevent cannabis monopolies, such as businesses generally only being allowed three licenses. He worked in Massachusetts to obtain host-community agreements and non-opposition votes from local governments.
“We focus on border towns, due to the fact that we're not a big corporation,” Adedeji says. (Athol is located near the New Hampshire border.) “I can’t afford Boston, and I'm not ashamed of it. So, we strategically focus on what is our strength, what can we afford right now, and we’re scaling, going places where most people don't want to go.”
Pierce Ellison, store manager of Elev8’s Athol location that it opened in October 2020, emphasizes the welcoming atmosphere of the company, outlined in its mission “to love, awaken, and elevate the human spirit by treating everyone like gold.”
“We are here to serve our surrounding communities and anyone that wants to visit us,” Ellison says. “Our mission is to be inclusive, treat our customers like they are gold, treat them like they are our family members.”
These approaches have helped Elev8 to—well, elevate—to a multi-million-dollar company with 20—soon to be about 40—employees, and the construction of two more storefronts in Orange and Williamstown, Mass., which Adedeji says are tentatively set to open by the second quarter of 2021. Like Athol, both Orange and Williamstown are located along the State Rt. 2 corridor that rides the northern border of the state.
Photo courtesy of Elev8 Cannabis
Elev8's Athol, Mass., store
Inspiring Others
Several years back, Adedeji worked selling phones at Sprint, and he rose in the company to a manager. To launch Elev8, he used $50,000, a combination of personal savings and investments from friends.
He has not used social-equity programs to enter or operate in Oregon or Massachusetts’ cannabis markets, though he says he did have a similar background—a former arrest for cannabis, for example—as such programs use as qualifications for participation.
Growing up as a teenager in Chicago, Adedeji was arrested for selling cannabis; the charge was possession. “Getting arrested at 13, I never knew that it would actually help me in the future,” he says. “It was just devastating, period. I couldn't see any benefit from it. I couldn't predict that cannabis was going to be legal. I was just a 13-year-old kid that was just trying to provide and feed myself. It was devastating—I thought my life was over.”
Adedeji says he relates with other people who have been affected by the War on Drugs. He advocates for social equity, but he doesn’t participate in those programs because he feels that many of them do not provide opportunities for true equity.
Many of the people who are advocating for social equity, Adedeji says, could try to launch a business under states’ broader rules and regulations. “But I think that a lot of people are missing out on the wave because they're so tunnel-visioned on social equity, they’re not actually executing on their vision and their dream of being a cannabis dispensary owner,” he says.
Adedeji says he is transitioning from “COE” to CEO, delegating different tasks to people who can complete them “on a mastery level that I can’t.” In addition to expanding its leadership team, Elev8 cross-trainsemployees and promotes from within. Budtenders shadow intake managers and store managers, for example, to see the different ways their store runs. Then, when the store hires more people, those new employees have the same opportunities to advance.
“I want people that stand for purpose, stand for the people and give others the opportunities to get this money so they can help more people,” Adedeji says. “I think that's it for me is just, I'm a purpose-driven person, I love collaboration and seeing my vision come to life. And that's stimulates me. That makes me get up every day and feel like I'm doing something, that I'm changing lives or helping people.”
Ellison (who, like Adedeji, lightheartedly ends conversations and signs emails with a reminder to "Stay Elev8ed!") says his boss has inspired him in multiple ways. “As a gay man, his inclusivity has inspired me, and pushed me to treat as many people as I can like gold, and treat everyone like they’re you’re family because in our family we accept anyone no matter who they are,” Ellison says.
Adedeji isn’t only being recognized as a leader within his own business. He serves as a “cannabis czar” for the Chicago Black Chamber of Commerce and will serve on the National Cannabis Industry Association’s (NCIA) board of directors from 2021-2023.
Photo courtesy of Elev8 Cannabis
Pierce Ellison speaking with a customer at Elev8’s Athol, Mass., store
Offering Knowledge of the Plant to the People
Following their mission to treat people “like gold,” Elev8 team members to actively listen to and educate their customers on some of the intricacies of cannabis.
Ellison joined Elev8 in September 2020 as a budtender and soon was promoted to store manager of the dispensary’s Athol location. Previously, Ellison obtained a bachelor’s degree in music performance with a specialization in trumpet from Texas Tech University and was working toward a master’s degree in music performance at the University of Massachusetts, Amherst.
He says cannabis has played an important role in his life and that the chasm between Texas’ and Massachusetts’ drug laws was a factor in his decision to move to the Bay State. After the move, he obtained a medical card and worked as a cultivation technician.
“I quickly learned that indica[-leaning] hybrids would be my best friend,” says Ellison, citing that it helps him with depression, anxiety, stomach pains and headaches.
Now, after joining Elev8, Ellison channels his passion for cannabis as he welcomes all walks of life into the store, from 21-year-olds who have just become eligible to purchase cannabis in Massachusetts’ adult-use program, to people who can’t sleep at night, to 80- to-90-year-olds who “say they just want to have some fun like they did in the ’70s.”
For customers who are interested in learning more about cannabis and its effects, Adedeji says, Elev8 provides them with pamphlets with information on cannabinoids.
“We talk to our customers,” he says. “We seek first to understand what brings them in, what illness that they're trying to target or use cannabis for. Once we do that, we then educate them on the best product that can fit their needs. We have other customers that want to get high, but … they just know that they want to relax, they want to stay focused.”
Adedeji says he has noticed some general differences between how Oregon and Massachusetts customers approach purchasing decisions. “I think when you look at more mature markets like Oregon, you see a lot of Oregon folks—they're focused on cannabinoids, they're focused on terpene profile, they're focused more in-depth on the educational component,” he says. “When you look at newer states like Massachusetts and the East Coast, they're focused on THC potency.”
Large Lessons Learned
Adedeji offers some words of advice to dispensary owners and managers, both from personnel- and money-management perspectives.
“Your budtenders, your team members are the bloodline of your company,” he says. “Just appreciate them because without them, we wouldn't be able to lead.”
In addition, he stresses the value of a cannabis-business license and advises owners to time their larger capital raises after they have already acquired a license.
Explaining his plans for Elev8 for the next several years, Adedeji says: “I think for us, we want to continue to be a leader within the cannabis industry. We want to continue to break down barriers … to do the impossible [when] people say it's not possible. I'm a guy that started with $50,000. Now, we are running a multi-million-dollar company. So, I really want to just continue to be a beacon of hope while expanding our brand across the United States.”
3 Questions Every Processor Should Ask Before Pursuing Solventless Extraction
From space considerations to deciding which products to produce, here is what to think about before launching a solventless operation.
Solventless extraction is capturing the attention of many cannabis processors who are looking to produce premium concentrates, but Ben Britton, co-founder and CEO of solventless extraction technology manufacturer PurePressure, advises clients to consider several factors to maximize profitability and success.
1. How much space do you need?
Solventless extraction often involves fresh frozen material that needs to be stored and handled properly throughout the extraction process. This means processors need to think about where to put this raw material, and Britton says he often sees clients with too much or too little square footage to address this concern.
“Sometimes, people will get gung-ho and they’ll sign on to a facility contract, and then they’ll contact us and realize they don’t need 10,000 square feet—they might only need 1,500,” he says. “Or vice versa, they’re renting a closet-sized space and have 250 square feet, and [they] want to put out tens of thousands of grams a year, but their product output expectations are ambitious. So, it’s just really finding a balance for space and coming up with a true business plan.”
Processors should consider what kind of products they want to produce before leasing or building out a facility, Britton says. “Let’s talk about what you want to make, and then we can figure out how to get you there.”
2. Which products are popular in your market?
It should be no surprise to cannabis business operators that they should evaluate the market before establishing a business plan, and the same is true when it comes to products—extractors should know which SKUs are popular and use that information to drive decisions about which products to produce.
Photo courtesy of PurePressure
Solventless edibles, vape cartridges and dabbing products are generally popular across all cannabis markets, Britton says, with edibles being one of the most profitable products to produce.
“Edibles are … very simple, require very minimal equipment, and you can do it at scale,” he says. “We’ve got a number of customers who are highly successful with that business model and that’s all they do.”
Full-melt hash is another profitable product, Britton adds, as long as high-quality material is available.
“Assuming you have quality material, this is something that, once you’re done making your ice water hash, you have a sellable product,” he says. “There is no further processing. … If it’s achievable, it tends to be a profitable product."
Another popular SKU in many markets is pre-rolls with hash or rosin inside, Britton says, and these products often sell for a premium.
“They’re hard to keep in stock, at least in Colorado,” he says. “A lot of markets really like that, and it’s a great way to merge concentrates with flower into a single product."
3. Do you have access to the right material?
With solventless extraction, processors should evaluate the quality of their raw material to determine the right approach for that material, Britton says. In this way, a processor’s access to material largely dictates his or her processes and business model.
“Knowing what your material is, listening to that material and finding the right extraction process for it I would say is an important piece to success,” he says.
For example, fresh frozen material is ideal for solventless extraction, he adds, as it prevents degradation of the material and the loss of terpenes.
“We go from the grow straight into a bag, frozen,” Britton says. “We go from the frozen bag into a bath of ice water. From the bath of ice water, we filter that particulate out and go into a freeze dryer. We pull the moisture out, and then we go directly back into a freezer for storage until we either sell the product or further process it with a rosin press. So, we’ve gotten all the way through our extraction process without any exposure to temperature, and that allows us to retain the highest-quality resin glands possible.”
Britton encourages those looking to launch their solventless extraction journey to contact PurePressure for more information.
Photo courtesy of PurePressure
4 Tips for Profitable Solventless Extraction
PurePressure founder and CEO Ben Britton outlines his top advice for avoiding common pitfalls and finding success.
Solventless extraction can be a profitable and attractive option for cannabis processors, especially when they avoid common pitfalls.
For someone looking to launch a new extraction facility, the equipment, setup and buildout are significantly less expensive for solventless than other extraction methods, according to Ben Britton, founder and CEO of PurePressure, a solventless extraction equipment manufacturer. While solvent-based extraction equipment requires special ventilation considerations, for example, this isn’t the case with solventless, so the upfront cost of the facility buildout and equipment is generally lower.
In addition, solventless products typically sell for a premium and are popular with connoisseurs at dispensaries, Britton says.
“It also opens you up to the ability to make quality product, something that is unadulterated and hasn’t been modified by chemicals,” he says.
Here, Britton outlines his top advice for launching a profitable solventless extraction business, from acquiring high-quality raw material to establishing efficient processes.
1. Control your raw material.
Two common roadblocks for anyone processing cannabis are quality and yield, Britton says.
“At the end of the day, everybody wants the highest-quality product, and they want the most of it so that they can be profitable,” he says.
Solventless extractors use mechanical methods to separate the resin glands from the plant, and Britton says this must be a meticulous process to ensure that no particulates are lost.
Controlling the raw material is one way that processors can ensure that they have a consistent supply of high-quality cannabis that can be easily separated, Britton says.
“Time and time again, we see that the most successful businesses have really great relationships with their grow, or they’re vertically integrated, meaning that they have a grow under their umbrella,” he says. “If you can properly grow cannabis, that means that you’re properly growing good trichome heads, and that’s ultimately what we’re harvesting here. A good grow creates consistent, large, nice, bulbous trichome heads that we can then separate from the plant and collect for processing.”
For those who aren’t cultivating, creating relationships with grow wholesalers to provide great cannabis for solventless is crucial, Britton adds.
2. Start with high-quality material.
While low yield is often a common complaint with solventless extraction, Britton says this can be avoided by using high-quality material with high oil content.
“We want to make sure that we have high-quality material to start with,” he says. “You can’t extract oil that isn’t there to begin with. The maximum yield is only whatever is on that plant when you start the process.”
Yields are typically measured relative to the weight of the raw material, but if a processor knows the oil or resin content, then yields should ideally be measured against those metrics to ensure that most, if not all, of that oil is extracted, Britton says.
“That’s kind of a good way to think about things: let’s see what’s available to extract and start with something that’s as potent as possible.”
3. Handle the raw material and equipment properly.
Solventless extraction often involves fresh frozen material—a live cannabis plant that is frozen within 30 minutes of cutting and stored in a vacuum-sealed container to ensure that it has the highest terpene retention. If fresh frozen resin glands are exposed to higher-than-ideal temperatures, which exceed 40 degrees Fahrenheit, they can easily transfer, melt or be lost entirely, Britton says, so it is critical to handle and store the material properly throughout the extraction process.
If a processing facility does not have its own grow attached, vendors should maintain the fresh frozen flower at freezing temperatures during transit, and this should be maintained within the extraction lab until it is processed.
“We just see those steps being overlooked,” Britton says. “A lot of people are excited to get the new extraction equipment that they know is going to produce the oil, but maybe look over some of the finer details in between.”
When the material is ready to be processed, extractors must ensure that their equipment, such as rosin presses and hash washing gear, is in proper working order to maximize yield, he adds.
“When we’re going through the filtration process with ice water extraction, we’re typically filtering micron-sized particles anywhere in the neighborhood of 25 to 160 microns in diameter, and we’re straining that out of, say, 65 gallons of water,” Britton says. “You’ve always got the opportunity for that particulate to be lost if, let’s say, your filtration media has a hole in it, or you have a leak somewhere.”
Therefore, processors must be meticulous, ensuring that their filtration media is inspected and that all gaskets are in place before use.
“These are simple things that sound trivial, but it ends up having a pretty dramatic impact,” Britton says. “Make sure that before you start washing to make ice water hash, that your water and your vessels and all of your fittings have actually come to temperature at about 32 to 33 degrees Fahrenheit. You don’t want that material to come into contact with a warm vessel wall, or it is going to stick to that vessel.”
4. Lay out an efficient extraction process.
Extractors should have a clear and defined processing schedule for their facilities to ensure that material moves smoothly through the process, Britton says. This is especially important for processors who use solventless extraction, as they often deal with fresh frozen material that must be handled properly throughout the process to avoid damage and loss.
“Having a good extraction process laid out will help you with your efficiency and making sure that when the product finishes from one process, you’re ready for it to move on to the next process, or you at least have a way to store that material,” Britton says. “We’ve seen issues where people just kind of go in gung-ho and start producing, but they don’t have all their subsequent processes lined up or timed properly. It’s the equivalent of having the turkey on Thanksgiving come out at noon and everything else is ready at 4 in the afternoon—it’s not going to work out so well.”
Britton encourages those looking to launch or optimize their solventless extraction operations to contact PurePressure for additional information.
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