Rising Cannabis Extractor Going Public Today

In the Canadian cannabis market, Cannabis 3.0 is finally starting to realize the sales potential many investors imagined back in 2019. That is when Canada legalized cannabis-derived products like oils, extracts, and edibles, and the thought was these new products would spur incredible growth in a somewhat flat industry that hadn’t been returning profits on massive investments. There were licensing, distribution, and regulatory issues that caused a soft start, but sales have been skyrocketing pretty much ever since.

The data shows that extracts account for about 17% of overall cannabis sales in Canada, while edibles account for about 20%. Dried flower is still the king of market share, coming in around 64% of sales, but flower sales are relatively flat compared to the other two categories. Back in August 2020 for example, dried flower accounted for about 72% of overall sales, edibles about 15%, and extracts about 14%. Between January 2020 and March 2021, adult-use edible sales grew 492% and adult-use extract sales grew 214%, while adult-use flower sales grew 29%.

The foundation of the high growth Cannabis 3.0 market lies with extraction companies and their ability to provide pure and effective cannabinoids like CBD and THC for products in the space. One of the newer extractors is Hempsana Holdings Ltd. (CSE: HMPS), which began trading today on the Canadian Securities Exchange.

The Business Model

Hempsana is based in Goderich, Ontario, a picturesque town on the shores of Lake Huron and surrounded by farmland and a couple hours drive from Toronto. The company is working with local farmers to supply hemp for its CBD extraction business, while simultaneously enjoying a location well-suited for shipping and distribution.

Hempsana is currently focused on the Canadian market, but also has its eyes on Europe and the UK. Hempsana’s production facility is EU GMP compliant and the company is working on certification that would allow export into European countries while simultaneously exploring avenues into the recently-BREXITed UK.

Extracts come in various forms, and Hempsana is currently producing crude and distillate while initiating isolate production. One of the most prominent cannabinoids, CBD, make up the bulk of current production. However, Hempsana sees tremendous opportunity in the growing but underserved market for rare cannabinoids such as CBN, Delta-8 THC, and CBG.

Hempsana is currently executing on 3 contracts that call for the processing of 50,000 kgs of hemp biomass, for CBD and rare cannabinoid production, over the next 6 months. These contracts have pushed the company’s development forward a bit, as an 80% production capacity at its relatively new facility was targeted for the end of the year but has been moved up to accommodate demand.

Hempsana sells ingredients wholesale to qualified buyers that formulate and manufacture their own products. The company also offers more comprehensive services that manage refinement, and include purification, remediation, and even formulation services to cannabis companies without those capabilities. Hempsana also offers white label services, partnering with clients to take products from the idea stage all the way to a ready-to-sell package.

The Takeaway

Investors looking for new opportunities in the highest growth sectors of the legal cannabis industry may want to keep an eye on Hempsana. The newly-public company provides the materials and services that form the foundation of Cannabis 3.0 in Canada. Hempsana’s international aspirations and its attention to the rare cannabinoid markets could serve as further catalysts for the company over the coming quarters.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Robin Lefferts

Robin Lefferts has been involved in the legal cannabis industry since 2012, sometimes as an active participant and always as an interested observer.