Nextleaf Ends 2019 with 11 Granted Patents

The Canadian Intellectual Property Office has granted Nextleaf Solutions a patent for its proprietary filtration stack used in the post-extraction processing of THC and CBD oils. Nextleaf has been issued a total of 11 patents by four international patent offices in the key markets of Canada, the United States of America, Australia, and Colombia.

“Given the abundant supply of lower-grade dried cannabis, we believe processors that establish a competitive advantage by utilizing superior technology to transform otherwise unsellable biomass into high-purity THC and CBD oils at a lower cost than competitors, will generate better margins and build a sustainable long term business,” said Paul Pedersen, CEO of Nextleaf Solutions. “As we close out 2019, I’m extremely proud of our R&D team for obtaining its 11th patent, protecting what we believe to be the most efficient methods for producing distilled THC and CBD oil at scale within a regulated environment.”.

2019 Milestones and 2020 Outlook

While Canada became the first developed country to federally legalize cannabis and cannabis-infused products, Nextleaf became the first public company granted multiple patents for industrial-scale extraction and purification of cannabinoids.

In December, the Company received its high-capacity, proprietary extraction plant, the final component of the Company’s patented end-to-end processing system. The phase 1 plant, operating within the Nextleaf Labs Ltd. licensed production facility, can process the same amount of cannabis biomass into a refined oil as eight large supercritical CO2 extractors. With the recent legalization of cannabis 2.0 products combined with a supply glut of nearly 400 tonnes of cannabis biomass, there has been strong demand for efficient, high-throughput extraction and refinement processing. Cost per milligram of THC and CBD, as well as fulfillment time, are the primary decision drivers when licensed companies decide to outsource their extraction.

In November, Nextleaf completed commissioning of its automated vape cart filling line that has capacity to fill 3,000 vape cartridges per hour. The Company believes its patented large-scale extraction and refinement plant will position Nextleaf as a low-cost supplier of THC and CBD distillate. The Company expects to announce revenue from toll processing and the supply of bulk concentrates in the first calendar quarter of 2020.

In September, Nextleaf acquired intellectual property pertaining to water-soluble cannabinoid formulations. Based around a nano and micro emulsification process, the technology utilizes food grade emulsifiers already approved by Health Canada to create water-soluble cannabinoids that are shelf stable and deliver fast onset time. Nextleaf believes fast-acting THC and CBD emulsification technology in cannabis beverages will prove disruptive to the beverage alcohol industry. The Company expects to monetize this technology in 2020.

In June, Nextleaf acquired a U.S. patent pending hydrocarbon extraction process and award-winning formulation for THC concentrate, commonly known as “shatter”. The unique patent pending butane hash oil (“BHO”) extraction process and formulation produces a broad spectrum concentrate with a rich terpene profile. Nextleaf remains committed to developing and monetizing its intellectual property for innovative cannabis 2.0 products. The Company started generating licensing royalties in 2019, and expects to realize $5MM-$10MM in licensing royalties in 2020.