Neptune Wellness Solutions (NASDAQ: NEPT) (TSX: NEPT) has reported that its subsidiary 9354-7537 Québec has received approval from Health Canada for its cannabis operations.

Extraction Capacity Increases to 200,000 kg

The scope of the amendment received from Health Canada permits expansion of cannabis operation areas to include an additional extraction room where Neptune will perform cold ethanol extraction.

Ethanol extraction is faster and more cost-effective than the CO2 extraction currently used and will increase the company’s input capacity from 30,000 kg to 200,000 kg.

Start-up activities will begin immediately, including the final stages of commissioning the equipment, and Neptune will ramp up commercial operations on a progressive basis during the second fiscal quarter.

Cannabis Oil Capsules Production

The amendment from Health Canada also includes expansion for an encapsulation room where Neptune will produce cannabis oil capsules using the Licaps technology licensed from Lonza Group AG.

The encapsulation equipment is commissioned and ready for commercial operations with a capacity of up to 200 million capsules annually. The Licaps technology supports differentiated product offerings through its various delivery systems, colors and branding possibilities. In addition, this is an effective technology for variable and multiple product formulation runs.

“The new regulations regarding cannabis edibles, extracts and topicals recently published by Health Canada are expected to result in significant additional demand for cannabis extraction and purification services. With our increased extraction capacity, Neptune is now well positioned to benefit from this rapidly growing market. In addition, our cannabis oil capsule technology provides the company a differentiated offering for which there is strong demand,” Neptune CEO Jim Hamilton said in a statement.

Future Plans

Neptune’s board of directors recently approved an investment of $7 million to establish additional formulation, manufacturing and packaging infrastructure. The investment will allow Neptune to provide formulation services for new expected product forms such as vape pens, topicals, beverages, sprays, and others.

A $4-million investment has also been approved, due to strong customer demand, to increase extraction capacity to a total of 1,500,000 kg, under Neptune’s Phase IIIA expansion plans targeted for completion before the end of calendar year 2019.

With this approval, Neptune said it is now positioned to submit further license amendments to incorporate the manufacturing of additional product forms, and packaging capabilities, as well as for the Phase IIIA extraction capacity expansion.