Neptune Starts Commercial Production of Cannabis Extracts

Neptune Starts Commercial Production of Cannabis Extracts

Neptune Wellness Solutions (NASDAQ: NEPT) (TSX: NEPT) announced that it completed initial commercial production lots and is now shipping cannabis extracts from its licensed facility in Sherbrooke, Quebec, Canada.

Health Canada issued a standard processing license to Neptune earlier this year. The company completed the required testing and commissioning of its phase 1 (CO2-based) extraction installation and produced its first lots of cannabis extract.

Upon successful analysis and testing, the products are now being shipped and invoiced, the company said.

Jim Hamilton, CEO of Neptune, said that “this marks an important step forward in the execution of our vision to lever our decades of extraction and wellness industry experience towards becoming the world’s leader in the extraction, purification and formulation of value-added, differentiated cannabis products.”

Neptune will record its first cannabis business revenue in the current fiscal year ended March 31, 2019, adding to revenue generated by the company’s nutrition business and putting the company on a new growth trajectory.

“Generating Cannabis Business revenue is a long-awaited milestone for Neptune, and we continue to expect positive EBITDA from this business within our first year of production,” Neptune CFO Mario Paradis stated.

“With strong market demand dynamics, current firm commitments of at least 150,000 kg, and line of sight to more than double this amount of cannabis and hemp for extraction over the next three years, we are on solid ground to deliver increasing sales volumes,” Paradis noted.

What Next

Neptune said that it is on track to complete installation of its phase 2 ethanol-based extraction equipment by the end of March 2019, with operations planned to ramp up towards a total annual processing capacity of 200,000 kg by July 2019, pending regulatory approvals.

As the global market for CBD products grows rapidly and the Canadian market readies itself for extract-based product categories slated for legalization in October 2019, Neptune has started planning for the third phase of its capacity expansion investments, which will bring its total extraction capacity to 6,000,000 kg by upgrading its facility.

“Our aim is to support our partners in seizing together all opportunities that the upcoming Canadian market for edibles, topicals and concentrates offer, and in growing in step with the market opportunities afforded by the rapidly evolving US and global regulatory landscape,” Hamilton stated.