Quadron Cannatech: Picks, Shovels and Cannabis
December 7th, 2017
Exclusive, News, Top News
Canada’s legal adult-use cannabis industry is expected to reach $22.6 billion over the coming years, surpassing medical use, according to Deloitte. With nearly 80 licensed producers, investors have many different opportunities to capitalize on the space, but these aren’t the only opportunities. The cannabis concentrates market is one of the fastest growing subsets of the industry and some companies have specialized in that area.
In this article, we will look at why investors may want to take a closer look at Quadron Cannatech Corporation (CSE: QCC), which has positioned itself as a pure-play in the cannabis extraction and distillation business.
Why Extraction Matters
Cannabis concentrates have become increasingly popular among both regulators and consumers over the years. In the United States, Minnesota and New York have banned smokable forms of marijuana in favor of concentrates and infused products. And California sold nearly $170 million worth of cannabis concentrate products during the second quarter of 2017 alone – a figure that’s expected to rise with the legalization of adult-use marijuana.
In Canada, cannabis oil consumption is expected to grow from 284 litres in 2015 to 562,613 litres by 2020, according to Mackie Research, which represents a 198,000% growth rate. Dried cannabis consumption, by comparison, is expected to grow just 1,600% from 6,388 kilograms in 2015 to 110,034 kilograms by 2020. There’s a clear trend towards concentrates taking a bigger piece of market share from dried cannabis products. Not only do cannabis concentrates help doctors provide more precise medicine and dosing to their patients, consumers can also realize the benefits of cannabis without having to smoke the substance.
Unique & Innovative Approach
Quadron Cannatech Corporation (CSE: QCC) aims to capitalize on the growing demand for cannabis concentrates through its focus on automated extraction and processing solutions.
President & CEO Rosy Mondin is a lawyer that is well-known in Canada’s cannabis industry. In 2014, members of the cannabis industry began contacting her to assist with their MMPR applications, or otherwise become involved with the applicant company. That’s when she saw an opportunity and consulted with some of her contacts to explore a business venture in the cannabis space. They considered applying to become a licensed producer, but ultimately decided to look outside of licensing due to the time and risk involved.
Quadron Cannatech was formed with an in-house engineering, manufacturing, and science team to focus on developing automated extraction and processing solutions. The team designed and manufactured its High Flow CO2 Supercritical Extraction Technology fully in-house as an industry leading extraction technology. At the same time, the company generates revenue from service contracts with its customers that are tailored to their specific needs.
The innovative extraction technology features:
- Full automation of temperature, rate, and pressure.
- Increased flow and yield with a 3-4x faster processing cycle.
- Plug and play functionality with no configuration.
- Software that collects, stores, and analyzes data.
- Programmable cycles.
- Small footprint.
- 12,000 kilogram annual capacity.
- Low cost of operation.
Future Expansion Plans
Quadron Cannatech recently signed a definitive agreement with Lucid Labs – a leading cannabis equipment distributor based in Washington State – to enter into the U.S. market. The move helps immediately increase distribution of the company’s technology into the United States, while the partners also signed a deal to co-develop new processing systems for commercial release down the road.
In addition to its new distribution, the company is actively developing mobile extraction equipment that it believes could help licensed producers in Canada scale up their internal production of cannabis concentrates. Management is targeting a Q1 2018 completion date for the technology and anticipates two mobile units in the field by Spring 2018. If successful, the transition into this area could pave the way to a lucrative niche market.
Finally, the company has expanded into branded ancillary products for authorized growers. These product lines are designed to make it easy for licensed producers to roll out new concentrate-related products, such as vape pens, cartridges, inhalers, capsules, tinctures, edibles, and suppositories. Since the R&D is already done, it accelerates a licensed producer’s time to market and improves their product offerings.
The Bottom Line
Quadron Cannatech has experienced strong revenue growth as it looks to capitalize on the rapidly growing cannabis concentrates market. With a proven management team at the helm, investors may want to take a closer look at this unique pure play on cannabis extraction, which is poised to capture significant market share from dried cannabis over the coming years.
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