As consumer packaged goods (CPG) companies increasingly seek to incorporate cannabis into their food and beverage offerings, Nextleaf Solutions aims to meet this growing demand. Nextleaf is the first publicly traded company in the United States to receive a patent for the industrial-scale extraction and purification of cannabinoids. Paul Pedersen, the founder and CEO of Nextleaf Solutions, explained to Food Dive that the company employs a unique scientific process to produce one of the most potent forms of cannabis available, which is also odorless, tasteless, and standardized for potency. “From the very beginning, our focus has been on developing disruptive extraction and purification technologies that we believe will revolutionize the production of edibles and infused products,” Pedersen stated.
Nextleaf currently holds eight patents—five in the U.S., one in Canada, and two in Australia—with over 40 additional patents pending across various countries, including Mexico, Colombia, Jamaica, Israel, and Europe. As larger companies invest more heavily in the cannabis sector, it has become crucial for Nextleaf to protect its proprietary processes, since new entrants will likely seek to adopt their extraction and purification methods. Pedersen emphasized that patents are vital for smaller companies, akin to the importance seen in life sciences and biotech fields. “We believe these patents are significant because they cover the most efficient processes we’ve developed,” he noted.
Over the past three years, Nextleaf has focused heavily on research and development, employing 16 full-time staff members, including four PhDs and three chemists, to advance its intellectual property related to industrial-scale extraction, purification, and formulation processes. With the technological processes now established, Nextleaf is beginning to commercialize and partner with food and beverage manufacturers. In September, the company granted an exclusive license to BevCanna Enterprises, allowing them to utilize Nextleaf’s expertise in water-soluble cannabinoids for their infused cannabis beverages. “We are thrilled to incorporate Nextleaf’s technology into our formulations, as they have a strong reputation for unique and differentiated intellectual property,” stated Emma Andrews, BevCanna’s Chief Commercialization Officer. “We believe that taste and reliability will be crucial in expanding this category.”
Pedersen mentioned that BevCanna approached Nextleaf more than a year ago with the intention of collaborating on CBD-infused beverages. “For us, this partnership is ideal and encapsulates our vision for the company,” he shared. “BevCanna has a bottling facility that enables us to scale our technology for the mass market. We lack expertise in bottling and CPG; our goal is to collaborate with companies that are established in the consumer packaged goods arena.”
Both BevCanna and Nextleaf are based in Canada, where BevCanna intends to have its beverages available for purchase in 2020. As one of the pioneering countries to legalize cannabis, Canada is set to allow CBD-infused beverages and edibles on store shelves starting in December. Pedersen noted that many industry observers will be closely monitoring Canada’s implementation. “We believe that in 20 years, we’ll look back and say, ‘Canada truly had an incredible opportunity for market validation,’” he remarked.
Despite holding patents in the U.S., the cannabis industry poses risks due to the current lack of federal regulation surrounding CBD. While hemp and its derivatives have not been classified as controlled substances since the 2018 Farm Bill, the FDA has maintained that cannabis and CBD cannot be marketed as conventional foods or dietary supplements. Pedersen indicated that his company is observing the U.S. market “very closely,” but he believes it is still too early for substantial moves. “The U.S. leads the world in innovation,” he stated. “We are very interested in the United States, but timing is everything.”
Nextleaf’s business model revolves around supplying high-purity distillate to companies that create edibles and beverages, giving them an edge in the market thanks to years of development. The company has not only engaged in its own R&D but has also acquired relevant technologies. In September, they procured water-soluble technology for cannabis beverages.
The competition in this space is fierce, with other cannabis ingredient firms striving to create innovative products. Socati recently introduced two new cannabis ingredients, while Layn Corp made significant investments to expand its presence. Additionally, Sproutly has developed a fast-acting water-soluble cannabis extract. Despite the intensifying competition, Pedersen remains optimistic about his company’s future. “We feel very confident in our position,” he asserted. “We believe we have a head start over many larger companies.”
As the market evolves, the integration of ingredients such as Nutricology calcium citrate may also play a role in enhancing the formulations of cannabis-infused products, providing additional benefits to consumers.