Chemesis International (CSI.C) now has the IP and equipment necessary to conduct low-temperature live resin extraction.
The 2016 Marijuana Business Factbook lists the profit margins of cannabis-infused products–an umbrella term which includes edibles, concentrates like live resin and more–at roughly 32%.
Cannabis infused products maintain an 11% lead over the second most profitable consumer good, pharmaceutical drugs.
But unlike pharmaceutical drugs, consistency in the cannabis industry is an issue, especially with infused products.
Thanks to the low-temperature, Chemesis says its live resin will keep 100% of the natural cannabinoids present in the biomass pre-extraction, thereby preventing the loss of health-boosting molecules like CBD:
This extraction method will increasing yields and eliminating many of the operating costs normally associated with other method processes such as winterization, filtration and evaporation.
The low-temperature extraction just acquired by Chemesis provides a third extraction method to “complement its current ethanol and butane hash oil (BHO) methods.”
Chemesis is currently relocating the extraction machinery from its current home in San Diego County, CA, to the company’s extraction facility in nearby Cathedral City.
The company will be retaining the sales staff related to the acquisition, integrating them into Chemesis’ operations.
Chemesis will issue 1,597,633 shares priced at a deemed value of CAD$1.69 to pay for the acquisition and the shares issued are subject to 36-month lock-up/leak-out guidelines.
Chemesis trains its sights on Colombia
On January 28, 2018, Chemesis announced its wholly-owned subsidiary, La Finca Interacviva-Arachna Med, has plans to begin construction of a GMP-certified extraction facility in Bogota before the end of Q1 2019.
The facility will also house a certified production lab, providing the capability to produce at a level sufficient to supply domestic and international markets.
Chemesis has a strong track record of constructing and operating compliant extraction labs in different international markets, as demonstrated in California and Puerto Rico.
The Company will leverage a first mover advantage in Colombia, where there is currently a scarcity of certified extraction facilities. La Finca will continue to add to its current 1,060 acre cultivation land as construction begins on the new processing facility.
La Finca has also been granted a seed producer license from the Colombian Ministry of Agriculture (ICA).
As per ICA regulations, Chemsis’ subsidiary will continue to work towards the completion of “additional agronomic evaluations,” which, once finished, will permit La Finca to begin cultivation across Colombia.
La Finca, Chemesis and Universidad Nacional of Colombia will continue their previously announced partnership to develop new efficiencies for cultivation.
The partnership’s research parameters:
- Ideal densities for biomass
- Yield improvement
- Ideal seed strains per climate
- Harvesting techniques
“We are extremely pleased with La Finca and the progress it has made in such a short period of time,” said CEO, Edgar Montero. “The Company’s certified extraction facility will allow the Company to service both domestic and international markets with a variety of finished goods, for its in house and third-party brands.”
The importance of Latin America to the cannabis sector is undeniable. Low labour costs, ideal growing conditions and a population of 620 million people make it an attractive base of operations.
Considering the profit margins on concentrates and the opportunities in Latin America, we think Chemesis is on to something.
–Ethan Reyes
Full disclosure: Chemesis International is an Equity.Guru marketing client.