On Tuesday, Valens GroWorks (CSE:VGW) (OTC:VGWCF) started construction on their new purpose-built facility. The facility, which is alongside their existing facility in Kelowna, BC, will be equipped to increase the pot stock’s production capacity to over 1,000,000 kg per year. According to the press release, construction will be done by the first quarter of 2020.

As it stands now, Valens is already equipped to produce 425,000 kg of dried cannabis and hemp biomass, which is being used for the company’s extracted products. Valens is the largest third-party extraction company in Canada, and they use multiple kinds of extraction processes, including solventless and terpene methodologies, to create their white label and private label products. By nearly doubling their production capacity in under a year, this pot stock could quickly become a competitive addition to any cannabis portfolio.

Taking a closer look at Valens GroWorks

Their capacity may not yet rival a behemoth’s like Aurora Cannabis, but Valens is looking beyond the production of dried flower. Extraction is the company’s calling card, and companies like Tilray are already partnering with Valens to gain access to their wide array of the proprietary extraction process. With edibles and the like hitting shelves in Canada this fall, Valens is setting themselves up to be the premier provider of oils, vapes, topicals, edibles, and capsules for some of the industry’s biggest players.

“With over 100 years of combined extraction experience on our team, we have worked hard on our formulation portfolio which will be essential to the development of new innovative products coming this year, enabling our partners to differentiate their offerings,” CEO Tyler Robson explained on Tuesday. “[Our] new capacity will also allow us to expand our capabilities in product development and manufacturing to meet changing consumer market demands.”

Valens’ two-year agreement with Tilray was expanded this week when both companies announced that they would be increasing the extraction minimum from 15,000 kg to 60,000 kg. Valens can also develop tinctures, gel caps, vape cartridges, and topicals for Tilray at their discretion per Health Canada regulations. Given that Tilray is the one who requested this expansion, Valens’ reputation as a capable, cutting-edge extractor could send their stock flying high. The pot stock was up seven percent this week, meaning that investors are catching on to the potential of this small-cap company.

[WeedMD: Cannabis investors don’t want to miss out on this pot stock]

But Tilray is not the only company taking an interest in Valens GroWorks. Valens signed another multi-year extraction agreement with Tantalus Labs to create resins and distillates for the company. According to CEO Robson, the companies will be working closely together to broaden Tantalus’ product portfolio all in preparation for the new extracts market in Canada. If Valens can maintain this momentum and continue to grow their network of industry players like this, they could easily dominate the Canadian extraction industry over the coming years.

As CEO Robson explains: “We expect to see the creation of entirely new categories of cannabis-based products driven by a greater understanding of the potential uses of cannabis. Already, we are seeing an expanded portfolio of cannabis-based products emerging in the consumer packaged goods (CPG) industry, ranging from beverages to cosmetics, skincare items, and beyond. Our modern extraction technology and unrivaled expertise uniquely position us to capitalize on this opportunity.”

Valens GroWorks continues to grow, but what’s the catch?

With their portfolio expanding and their stock starting to climb, Valens announced the conditional approval of their TSXV listing on Monday. Valens has to fulfill the requirements listed in their approval letter, and they will release another press release informing shareholders when trading will officially begin. In the meantime, investors and shareholders both can look forward to the company’s second-quarter financials, which will be coming out on July 15.

[PAX Labs is partnering with the biggest pot stocks in the industry]

Investors should be aware that Valens did confirm with their uplisting announcement that 3.75 million shares are still reserved for “issuance under certain management agreements.” The catch is that the potential for dilution is there, but it is too early to tell when and if these shares could have any negative effects on an investor’s cannabis portfolio at this time. The best bet would be to take advantage of the positive growth sooner rather than later, giving investors ample time to sell should dilution be a possibility. Anyone sitting on the fence could wait until the financial announcement in July, but, as it always goes in this industry, there is no better time than the present to get in on this hot pot stock.