Canopy Growth Corporation (TSE:WEED) (OTCMKTS:TWMJF) (FRA:11L1) extraction partner Valens Groworks Corp (CNSX:VGW) (OTCMKTS:MYMSF) (FRA:7LV) began producing cannabis oil at its super-critical CO2 extraction facility in Kelowna last week, where it expects to begin pulling 400 litres per month.

Valens Groworks was granted an amendment by Health Canada to their existing dealer’s license under the Narcotics Control Regulations approving the manufacture and packaging of cannabis oil products for sale to Licensed Producers, Licensed Dealers and approved Clinical Trials – among the first license amendment of its kind to be granted under the ever-evolving set of rules known relating to the production of medical cannabis.

According to Valens AgriTech Limited President Rob O’Brien, “Being the first licensed dealer to receive formal approval to become a processor and manufacturer for LP’s is a tremendous opportunity. Our proprietary process to generate 100% cannabis oil products without the use of solvents, and our distribution, marketing and sales agreement with Canopy Growth Corporation through its extensive CraftGrow distribution network, enables us to build immediate brand recognition. It also positions us as a leading processor for the adult recreational market when the anticipated Cannabis Act legislation comes into force next summer.”

Subsidiary Valens Agritech has initiated cannabis production, processing and sales under a Health Canada Dealers Licence, which includes a supply agreement with Canopy Growth under their extensive CraftGrow distribution network.

Cannabis Extracts Consumption Increasing

Cannabis extracts are becoming more important over time than dried flower, since as an extract the plant’s 100+ cannabinoids can be isolated to create a product that expresses the unique characteristics of these important compounds.

The ramp-up in products such as edibles and vape resins that start with extracted cannabis resin as an ingredient are expected to cause the market share of extracts to increase steeply as recreational legalization spreads.

Extracts have built-in advantages over dried flower when it comes to qualitative and quantitative administration of dosage.

The fact that it is much more efficient to transport also makes it appealing to ACMPR growers who want to maximize their output on the balance sheet.

In the first fiscal quarter of the reporting year 2016 under ACMPR, a total of 1,500 kilograms of cannabis oil was sold versus 4,037 kilograms of dried flower. During the same quarter of 2017, ACMPR licensees sold a total of 6,194 kilograms of cannabis oil was sold, versus 4,896 kilograms of dried flower. So while dried flower sales increased by 21 percent over the same period in the previous year, cannabis oil sales increased by 313%, demonstrating in no uncertain terms the trend for oils toward market dominance.