Paul Pedersen, Nextleaf CEO talks with MJInvest on Aug 10, 2021

Why investing in an undervalued company featuring one of the largest U.S. patent holders for the extraction, distillation, and delivery of cannabinoids may be your next portfolio win.

“In markets like technology, intellectual property (IP) is pretty well understood. Create a unique invention, patent it, and then enforce it against anyone who tries to copy you. In the nascent cannabis industry, IP is critical for creating true differentiation between companies.”  

 – Kevin Murphy, Founder of Acreage Holdings

Big Tobacco and Big Alcohol are once again pouring Big Money into the federally legal, Canadian cannabis industry focusing on licensed producers with intellectual property.

  • 2018 – International alcohol giant, Constellation Brands (NYSE: STZ), invested $4 billion USD in Canadian cannabis producer, Canopy Growth (TSX: WEED, NYSE: CGC).
  • 2019 – U.S. tobacco giant, Altria Group (NYSE: MO), invested $1.8 billion USD in Canadian cannabis producer, Cronos Group (NASDAQ: CRON, TSX: CRON). 
  • 2019 – UK tobacco giant, Imperial Brands (LON: IMB), invested $93 million USD in Canadian cannabis company, Auxley Cannabis Group (TSX.V: XLY, OTCQX: CBWTF).
  • 2021 – British American Tobacco (LON: BAT, NYSE: BTI) the world’s largest tobacco company, announced a strategic investment of $175 million USD into Atlantic Canada-based Organigram (TSX: OGI, NASDAQ: OGI) to form a product development collaboration agreement. The companies are creating a Center of Excellence focused on creating and sharing IP around cannabis products.  
  • 2021 – British American Tobacco’s Btomorrow Ventures leads $25.4M Series A for Vancouver, Canada based cannabinoid biotech co. Trait Biosciences

For the cannabis industry, these examples demonstrate what multinational corporations look for in an acquisition and investment target, intellectual property and operations in federally legal jurisdictions.

Nextleaf Solutions (OTCQB: OILFF | CSE: OILSOTCQB: OILFF | CSE: OILS) has been issued over 80 patents globally including 15 U.S. patents and validates its technology through its operations in Canada, the world’s largest federally legal cannabis market, where patent rights can be both enforced and leveraged over their 20-year lifespan. Nextleaf is one of world’s largest cannabis patent holders and is focused on remaining asset light and IP heavy.

Video of Emma Andrews talking about Nextleaf’s growing CBD business

The Patent Wars Have Begun

“Despite marijuana’s illegal status in most countries, the patent arms race for cannabis has already begun. Seven of Canada’s top ten cannabis-patent holders are multi-national pharmaceutical companies, including Ciba-Geigy, Pfizer, GW Pharmaceuticals, and Merck.”  – Sterne, Kessler, Goldstein & Fox

A critical catalyst for IP focused cannabis companies arrived in dramatic fashion during the last days of 2020. On December 22, 2020 Canopy Growth (TSX: WEED, NYSE: CGC) filed the industry’s first cannabis patent infringement lawsuit, against GW Pharmaceuticals (NASDAQ: GWPH) pertaining to its patented C02 extraction process.

The lawsuit validates the value of IP in cannabis. With the U.S. inching towards federal legalization, experts believe U.S. patents will become as integral to cannabis, as they are to the pharma and bio-tech industries. The lawsuit is a positive development for Nextleaf (OTCQB: OILFF | CSE: OILSOTCQB: OILFF | CSE: OILS) , which owns one of the largest portfolios of cannabis patents after companies like Canopy Growth and GW Pharma.

May 2021: Despite the lawsuit, Jazz Pharmaceuticals (Nasdaq: JAZZ) acquired GW Pharmaceuticals (Nasdaq: GWPH) for $7.2 billion USD.  GW Pharma owns 57 U.S. patents and is one of the largest global cannabis patent holders. 

In 2019 Nextleaf became the first publicly traded company to be issued a U.S. patent for industrial scale extraction and distillation of cannabinoids. Since then, Nextleaf currently owns 15 U.S. patents and has strategically amassed over 80 patents issued globally in countries like the United States, Canada, Mexico, Israel, across Europe, Australia, New Zealand, Columbia, Brazil, and Asia.

Nextleaf has a 99% success rate obtaining issued patents from its pending patent applications, compared to averages of less than 50% for life science companies. 

Nextleaf’s patents cover what its team of Ph.D chemical engineers and scientists  believe are the most efficient methods for producing high-purity THC and CBD distillated oils. In the race for IP development and patent issuances, Nextleaf owns one of largest patent portfolio of any cannabis company in the world. Firmly ahead of many of the industry’s larger, more well capitalized cannabis companies.

The next wave of M&A and investment in the global cannabis industry is in full force and targets IP-rich companies. Validated technology that can be immediately commercialized will be essential as larger markets like the U.S. federally legalize. To get a head start, some of the largest tobacco companies in the world are starting in Canada.

British American Tobacco (LON: BAT, NYSE: BTI) announced a strategical investment in Organigram (TSX: OGI, NASDAQ: OGI) for 19.9% equity interest.

Further evidence validating the value of IP and the expert’s theory that large multinational companies are eyeing cannabis companies with IP and patents operating in federally legal jurisdictions as M&A targets, arrived when BAT and OGI announced their agreement. As part of the deal, a Center of Excellence will be established in Canada so the companies can share and collaboratively develop IP in a space that will also allow them to globally commercialize their products and technologies.

Source: MJ Biz

Nextleaf Solutions (OTCQB: OILFF | CSE: OILSOTCQB: OILFF | CSE: OILS) has positioned itself to be appealing to suitors by focusing on developing disruptive IP around the extraction of standardized CBD and THC molecules. Add in the recent M&A activity and it is not hard to imagine the company as a prime target for a takeover attempt by a large multinational company looking to acquire one of the largest global patent portfolios in cannabis.

Through automation innovation, Nextleaf Solutions (OTCQB: OILFF | CSE: OILSOTCQB: OILFF | CSE: OILS) is playing a leading role in revolutionizing extraction and purification to enhance cannabis oil economics across the globe.

Currently, most cannabis oils used to infuse edibles, beverages, topicals, and other non-smokable forms of cannabis is extracted using off the shelf, small-scale Co2 extraction equipment. This less efficient technology is at the center of the patent infringement lawsuit on GW Pharmaceuticals put forth by Canopy Growth.  

The two primary problems for cannabis and hemp processors that rely on Co2 extraction are:

  1. The process stops at a less refined crude oil causing undesirable flavor and smells due to the chlorophyll, fats, and waxes that aren’t removed initially.
  2. There is no ability to efficiently scale production, leading to a significantly higher cost of producing CBD and THC oils produced using this and other off the shelf extraction methods.

Nextleaf’s automated, closed loop extraction plant is 8-10 times as efficient as most traditional Co2 extractors.  

Nextleaf’s patented technology and economies of scale rely on automation that is simply nonexistent in off the shelf technology like Co2 machines or other alcohol extraction methods. This advantage enables the production of a truly standardized, high purity distillate at a fraction of the cost.

Advantages of an Asset Light, IP Heavy Model

Nextleaf believes it has developed the most efficient method of processing cannabis biomass into THC and CBD molecules. By strategically patenting its technology in emerging jurisdictions such as the U.S., Mexico, and certain European countries, Nextleaf has a speed to market unlike many of its peers.

While other Canadian companies invest millions in cash and stock in hemp-CBD companies, Nextleaf will be able to operate themselves or find partners through IP licensing in these markets without the fear of litigation for using inferior technology. 

Protecting the process of producing a high-purity, cannabinoid-rich distillate is the first step, but developing and protecting formulations for THC and CBD products is just as important.  

Nextleaf owns two high-profile patents around the production of THC and CBD prodrugs known respectively as THC-O-Acetate and CBD-O-Acetate. The patents issued in the United States and Canada enable the production of a more potent analog of THC and CBD, an alternative option to experience the unique medicinal benefits associated with targeted drug delivery. Nextleaf’s Canadian patents around these specialty molecules represent the best opportunity with the fewest barriers to entry for pharmaceutical firms. The U.S. patent may be the key that unlocks its billion-dollar business potential.

The industry is pivoting from the vertically integrated business model to a more sustainable approach featured in most established industries. Example: Coca-Cola does not grow its own sugarcane; it purchases the ingredient from a supplier.

That’s why the undervalued, asset light, IP heavy Nextleaf Solutions (OTCQB: OILFF | CSE: OILSOTCQB: OILFF | CSE: OILS)  stands out.

This is what has landed Nextleaf on many analyst watchlists:

  1. A focus on one part of the cannabis supply chain
  2. Automated, proprietary, closed loop extraction technology
  3. Technology to transform failed crops of cannabis or hemp into a standardized high purity product
  4. Formulations to manufacture a patented and standardized THC and CBD derivative with therapeutic potential
  5. Supplier of vape pens, CBD oil, and bulk ingredients for ingestible products
  6. Continual innovation: Nextleaf has applied for its psychedelic dealer’s licence to replicate its success with cannabis patents into psychedelic patents

Nextleaf Issued Its 15th U.S. Patent, Plans to Develop IP for Psychedelic Mushroom Extraction

The largest cannabis markets in the world are preparing for legalization. It is no longer a question of if markets like the U.S., Mexico, and Europe legalize, it is a question of when?

The election in the U.S. suggests the U.S. will legalize cannabis this term. On Dec 2nd, 2020 the United Nations rescheduled cannabis. As a result, the UN greenlighted medicinal cannabis and the European Commission announced CBD would not be regulated as a narcotic.

Nextleaf Solutions has outperformed the world’s largest companies when it comes to developing issued patents and intellectual property around the extraction, distillation, and delivery of cannabinoids. Validating its I.P. in Canada before the U.S. is a federally legal jurisdiction is an advantageous strategy to attract large multinational corporations waiting for that specific catalyst and is a key driver of market cap in the next oil boom!

Register and download the company’s special investor kit to learn more about the world’s most innovative cannabis extraction technology company, Nextleaf Solutions (OTCQB: OILFF | CSE: OILSOTCQB: OILFF | CSE: OILS)

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