Neptune Begins Commercial Production and Shipping of Cannabis Extracts

Published: March 27, 2019

Neptune Begins Commercial Production and Shipping of Cannabis Extracts

Neptune Wellness Solutions Inc. has completed initial commercial production lots and is now shipping cannabis extracts from its licensed, GPP facility in Sherbrooke, Quebec. After receiving its standard processing licence from Health Canada on January 4, 2019, Neptune completed required testing and commissioning of its Phase 1 (CO2-based) extraction installation, after which it produced its first lots of cannabis extract. Upon successful analysis and testing, the products are now being shipped and invoiced.

“The quality of the extracts in Neptune’s first production runs at our state-of-the-art facility has been terrific, and we are proud to begin deliveries,” said Jim Hamilton, President and CEO of Neptune. “This marks an important step forward in the execution of our vision to lever our decades of extraction and wellness industry experience towards becoming the world’s leader in the extraction, purification and formulation of value-added, differentiated cannabis products.”

Commencing commercial cannabis production means that Neptune will record its first Cannabis Business revenue in the current fiscal year ended March 31, 2019, adding to revenue generated by the Company’s long-standing Nutrition Business and putting the Company on a new growth trajectory.

“Generating Cannabis Business revenue is a long-awaited milestone for Neptune, and we continue to expect positive EBITDA from this business within our first year of production,” said Neptune Chief Financial Officer Mario Paradis. “With strong market demand dynamics, current firm commitments of at least 150,000 kg, and line of sight to more than double this amount of cannabis and hemp for extraction over the next three years, we are on solid ground to deliver increasing sales volumes. It is a very exciting time for our entire organization, and our production and commercial teams are fully committed to drive production and sales to our full capacity.”

The completion of investments for installation of Phase 2 ethanol-based extraction equipment remains on track for the end of March 2019, with operations planned to ramp up progressively towards a total annual processing capacity of 200,000 kg by July 2019, pending regulatory approvals. As the global market for cannabinoid products grows rapidly and the Canadian market readies itself for new, extract-based product categories slated for legalization in October 2019, Neptune has also initiated, as previously disclosed, planning for the third phase of its capacity expansion investments, which will bring its total extraction capacity to 6,000,000kg by retrofitting equipment already installed in its facility.

“Our aim is to support our partners in seizing together all opportunities that the upcoming Canadian market for edibles, topicals and concentrates offer, and in growing in step with the market opportunities afforded by the rapidly evolving US and global regulatory landscape,” Mr. Hamilton concluded.

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