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Increasing the Bottom Line: Easy & Affordable THC Remediation

Featured Submission, Featured Submission
0 Comments| January 23, 2020

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As the cannabis and hemp markets continue to unfold, the demand for safe, clean products is rising dramatically. With varying laws across the globe and a growing concern over mislabeled, untested legal CBD products, producers must employ high-tech solutions to achieve greater purity.

Achieving clean, pure cannabinoid isolates and THC-free distillates from cannabis and hemp crude oil historically required expensive laboratory equipment, as well as the qualified staff to operate. For producers, implementing these lab-grade processing solutions has required significant initial outlays of capital for equipment procurement and setup, in combination with onerous on-going maintenance and operating expenses, each of which decrease profit margins. Additionally, these legacy systems require several processing steps, produce small quantities, are challenging to scale as production increases, and demand significant operating expenses.

Fortunately, advances in cannabinoid isolation and purification technology from Sixth Wave Innovations (OTC: ATURF) promises to reduce both CAPEX and OPEX, simplify the process, and increase yields.

A Look at Legacy Chromatography

In the early days of legal cannabis, flash chromatography sufficed as a solution for cannabinoid separation and isolation. Most cannabis producers were producing relatively small batches of cannabis extracts from manageable quantities of harvested biomass. However, factor in the rapidly expanding market of legal cannabis, coupled with hemp legalization and world-wide demand for CBD, traditional chromatography creates a production bottleneck that requires a significant amount of capital to correct.

According to data, an industrial scale flash chromatography system, that produces a mere ten kilograms, can cost hundreds of thousands of dollars just for the basic equipment. This estimate doesn’t include the cost of shipping, installation, additional accessories, staff training, consumables, or maintenance. Legacy chromatography solutions have tended to occupy a reasonably large plant footprint, not to mention the incremental costs of a dedicated Lab Technician, Chemist, or Engineer required to operate the equipment, which, according to a recent survey from the NCIA, can range from $45,000 per year to up to $150,000 per year depending on the role.

Additionally, traditional chromatography solutions have required a significant amount of pre-processing before cannabinoid separation could occur. After the initial extraction, crude must then go through a series of time and labor intensive steps including, winterization, filtration, fractional distillation, and decarboxylation. Finally, separation by chromatography comes as the final step in a series of complex laboratory processes.

For many processors, chromatography represents an significant impediment to ongoing growth, expensive to operate and difficult to scale as operations expand. The substantial costs of increasing the output of a chromatographic circuit, combined with its time-consuming, intricate technical processes, tend to generate production inefficiencies and an artificial “pinch-points” which ultimately limit the company’s ability to expand operations in response to demand.

New Technology, New Approach

Affinity™ by Sixth Wave uses patented nano-extraction technology adapted from the mining industry to target particular molecules for isolation and remediation. This ground-breaking technology provides a simple-to-use, small footprint which allows producers to easily remove THC (or any other targeted molecule) efficiently with the use of molecularly imprinted polymer beads, or MIPS. The closed-loop system allows for complete recycling of the consumables, including the reusable MIPs and ethanol solvent. Because Affinity beads are durable and reusable, the system itself inherently reduces maintenance and upkeep for producers. However, reduced consumable usage is just the tip of the iceberg in terms of cost savings offered by Affinity.

Alternative Capital

Canadian and United States banks are notoriously wary of financing legal cannabis operations. Sixth Wave has recognized this problem by offering a platform that keeps CAPEX costs at a bare minimum. For starters, the Affinity equipment platform is substantially less expensive to acquire and install than a comparable chromatography set-up. The reason for this is not only the Affinity base unit is much smaller and more efficient, but that Sixth Wave has adopted a unique cost-plus equipment pricing policy. In most cases, the company can provide its Affinity unit, fully installed, at a small fraction of the cost of chromatography.

By foregoing equipment margins and providing streamlined equipment financing, Sixth Wave intends to partner with the producer, effectively removing the up-front equipment cost barrier that tends to limit growth. With this innovative approach, Sixth Wave builds a collaberation that provides producers with an innovative alternative to traditional capital financing.

Once the system is installed and operational, Sixth Wave collects a simple, all inclusive production fee based on the amount of output per customer. This fee solidifies a mutually beneficial partnership, with Sixth Wave covering all of the maintenance, upkeep, and training necessary to keep the system operating at maximum efficiency. What’s more, beyond the significant savings in up-front equipment CAPEX, the all inclusive production fee offers substantial ongoing savings in producer OPEX, compared to legacy chromatography systems.

By largely eliminating up-front capital outlay and collecting a simplified fee based on output, Sixth Wave is just as committed to the company’s success as the producer itself. Overall, this unique, “pay-as-you-grow” approach helps keep cannabis businesses of all sizes as efficient and profitable as possible with minimal capital investment.

Lower Overall Operating Expense

Operating on a closed-loop system, Affinity doesn’t just preserve consumables, but it does so without the need for skilled staff to maintain the equipment. Additionally, the system allows for up to a 15% improvement in yields compared to legacy chromatography, thus increasing profits from the start. By providing a fast turnaround, Affinity increases inventory turnover, removing risk, and reducing carrying costs.

Affinity requires less labor and maintenance, as well as quicker scalability and better economies of scale, coupled with increased yields and a reduced overall cost of ownership. Clearly, Sixth Wave has shifted the future of cannabinoid production to help the industry meet the growing demand of the consumer market.

FULL DISCLOSURE: Sixth Wave Innovations is a client of Stockhouse Publishing.

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