Giving PEI Potatoes a Run for Their Money
Advanced Extraction Systems, Inc.
In 2012, David Campbell co-founded a company in the little province of Prince Edward Island, Canada called Origins Xtractions Limited that focused on making equipment for the nutraceutical, pharmaceutical, and biotechnology industries. At the time, cannabis was not legal, but he suspected that someday it would be.
Meanwhile, manufacturing equipment to extract oils from things like shellfish gave the company time to perfect its product: high-pressure, high-quality, carbon dioxide (CO2) fluid extraction gear.
When the law started changing in Canada, it was the perfect time to move into the cannabis and hemp industry. In 2015, Campbell and partner Peter Toombs formed Advanced Extraction Systems Inc. (AESI), using the same type of fluid CO2 extraction equipment used in their previous business.
Its first sale gave the company an early jump start because it was to the largest cannabis company in the world: Canopy Growth Corporation. At the time, it built the largest system in the world to process cannabis. This project took the company from manufacturing one litre systems to ones that would hold up to seventy-five litres of material.
When the company started, its goals were simply to make the best gear on the market, while never sacrificing and never cutting corners. It was important that customers were getting the best in reliability, performance, efficiency, and long-lasting gear. That was the way Advanced Extraction Systems chose to differentiate itself.
Today, those goals remain the same but are just happening on a much larger scale. Several months ago, it premiered the biggest CO2 supercritical fluid extraction (SFI) system in the world for cannabis and hemp which can process up to 3,600 kilograms a day.
Its target customers are government regulated licenced producers (LPs) primarily based in Canada; however, because many customers have expanded into other countries, the equipment is being implemented worldwide. Currently, it has a couple of systems in production for overseas as well.
Twenty-three employees are currently on staff, most of whom are heavily weighted toward the science and engineering side of the business, meaning that the company has had no shortage of qualified individuals to develop its product. Their biggest challenge in that area is to find specialized sales staff.
Once the company finds the right people to join its team, it takes great care in ensuring they remain the right fit for the close-knit group.
“One of the things that make this company different on the inside is that it’s completely team-oriented, so from the top down, all the way back up, everyone works together, and everyone has fun on a daily basis, so they feed off each other. They learn from each other,” said AESI Director of Sales Michael MacDonald.
In fact, since Advanced Extraction Systems opened its doors, its retention rate has been pretty close to one hundred percent. “PEI is a real hotbed for biotech and pharmaceuticals, so there is a lot of talent locally, and we’ve been fortunate enough to kind of field and retain some high-level employees,” said MacDonald.
In an industry where the company could be faced with controversy or public opposition, MacDonald explained that it has experienced just the opposite. “The provincial government is incredibly supportive of us here,” he explained. “They are looking at the biotech market as the next big thing, so it’s created a lot of jobs and boosted the economy, so it’s incredible support we get from the local government.”
The business community as a whole has rallied around the company as well, and it was recently awarded the by the Greater Charlottetown Area Chamber of Commerce for 2018.
In addition to government support, AESI also attributes much of its success to fostering good relationships with its customers, suppliers, and partners.
“Partnerships are very important to our business. We like to say our customers are our partners,” said MacDonald. “It’s not like walking into a shoe store, where you buy your shoes and never see that customer again. We’re talking to our customers on a weekly basis. We help our customers grow, and they are constantly coming back for upgrades.”
Advanced Extraction Systems has formed some significant partnerships with other businesses as well, including a recent deal to be an official partner of Diversey, the largest hygiene and cleaning company in the world. This partnership resulted in the creation of a revolutionary, new cleaning process and clean-in-place (CIP) system for the CO2 extraction process for the hemp and cannabis industry. This process means that the interior of the process equipment can be cleaned without having to be disassembled.
The company is anticipating profits of $20 million this year. Due to its rapid growth, it has had to construct a new facility in Charlottetown to accommodate the manufacturing of the massive systems required for the hemp market.
The state-of-the-art facility, which is expected to open in September 2019, will be 10,000 square feet. The building was constructed using good manufacturing procedures (GMP), which means having a quality system in place to ensure that when the product comes in the door, it is handled safely and properly, makes its way through certain processes, and exits the way it should.
The look of the facility is similar to a hospital, meaning it is very clean and white, like walking into a laboratory, and there is no rough manufacturing done on site. All grinding and welding will be outsourced, so only the assembly and intricate piping will be done in the facility.
With all of this growth come a few challenges, one of which is that the company manages its success with an appropriate rate of growth. “Now that we are going global, we’re making bigger and bigger systems, so it’s ensuring we manage that and maintain our current customers while reaching out to new potential ones as well,” said MacDonald.
Another challenge is the volatility of the U.S. market. Even though cannabis is legal in thirty-one states and hemp has become legal federally, it is still an issue because of its association with cannabis. Within Canada and most places worldwide, it is not an issue, but the U.S. is a substantial market for the company, so that is one of the biggest issues it faces. It does not let the challenges slow it down, however, and just keeps looking for opportunities.
“We just got back from the World Cannabis Congress in Saint John, and we were the only equipment manufacturer there out of 750 attendants, and it was invite-only,” explained MacDonald. “There were C-level employees from all over the world, and we were literally the only equipment manufacturer, to give you an idea of our presence in the industry.”
He went on to explain that because the company is designing massive hemp systems which are basically an entire facility, it sees opportunities for its systems throughout the equatorial countries that have the optimal agricultural conditions for growing outdoors.
“New countries are coming online all the time for cannabis and hemp, so there is opportunity all over the world, and for a lot of these third-world countries where there is not a lot driving the economy, growing this product outside will give their agriculture industry a big boom by supporting local farmers and creating an export market,” said MacDonald. “The whole world was watching Canada, and now that they see that there has been no issue and that we’re passing new laws to expand, more opportunities will come online.”
As the cannabis industry evolves, Advanced Extraction Systems is excited for the opportunities the future will bring. “One year ago, the market was comprised of about eighty-five percent of revenues generated by flower, and it was only about ten to fifteen percent extracts, so we’re somewhere in the middle of a shift,” said MacDonald.
“Up until Oct 17, 2019, when the Canadian government will allow the sale and manufacturing of extract products – anything from pharmaceuticals, like drugs to CBD water, cannabis beer, suckers or gummy bears. All of those things will be legal here in Canada, which will really open up the market because of our type of equipment: equipment that extracts oils from cannabis and hemp. So we’re looking to totally inverse, and the market will be eighty to ninety percent extracts and ten to fifteen percent flower or dried marijuana that you smoke.”
With all the exciting challenges and opportunities happening for this company on a global level, Advanced Extraction Systems’ roots are firmly planted in the famous red mud of Prince Edward Island.
“Every salesperson is going to tell you their product is the best. It doesn’t matter what store you walk into, 99.9 percent of the time they are going to say they are industry leaders or that their burger is the best or this is the best pizza on earth. That’s what they’re there to do, but we truly are top in the industry,” said MacDonald. “There are very few companies out there that can do what we do at the level we do it, and we’re very proud of the fact that we’ve become an industry leader all from right here on little old PEI.”
Maybe that means that perhaps one day the island’s famous potato industry may be soon be eclipsed by another type of bud.