In a cannabis extracting landscape where most companies operate on comparative and inefficient business models, Gaia Grow (CNSX:GAIA) stands out. Not only does the company produce isolate, distillate and finished products that are comparable in quality to its competitors, it does so at unmatched price points. We recently invited Gaia Growth CEO Frederick Pels to the program to explain the company’s processes in further detail.
The origins of Gaia Grow are quite interesting. The company originally began by applying to Health Canada as a licensed producer (LP) to become a licensed cultivator in Canada. Identifying that the market was already saturated with LPs, Gaia focused on the less-congested hemp market, ultimately cultivating approximately 4 million pounds of feedstock. What they found out next was transformative: the company quickly realized that only a fraction of the feedstock (around 3%) was actually used, and thus sought to uncover a more efficient way to use hemp—one that encompassed a heightened usability of the plant.
This quest eventually lead the company to TruExtracts Inc. and Canna Stream Solutions Ltd.—both of whom were officially acquired within the last month. Both subsidiaries offer complimentary value-adds which turning Gaia Grow into an emerging force to be reckoned with in the cannabis extraction space.
Prior to the acquisition, Canna Stream Solutions had filed a US provisional patent application in the chemical extraction of cannabinoids and monoterpenes from cannabis flower and biomass utilizing their solvent system—one that is significantly more efficient than ethanol.
While there is a compelling environmental component to the efficiencies Gaia Grow in generating through its reusable solvent technology, it’s the cost factor that is garnering the most attention. According to price points the company can purportedly achieve on a commercialized basis, the competition is about to get subverted. According to CEO Frederick Pels:
Shadd Dales: So, where are we now, like I ask as far as the extraction landscape. Because from what I understand, you are producing at a substantially lower cost. So, how big is that advantage in comparison to say, some of your commercial competitors?
Frederick Pels: It’s huge. I mean, we’re somewhere between the 20-30% of their production costs using this system… (separate Q&A) Once we’re able to give a firm price point with a volume discount to a lot of these corporations, it’s going to remove demand from a lot of our competitors in the industry. And that ultimately will show up on our balance sheet. And moving forward, I think we’ve alerted certain manufacturers of our intent to, you know, be the lowest cost producer in Canada for sure. And, you know, their ability to now sell Gaia product is on the table—and TruExtracts product—and if they want to compete, I don’t know where else there is to go.
The next step is for Gaia Grow to demonstrate its cost effectiveness on scale. Frederick Pels spells out how exactly the company plans on achieving this milestone. Once proved, Gaia should be able to substantially undershoot its competitors on output costs, which they hope will translate into rapidly increasing supply agreements, white label deals and more.
Click on the embedded link for more of our inaugural interview with Gaia Grow CEO Frederick Pels, in his own words.