Isodiol eyes Canada as key market for CBD products
About two years ago, as start-ups and investors jockeyed for space in the potentially-massive market for legal marijuana, a small group of entrepreneurs in California and Canada saw an opportunity that had nothing to do with getting high.
While the recreational marijuana market became increasingly crowded, the entrepreneurs noted few companies were making sophisticated products with cannabidiol (CBD), a non-psychoactive compound found in hemp.
“None of these (CBD) products get you high,” said Soheil Samimi, who was part of the original group, and is now a director of Isodiol International Inc. “We thought this was a niche segment that would be interesting to focus on.”
As awareness about CBD grew, Isodiol saw its profile and revenues spike significantly, with more than $20 million in global sales in the 2017 fiscal year, and on pace for doubling revenues in 2018.
“What we foresaw as being a niche market is starting to be viewed as, potentially, even the bigger market — compared to THC,” said Samimi, who is also president of Isodiol’s Canadian division.
“We’ve had a very, very fastpaced growth … our principal worry is how to set up the supply, the logistics and everything that’s getting products ready to hit the shelves.
“It’s not as much, ‘Is there going to be a demand for it?’ ”
Isodiol makes a suite of CBD-infused skin creams, capsules, tinctures, topical pain gels, vape juices, and various beverages, including water and energy drinks, as well as sleep shots. They’re sold in jurisdictions around the world where CBD is legal, and the company is eyeing Canada as a key market after cannabis is legalized in October.
“It’s going to be huge,” said Samimi. “We certainly don’t take for granted a business that’s always hard-earned in North America.
“But generally speaking, day-to-day, we’re a lot more focused and worried about continuing to build the infrastructure and the distribution and the logistics and all of those things, so that we can be positioned to fulfill this massive demand that’s coming.”
It’s possible to extract CBD from hemp by immersing the plant in oil or alcohol, but Isodiol has a more complicated process that uses super-cooled carbon dioxide to dissolve CBD and extract it with up to 99.9 per cent purity.
Isodiol is unique because in addition to its own finished goods, the company makes a CBD isolate that is certified as an active pharmaceutical ingredient (API). This isolate can be used as a raw ingredient by other companies that want to formulate products containing pharmaceutical-grade CBD.
A growing number of Canadian licensed cannabis producers are signing supply agreements with Isodiol in order to import this API CBD isolate into Canada.
“We are one of the largest providers of bulk cannabidiol and also provide private label services to basically make finished products on your behalf, for your own brand,” said Samimi.
“And so that has positioned us right now in a really good leading position in Canada, and we’re really excited about the changes in regulations that are coming, because it enables us to actually put the products into the marketplace.”
The size of the Canadian market will depend on the extent of additional regulation changes after cannabis is legalized.
Isodiol, along with a broader set of stakeholders, including hemp farmers and industry associations like the Canadian Health Food Association, is hoping to see regulations that would see CBD fall within Health Canada’s guidelines for natural health products.
It’s believed this would significantly broaden and expand distribution possibilities for CBD products.
“It would allow grocery stores, for example, to have CBD pain creams in the same aisle as regular creams, or CBD beverages in a regular fridge at the convenience store,” said Samimi.
“So beyond just the authorized cannabis sales channels. It would make it a lot wider in terms of how the THC-free products could be governed under the Natural Health Product Act.
“This is hopefully the trend that we see come, as further regulations are enabled in the industry.”
In addition to Canada and the United States, Isodiol has a significant presence in the United Kingdom, Brazil and Mexico. It already distributes into Europe through its U.K. facility, focused mainly on Germany, Austria and Switzerland, said Samimi.
“Europe is exploding at this time, with favorable regulations enabling a boom in overall cannabidiol demand. We are also doing some major investments in Asia as well,” he said.
“We’re right now expanding and building a large facility in China through which we can produce up to about 2,000 kilograms of raw CBD isolate per month … so as you see, this is very quickly becoming a global game.”
Isodiol is also in the process of securing Licensed Dealer status under the provisions of Canada’s Controlled Drugs and Substances Act, and has built a 10,000 square-foot licensed facility in Abbotsford, B.C.
Licensed Dealer status would give Isodiol the right to handle all cannabis derivatives; import and export oils, and isolates; prepare various formulations and mixtures; participate in research or testing activities; and conduct new product and drug development.
“We went from being a smaller private company just a couple of years ago in California with a U.S. focus, to now be, really, a multinational company headquartered in Canada,” said Samimi.
“There’s going to be a lot of demand for specialized players like Isodiol.”
“While the recreational marijuana market became increasingly crowded, the entrepreneurs noted few ... sophisticated products with cannabidiol (Cbd), a nonpsychoactive compound found in hemp.”