High Quality CO2 Cannabis Extraction – Interview with Pete Patterson Chief Operating Officer of Vitalis Extraction
As the demand for cannabis is increasing at unsurmountable rates, so too are its extraction methodologies, and one company is taking extraction to a whole new level setting the bar at an all time high.
There are many great solvents out there for different reasons and methods to extract cannabinoids and other oils from other biomasses. We love CO2 because it is clean and safe, it has low operating costs and is a highly selectable solvent which allows the operator an immense amount of flexibility when it comes to how and what they want to extract. In an ever-changing market and this dynamic industry, this flexibility is very important for businesses to have, says Chief Operating Officer & Co-Founder, Pete Patterson.
Pete is responsible for the people behind Vitalis Extraction Technology, a renowned industry-leading CO2 extraction technology, and leads Operations, Finance and HR in a day-to-day capacity.
In 2015, at the time of company inception, Vitalis had a goal of manufacturing one machine per month, the team now produces two per week and has machines and offices on four continents.
Under Pete’s guidance, and in just three years, the company has grown to 100 employees with year-over-year growth of 154%, making it the largest global manufacturing business servicing the cannabis industry so we’re glad to be able to share a bit more on how Vitalis has carved an industry standard. Here’s what Pete had to say:
[Q.] How did your company get its start in the industrial extraction industry?
[A.] Vitalis got our start through identifying an industry need and solving it at a high-level. Joel and I were doing work in the private equity space and James was doing work in the oil, gas and mining industry.
We recognized a remarkable need for industrial equipment – something reliable and responsive for precision extraction from intelligent manufacturing.
Being customers first, we saw a need for certifications and compliance in order to provide products and services that didn’t already exist at the maturity level companies needed. After reaching out to James for the initial manufacturing we found the desire to go industrial-scale and do our own manufacturing and not outsource, from that spirit Vitalis Extraction Technology was born.
[Q.] What backgrounds do your founders have that have contributed to their passion and desire to grow in this specific niche of the cannabis industry?
[A.] Our co-founders are made up of three diverse and passionate entrepreneurs – James Seabrook, Joel Sherlock and myself, Pete Patterson.
Our Chief Technology Officer, James Seabrook leads our Engineering, Application Science and Quality divisions of Vitalis. James holds a degree in Mechanical Engineering and before Vitalis, worked in the oil and gas industry. James is responsible for conceptualizing of our world-renowned systems and continues to build out best in class extraction solutions.
Our Chief Revenue Officer, Joel Sherlock has extensive investment and business experience. Joel studied Finance at the University of British Columbia and Harvard Business School. He has advised and led many successful start-ups and leads the Sales and Marketing departments at Vitalis. Joel is constantly travelling the globe, elevating the Vitalis brand and contributing as a thought leader in the extraction space at conferences, events and investor relations meetings all around the world.
I am the Chief Operating Officer here at Vitalis and like Joel, also have extensive investor and business experience. As COO, I concentrate on building the team behind Vitalis, leading Operations, Manufacturing, Finance and HR. I completed my MBA from Royal Roads University and hold a specialization in Management Consulting. Prior to starting Vitalis, I ran the national operations for Ricoh Canada, overseeing a $100-million-per-year business. Now after 3 years of running Vitalis, we have grown our team to over 100 employees, making us the largest global manufacturing business servicing the cannabis industry. .
[Q.] What benefits do you all see to CO2 extraction versus the other available solvents that many extractors use as well?
[A.] There are many great solvents out there for different reasons and methods to extract cannabinoids and other oils from other biomasses. We love CO2 because it is clean and safe, it has low operating costs and is a highly selectable solvent which allows the operator an immense amount of flexibility when it comes to how and what they want to extract.
In an ever-changing market and this dynamic industry, this flexibility is very important for businesses to have. Take for example this vape health crisis; harmful additives and metal toxicity are the suspected culprits associated with VAPI. Additives are being utilized to reduce the viscosity of some oils, while also adding flavor profiles.
Metal toxicity may be sourced back to either the hardware used in production and consumption (generally from the illicit markets); or, contamination may be occurring at the extraction level through the use of hydrocarbons. One of the many benefits of using carbon dioxide is that you don’t have to add anything to your oils to make it vape-able. On top of that, CO2 is a safe and clean solvent, so you don’t have to worry about contaminating your end product.
Finally, you can retain the general terpene profile, allowing for an enjoyable flavor profile. When I’m looking for a vape pen, I’m searching for CO2 oil made by a Licensed Producer. I stay away from vape cartridges filled with distillate as those products will almost always have some sort of additive.
[Q.] What inspired you to move internationally after starting operations in west coast Canada in Kelowna, BC?
[A.] Our customers are always our biggest motivator. As a Canadian organization, we find that Canada is a gateway to the globe for many industries, including the cannabis industry.
Being the first G7 nation to legalize cannabis for recreational use, the Canadian industry has reached a level of maturity beyond many other markets. The Canadian Licensed Producers have also led the expansion into other countries. Our customer who has equipment in Ontario, Canada, expects the same level of service for their new equipment in Denmark, for example.
It’s our responsibility to ensure our customers have total support, wherever they decide to place the equipment.
[Q.] Why do you all maintain such a focus on attaining seals, certifications and standards awards on an international scale?
[A.] We’ve had phone calls from Licensed Producers saying “we bought a piece of equipment from company x, and our local Safety Authority will not let us plug it in, it’s nowhere near compliant. How soon can you get me a Vitalis?”
Unfortunately, this is happening globally, and far too often. This industry is always moving and ever-changing. It is only going to become more regulated. It’s completely unconscionable to sell a piece of equipment with no regard for local codes and compliance.
Vitalis is not in the business of selling one machine at a time, we’re in the business of developing long term, successful partnerships with our customers.
[Q.] What current markets do you operate in across the world and where is your company eyeing entry in next?
[A.] North America, South America, Europe, the Asian Pacific, and more to come. We’re looking to continue to expand and support these existing markets. Currently we have prospective eye on Africa and the general Asian market as those areas continue to mature.
Vitalis has established a great foundation in North America and Europe as a strong global leader due to our steady focus on standards and certifications while deploying a Vitalis Service team in every market we enter.
[Q.] What differences do you see across the rules, regulations and commonplace activities in the different geographic markets you’re in?
[A.] Speaking to commonplace activities first, we see a very common flow to the maturation of each geographic market. Generally, the new market opens up medical applications first. We’ll see cultivation establish along with medical-distribution programs, typically with a focus on flower at first.
The patient base starts to grow, then we see the introduction of different forms of products as they demand it. Once the market establishes a well-defined cultivation program, and there’s inventory being created, we’ll see the extraction market start to grow. During this time, we’ll hear rumblings of adult-use or recreational programs along with the continued increase in extracts/concentrates consumption.
The United States is not so different from Europe, in my opinion.
From a macro perspective, both are large geographic markets that are experiencing a high level of political fragmentation. There are some broader unifying rules and regulations; however, each State (US) or Country (EU) are defining their specific protocols for rolling programs out.
The EU is exciting because we’ll see cross-border commerce which will create a more dynamic market than the US, and some interesting manufacturing opportunities (centralized vs. distributed).
In the Asia-Pacific markets (Australia & New Zealand), we find conditions very similar to that of Canada but just a little further behind in their legislation. As far as South America the differences in rules and regulations that we see vary greatly country by country, but, more of a focus on exportation, rather than internal consumption.
[Q.] How do you feel you’ve been able to grow to have the most deployed machines internationally and where do you see this stat being in the next 5 years? 10 years?
[A.] We see this clearly as 3 contributing factors:
- Designing and manufacturing exceptional equipment. The Vitalis extraction systems are re-defining CO2 extraction as a reliable and fast process that produces concentrates of superior quality. Keep an eye out for some new product launches that are going to completely disrupt various segments of the market.
- Focusing on certifications and compliance. We began our business by investing here, and continue to make tremendous investments into ensuring a Vitalis piece of equipment is compliant, globally.
- Putting the customer first. This is a small industry, and there’s no room for sub-par service. From the moment someone calls or emails Vitalis seeking information on our equipment, to the many years after deployment, people will always have an exceptional experience working with Vitalis. It’s in our DNA. We’ve hired the best people, and they’re dedicated to providing an exceptional customer experience.
What does the future look like. Well, New Frontier Data recently reported estimates that the current addressable Global Cannabis Market (regulated and illicit) is currently valued at $344.4 billion.
Numbers vary a bit on the exact size of the 2018 global, regulated market, but let’s say it was between $10 billion USD and $15 billion USD. Over the next decade, that number is expected to grow 10x as the regulated industries capture market share away from the illicit markets. We all have a lot of work ahead of us. Regulations and compliance are only going to be more rigorous and enforced more strictly.
Europe is setting a new pace for compliance with EU-GMP, which requires pharmaceutical-level manufacturing. This is going to be very beneficial for the industry as a whole. The demand for new tech will continue to develop and the incumbents have a choice – disrupt or be disrupted.
[Q.] How does a cannabis-related company that doesn’t actually sell the plant end up in a place with almost 100 employees?
[A.] We As of September 2019, we are now over 100 employees. Our ability to grow externally and internally comes back to ensuring we have the right team in place to adequately support the industry today and tomorrow.
We manufacture our own equipment, and as an OEM, it requires more people. As discussed earlier, we have a good contingent of people dedicated to quality, compliance, and regulations. We also have a sizable engineering team who lead our research and development efforts.
We always sell directly to customers and service our equipment globally and directly; therefore, we do not have distributors or service contractors. We have a global footprint to ensure that every interaction, all our customers feel comfortable and indoctrinated into the Vitalis family that we’re so proud of.
Vitalis Extraction Employees
[Q.] Why are you so open sharing about your personal education and processes in an industry where businesses pride themselves on their proprietary information and processes?
[A.] Because we are far more concerned about ensuring transparency for our customers so they can make the right decisions. It would be very easy to horde our secrets for proprietary gain, but rather than focusing on looking behind us and protecting what we have, we’re looking at development for the future.
Future products, future development, and future opportunities are what keep us competitive and keep us relevant; harping on the past only keeps our minds in that area and that is not where we need to be to succeed moving into the future. Buyers are too sophisticated; the industry has changed so much, and the “hide information” approach just won’t work anymore.
Thanks for speaking with Cannabis Magazine Pete!
My pleasure to be a part of this!