Neptune Wellness Solutions is a company at the heart of the upcoming cannabis product offerings; extraction. I had the chance to interview Jackie Khayat, who is part of the team that pivoted Neptune from exclusively producing krill oil, to extracting and producing cannabis products for their customers. Jackie is now VP Business Development at Neptune, and is charging ahead, forging exciting deals with major producers and technology providers, ensuring Neptune is at the forefront of the global cannabis extraction industry.
JK: My journey into cannabis is a result of a business pivot from Neptune. We’ve always been a b2b natural products company, helping well known brands in the natural ingredients space create concepts. We have a manufacturing plant in Sherbrooke Quebec, and about 2 years ago we were producing exclusively krill oil out of that factory. It was a very competitive, low growth market. We were seeing a lot of competition coming out of Asia so we looked at opportunities to divest and we saw cannabis as a significant opportunity for us.
When we decided to divest out of the krill business, we sold our intangible assets such as IP, patents and trademarks and used the proceeds to retrofit our existing plant so that it is dedicated entirely to cannabis Extraction Manufacturing.
My personal journey in the industry is interlinked with my colleague Mike who is the President of our cannabis division. He’s the person that brought the idea to the company, and I was one of the first ambassadors who thought that it was a really amazing idea. However, being a public company and having a traditional background, we needed to sell the idea to the management team and investors.
Absolutely. There was a concern that it did not fit our company vision of being a producer of wellness products.
When we proposed the idea, legalization hadn’t happened yet, but we were fortunate to have a colleague who is our head of regulatory based in California. She helped us put our business case together, and was also an early ambassador for our divestiture into cannabis. Being physically in California and seeing how the regulations and the market were evolving, she had a very strong voice in building a case that we could present to convince our management and board of directors that cannabis was a massive opportunity. We realized along the way that perhaps we weren’t comfortable with recreational cannabis, but there was a lot that we can bring to the market as a company in terms of wellness.
Wellness is the vision and mission of Neptune. We don’t want to promote smoking because it doesn’t fit with our brand, and as a result our focus is on oils and extracts, which are safer and healthier ways to consume.
No, we work with LP’s to process their flower and trim into extracts and different product forms. (Editor’s note – Neptune just inked deals with Tilray and The Green Organic Dutchman). We’re always looking at how we can bring more science and more robust and standardized formulations to our clients. For example, we’re seeking to understand why people are consuming and we want to be able to deliver the effect they are looking for. So for example, if you’re a woman or a man taking cannabis to help you sleep, you want to be able to depend on the product you’re taking to be consistently effective.
Our DNA is extraction, purification and formulation, so we’re simply bringing our decades of expertise and skills to the cannabis industry. When people visit our facility, meet our QA teams and see the level of our standards and procedures, they are very impressed.
We needed to be licensed in order to touch the substance, so we applied for and obtained a processing license, not a cultivation license.
Early on, the focus was on cultivation, and now it’s all about processing as the next wave of legal cannabis products such as edibles and concentrates are coming to market. There are currently about four to five established and licensed cannabis processing companies in Canada.
Absolutely, all of those product forms are based upon extractions. Typically, if you have the raw material you can do a crude extract which is the first step in the process. You may still have things in the crude that you do not want so you can do further post-processing to ensure you have a cleaner, higher quality oil. You can also isolate down to the very molecule. For example, if a client wants THC only, we can isolate down to that specific cannabinoid.
Yes, we can do as little as a crude extract or as much as turnkey product forms ready to go to retail. It all depends on the customer and their needs. Quite a few companies are now looking for a partner like us to outsource several of their product needs such as encapsulation. We’ve licensed a capsule technology, the Licaps™, that’s the best in class capsule with a capacity of up to 200M a year. We’re the only company that can offer this superior capsule solution to the Canadian market on such a large scale. We’re also working on other forms such as powders, tincture oils, vape pens, and we’re looking at getting underway with co-development in terms of topicals.
I was running the nutrition side of the business, helping with krill oil and formulations for big brands, so I had a knowledge base that was relevant to the cannabis industry. I help LP’s bring the right products to market, and having done this for years in the wellness industry in different delivery forms, whether it’s a liquid, a capsule or another product, I can leverage this experience to help clients succeed.
I have a strong interest in cannabis and I think it’s a phenomenal plant. I was an early ambassador because I believe in its wellness properties. I’m very excited to see how things shape up, and happy that we are taking a part in shaping the industry.
My role is to develop long-term partnerships with either customers or technology partners. With customers, we typically work on big projects that might include extraction, purification, encapsulation or packaging. As for technology partners, we are always interested to find technologies that are differentiated and can be beneficial to our customers.
Do you produce any products specifically for women?
Right now our customers are not asking for products to be developed specifically for women. With the exception of a few brands such as Eve & Co and 48North, I haven’t seen any mainstream brands develop products for women. I do however think that with the new product forms coming online in the fall, that will change.
The uncertainty. Building something from scratch can be tough. There’s a lot of risk. We embark on projects, and we build business cases based on a ton of assumptions which we need to validate further. It’s hard to predict. We are starting to see real data which will help get a better handle on how much actual consumption is happening and help better understand customer preferences.
When building a new industry like this you need to make bold decisions and you need to take risks. This is not for everyone. In many companies or industries, people don’t have the opportunity to make bold decisions nor take a lot of risk. Their decisions are based on facts and history and they typically grow their business through organic growth and acquisitions, but there’s not always opportunity for entrepreneurship.
You need to be very passionate and bold. You need a ton of courage, especially if you’re a manager in a public company. If things go sideways and you aren’t seeing results as fast as investors may want, managers are definitely in the line of fire, so it can be stressful. We put in a lot of hours, a lot of effort and a lot of dedication. If you are someone who wants to create history, this industry is for you.
It’s not only in the cannabis industry that this challenge exists. We still don’t have enough representation of women on boards. Companies need to take a stance and make this change. We’re very proud at Neptune to have two women on our board. Also, women underestimate their capabilities. I think women should be bolder but also leverage their compassionate, emotionally intelligent side to become a powerful force in corporate leadership.
I stay very active both mentally and physically. I play soccer twice a week. I meditate and I do yoga. I eat very well – good nutrition is a fundamental part of my lifestyle. I graduated with a degree in nutrition, so it’s important for me to avoid junk food and stay active. And I consume cannabis once in a while, of course!