How to extract contours from .jp2 DEM dataset?

This will be a little long-winded but I’m including all information I consider relevant.

Problem:

I have received a data set from a municipality that is a 3-layer LiDAR JP2 DEM and need to extract ground contours at 1 m intervals for a specified area (more below).

Programs available:

• QGIS 2.18 Las Palmas with LASTools add-on installed.
• GRASSgis 7.4.4 with GDAL.
• Civil3D 2017.
• Land Desktop 2004.

Additional Information:

I normally work with LiDAR in .laz/.las formats and use LASTools through QGIS to extract the ground points with laszip and then create a .tin for use in Civil3D through Recap360 (.rcap import).

I can load the .JP2 DEM into GRASS with a proper spacial reference (UTM20), but it comes in as a 3-layer raster map with color naming being the only difference (R/G/B)

When I run r.contour to create a vector layer capable of being exported to .dxf, the returned vector polys are very noisy and unusable. I’ve tried a cheap work-around by increasing the minimum points required per contour but it’s still unusable. I’ve also tried exporting the DEM .jp2 into a gtiff file but it’s unrecognized by Civil3D (Civil3D takes .dem, .tif, .asc, .txt, and .adf for surface creation, but seemingly won’t take a gtiff).

Assumed solutions:

• I need to first merge the 3 band of scans, then extract the ground contours through vector .dxf, or
• Combine the 3 bands and export as a singular .dem to be directly imported into Civil3D, or
• Combine the 3 bands and export as a .shp, import .shp into LandDesktop, and then use the auto-created .tin file directly in Civil3D.

Any help is greatly appreciated. I can also upload the .zip of the scan to a cloud storage if someone wants to try their hand directly (it’s public non-proprietary LiDAR set), but would like to know the solution regardless as I will likely need to do this again in the near future.