The lack of stable genetics is a key obstacle impeding many cannabis cultivators. This is not the case in traditional crops such as corn and soy where seed development is a critical and separate component of the value chain. Yet seed development or new
strain creation in cannabis, is frequently being done by producers rather than by specialized companies. As the cannabis industry matures, we expect it will take notes from agriculture. This includes the emergence of cannabis seed development specialists whose
patented genetics can enable cultivators to focus on what they do best while adding more predictability to their growing operations.
Today, cannabis growing operations typically rely on “mothers”. Using a technique called clonal propagation, cultivators take cuttings from the mother plant of a given strain, then plant it over and over in hopes of growing plants with identical
qualities. These clones (or seedlings) are delicate and require careful nurturing to become mature and strong. This process often results in many seedlings being lost during the maturation process.
The mother plant is a single, high-value plant typically stored in a protected room. Mothers contain genetic material with the desired characteristics of a strain that cultivators use to create clones by growing seedlings out of cuttings from the mother.
So why is clonal propagation used in cannabis production today? The answer primarily lies in the lack of inbred, stable lines. In most crops, plant breeders have spent decades—if not centuries—breeding and back-crossing (breeding to ancestors)
plants to develop inbred and stable genetics that produce seeds that look, grow, and produce yield consistently. This means that, for example, any given seed for a Beefsteak tomato plant will germinate, grow, and produce tomatoes at a predictable
rate and size.
Stable seeds are the foundation of giving consumers the same experience with a product with each use. For the most part, this consistency hasn’t yet been achieved in cannabis growing operations. That’s primarily because the path to creating
a stable genetic (and seed) is as time-consuming as it is complex. It requires rigorous breeding, patience, time, and capital to grow more than twelve generations of plants. This process is called plant breeding.
As highlighted above, plant breeding is a painstaking process that involves breeding or backcrossing a plant with desirable characteristics over successive generations to create a strain with all of the characteristics—known as traits—you
want. Desired traits could include colour, leaf size, root length, disease resistance, or different biochemical profiles, to name a few.
Once a stable seed has been successfully created, it is known as a “parental line”. You need a parental line before a breeder can begin to impart desired traits into that parental line or into new lines through various breeding techniques.
Eventually, the establishment of two parental lines will lead breeders to select new strains with new sets of desired traits. This is when cross-breeding—the cross-pollination of two parental lines—occurs. The result is
a crop of diverse offspring containing traits from both parents. Breeders will repeat this process multiple times before identifying the newly desired progeny -- the offspring or descendant of a plant -- to enter a new breeding program. From there
the cycle of in-breeding starts again, with multiple generations until the new progeny is stable.
This progeny can be considered intellectual property for a company. Upon creation of a new stable genetic line, seed companies may sell their novel genetics to growers directly, license their stable seeds to other seed companies that can further develop
them by imparting new traits, or license their seeds directly to another set of growers.
Plant breeding is a costly and time-consuming process. Despite cannabis’ relatively short growth cycle, it can take over three years from the first crop before a cultivator successfully develops a stable seed. In the industry’s early days,
investments in long-term breeding programs have typically been viewed as less appealing than shorter term, revenue generating projects.
A potential solution to the problem of slow breeding programs is one that doesn’t yet exist in the cannabis industry but is commonplace in other crops.
A plant genomic library enables breeders to explore a plant's genetic diversity. They are commonly open-access public databases run by federal agencies or non-profits, such as the National Center for Biotechnology Information (NCBI), that provide
valuable data to scientists and breeders.
In the context of seeds, a genomic library gives producers access to existing seed genetics that have been developed, stabilized, and patented by other companies. The “seed specialists”, or breeders, may be able to make modifications to
these genomes through breeding, add these modified genome sequences back into the library, and thereby allow other cultivators to license this knowledge. With all of this work being done and shared, there can be positive implications on ecology,
reproduction, morphology, and phenology of plants.
Agtech, also known as agritech, is the application of technology to improve operational efficiency, profitability, or sustainability of agricultural production and logistics.
Genomic libraries could play a vital role in opening up genetic development and seed stabilization as a viable business opportunity in the cannabis space. Companies that specialize in creating stabilized seeds may be able to patent these genetics.
This may create a steady source of revenue for agtech companies that can secure high-demand stable seeds. We think this will free many cultivators from having to make significant capital expenditures in research and development and enable them
to do what they do best: grow plants.
A variety of agtech companies exist across the agriculture industry. Some companies, particularly those specializing in crop sciences and agricultural biotechnology, patent seed genetics and then license these genetics to large cultivators. The value
of a seed is primarily derived from the combination and novelty of traits that exist within it, wherein each trait can be considered intellectual property. Having in-demand intellectual property is one of the reasons that we think plant trait
companies are compelling investment opportunities.
Canopy Rivers portfolio company, ZeaKal Inc., is one example of a company developing a novel plant trait for the agricultural industry.
ZeaKal’s PhotoSeed™ is an example of a next generation plant trait that is being optimised for row crops. PhotoSeed™ aims to address two challenging and complex areas of science:
Improving photosynthesis, and
Increasing higher value components, such as oil and protein, without sacrificing yield.
To date, these have been elusive targets for the agriculture industry. Efforts to increase oils, protein, or yield have come at the expense of one another. With PhotoSeed™, ZeaKal has enabled certain plants to harness more sunlight and capture
more carbon dioxide, translating into additional energy, and therefore more oils and protein.
A trait like PhotoSeed™ could have implications on a number of niche crops, including hemp. In hemp, the PhotoSeed™ trait is expected to result in benefits including increased yields and higher cannabinoid levels. As this happens, companies
like ZeaKal could become embedded in the cannabis (and hemp) value chain. With producers being able to focus on growing, companies like ZeaKal could become valuable partners.
Innovation in cannabis seed research is iterative and takes time. Stable genetics are a key obstacle facing consistent cannabis growing in the short term. As more traditional agriculture companies move into the cannabis space, they may encourage a shift to
modern agriculture operations, including the differentiation of seed companies and inclusion of robust genomic reference libraries.
We have already seen this take place when Syngenta joined the U.S. hemp lobbying efforts, signalling further cooperation
between the traditional agriculture and emerging cannabis industries. Stable seed genetics are already becoming increasingly important in the cannabis industry, and as the cannabis value chain continues to become more fragmented and specialized,
we think it will be key for success moving forward.
This is not an offer to sell or a recommendation to trade in any securities. This information is provided as of the date hereof. This document contains data obtained from third parties that Canopy Rivers has not independently verified. This document also contains forward-looking information within the meaning of Canadian securities law, which is based on certain assumptions. While management believes these assumptions are reasonable based on information available as of the current date, they may prove to be incorrect. Many assumptions are based on factors outside of Canopy Rivers’ control and actual results may differ materially from current expectations. Forward-looking information involves risks, including, but not limited to, the risk factors set out in Canopy Rivers’ most recent Management’s Discussion and Analysis and Annual Information Form. You should not place undue reliance on forward-looking information. Except as required by applicable law, Canopy Rivers assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances.
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