Cronos, Ginkgo to create lab-grown cannabis

Why grow marijuana when you can create its most potent molecules in a lab?

Cannabis producer Cronos Group is partnering with Ginkgo Bioworks in a US$122 million deal to genetically engineer the active compounds in marijuana. Ginkgo, which counts Bayer, Archer-Daniels-Midland and Cargill among its partners, will work with Cronos to identify rare cannabinoids that appear in tiny quantities in the plant, extract the DNA and produce them in a lab.

It’s like going into “a foot race with a Formula One race car,” Mike Gorenstein, chief executive officer of Toronto-based Cronos, said in a phone interview.

Boston-based Ginkgo, which has a 100,000-square-foot lab in the city, got its start creating scents for the fragrance industry. In a process similar to brewing beer, it takes the DNA code that makes a rose smell like a rose, for example, and transfers it into brewer’s yeast.

“Now when you brew it up in that same brewery, instead of beer coming out, rose oil will come out,” said Jason Kelly, CEO of closely held Ginkgo, who has a PhD in bioengineering from the Massachusetts Institute of Technology. “It’s cheaper, it’s not subject to weather conditions, the price isn’t all over the place, it’s not different if you grow it in Morocco or somewhere else, it’s just a much better product.”

The technology’s application to the cannabis industry is clear, said Gorenstein. For example, a compound called tetrahydrocannabivarin, or THCV, acts as an appetite suppressant, potentially offsetting the “munchies” effect of pot. It appears in very small quantities in the cannabis plant, making it difficult and expensive to produce at scale. Using Ginkgo’s technology, pure THCV can be produced in a lab.

“Being able to consistently and efficiently produce high-purity cannabinoids, that’s the Holy Grail,” Gorsenstein said.

Cronos will give Ginkgo about US$22 million to fund research and development, and will issue up to US$100 million worth of common shares in tranches as it achieves certain production milestones.