Jun 19, 2018 2:45 PM

Robotic cranes, genetic libraries and activated oil: How the cannabis industry is redefining hi-tech

At first blush, the Canopy Growth Corp. operation in Smiths Falls, Ont., doesn’t look especially high tech. The building is an old industrial pile that used to be a Hershey chocolate factory and it was until recently at risk of being demolished.

But today, past the tastefully decorated lobby and the biosecurity barriers, the factory’s rooms are full of bright green marijuana plants under even brighter white lights, with little irrigation hoses snaking in between the pots.

It looks like what you probably think a marijuana grow-op should look like, but then Jordan Sinclair points out “the birdhouse” hanging from the ceiling, in a room where no bird should ever, ever be.

Sinclair, Canopy Growth’s communications director, calls it a birdhouse because that’s roughly what it looks like, but it is actually a sensor monitoring humidity and temperature.

Once you notice the first sensor, you’ll find them everywhere in the cannabis industry, doing vital work and producing reams of data as companies try to scale up for legalization later this year.

As that day approaches, Canada’s marijuana companies are becoming known for developing best practices for a nascent industry that, if they do it right, could leave them well-positioned to dominate around the globe.

A lot of the work almost seems common sense. Plenty of growing practices are borrowed from other forms of greenhouse agriculture, pharmaceutical production and plain old manufacturing.

Figuring out how it all fits together takes work, but the basics of cannabis production are fairly simple.

Large “mother” plants are grown to provide cuttings that turn into genetically identical baby clones. The clones are allowed to rapidly grow — like a weed — under those bright lights with plenty of water and nutrition.

Once the plants are big enough, the light cycles are changed to trick the plants into believing that summer is turning into fall. The cannabis plants flower in anticipation of winter, and those flowers contain high levels of tetrahydrocannabinol, better known as THC. The buds are harvested, the growing room is cleaned out and the cycle then repeats.

But at every stage of the process, Canopy Growth uses data to refine the process, such as tweaking light cycles or nutrients in the soil, to maximize potency and yield.

“Really, what we want to do is move the needle on how much poundage we can pull out of one room,” Sinclair said. “I remember really well the first time we cracked 100 pounds out of a room. And now, if we came under it, it would be a big internal review process of how that happened, because the norm is to pull well over 100 (pounds) out of every room.”

Companies such as Canopy Growth are also working hard on selective breeding to refine the genetics of their cannabis plants, further pushing up the yield and enhancing the desired end effects.

Industry players talk about companies that will set themselves apart in the future by having distinct “genetic libraries” of marijuana strains.

Canada’s marijuana companies are developing best practices for a nascent industry that could leave them well-positioned to dominate around the globe

There are more signs of innovation further down the production cycle. For example, there’s the lab where Canopy Growth is experimenting with new edible products, including some sort of marijuana-infused beverage.

“Can we do it so that one is carbonated and looks and feels like a beer?” Sinclair asks. “Can we do one that can compete with traditional wine categories?”

In another area, he asks that cameras be turned off so that he can show off the “coolest” thing: a production line that will put activated cannabis oil into softgel pills.

Cannabis is especially sticky, Sinclair points out, which is a nightmare for running it through manufacturing gear.

“We don’t want it on camera because we don’t want our competitors to see what we’re doing,” he said. “But these are processes that are being used in other industries to encapsulate things in gel caps. You know, a vitamin E capsule is not a game-changing technology, but it’s innovative, and it was really hard for us to apply all of that to cannabis.”

Medical marijuana clones sit on shelves at Canopy Growth Corporation’s Tweed facility in Smiths Falls, Ont. THE CANADIAN PRESS/Sean Kilpatrick

There’s no clear roadmap for how to do corporate-backed production, so the industry is being forced to make it up as it develops, which is giving rise to a generation of cannabis startups that support the big producers.

In Boulder, Colo., Front Range Biosciences Inc. is growing cannabis “tissue culture” — essentially making tiny marijuana clones out of tissue samples in a lab.

In Toronto and Vancouver, Resolve Digital Health Inc. is using software to try to refine the dosage for medical patients. And Ample Organics Inc., which just moved into larger office space in east Toronto, is selling a system of barcode printers and scanners, plus the software to stitch it all together, that tracks every plant and every gram of marijuana produced from “seed to sale.”

Ample Organics chief executive, John Prentice, boasts that 75 per cent of the licensed producers in Canada use the Ample Organics kit.

The kit is most useful in helping producers meet the rigorous inventory management regulations mandated by Health Canada, but a happy side effect is that it creates even more data for producers to analyze.

Prentice said he expects companies will start using data and machine learning to try to track customer trends, which, in turn, can drive production decisions.

But it’s not just cannabis that interests Ample Organics. The same tracking software could be used to improve food safety, for example, or help car companies track down customers in the event of a recall.

“We have the technology to do this everywhere,” Prentice said.

Others have also caught on to the notion that innovation in the cannabis industry could spin off into applications for other industries.

For example, Hound Labs Inc. in Oakland, Calif., said it has built a working breathalyzer that can detect THC in a person’s breath in the critical few hours after smoking cannabis.

Co-founder and chief executive Mike Lynn, who is also an emergency room physician, said Hound Labs is looking to test its device in the field with law enforcement partners later this year. He said it wasn’t easy to find a way to detect THC in breath.

“It’s literally in your breath, like, in parts per trillion, which is akin to putting 20 Olympic-sized swimming pools together and looking for one or two specific drops of water in all those pools,” Lynn said.

Aside from the obvious applications for impaired driving, Lynn said developing such a sensitive device opens up all kinds of other possibilities.

Two people hold a modified design of the Canadian flag with a marijuana leaf in in place of the maple leaf during the “4-20 Toronto” rally in Toronto, April 20, 2016. Canada is poised to legalize marijuana use soon. Mark Blinch / THE CANADIAN PRESS

“If you have lung cancer, for example, your body is shedding all kinds of potential markers for that lung cancer,” he said. “Or maybe you’re taking drugs for other diseases and maybe there’s ways to monitor whether those drugs are effective for those diseases.”

A lot of other startups are also being driven to serve the cannabis industry, so much so that it can be hard to tell who’s peddling truly innovative new products, and who’s just trying to get in on the gold rush.

Sinclair, at Canopy Growth, said he expects to see the first cannabis bankruptcies later this year, and the biggest risk comes from supporting businesses.

“In any sector, if you’re in a startup mode, the most popular question you’re asking yourself is: Are people going to like this product? In cannabis, we already know, right? People like cannabis,” he said.

“On the ancillary side of the business, that question has not yet been proven out. If people are in a startup phase and they’re trying to prove a product that is a service or a tech or an add-on, they really have to figure out what the needs are for the people who are going to be buying that, and that’s going to be the big producers.”

Nevertheless, the result of all this activity has people in the industry talking about Canada as the launching pad for companies with a worldwide vision.

For example, Edmonton-based Aurora Cannabis Inc. is building big with global growth in mind. A phone interview with chief corporate officer Cam Battley gives a sense of the industry’s frantic pace: the only time he was available to chat was a Sunday afternoon and, over the course of a 45-minute interview, he paused at least a half-dozen times to fret about how many emails were coming in.

The company is building Aurora Sky, a high-tech marvel of marijuana production that sounds more like a pharmaceutical factory than an agricultural facility.

The building is designed to have a slightly higher air pressure than the normal atmosphere outside so that if there are any leaks, air flows out through the holes, thereby keeping contaminants from getting in. People never go into the production rooms where the plants actually grow.

“It’s all completely automated, so when it comes time to harvest, we have automated robotic cranes that go and pick up entire tables and take them out of the growing bay, into the harvest area,” Battley said.

We're combining technologies to an extent that has never been done before
Cam Battley, Aurora's chief corporate officer

The robotic arms in the facility have some nifty tricks up their sleeves, too. Their ultraviolet and near-infrared cameras scan the plants for any kind of stress, from pests to infection, that might prevent the plants from producing optimal flowers. The cameras can pick up on problems even before they are detectable by the human eye.

“We’re bringing in innovative technologies wherever we can, some of which we don’t speak about publicly because it’s a competitive advantage,” Battley said.

“We’re combining technologies to an extent that has never been done before. At Aurora Sky, once it’s fully operating, it’s going to be the most advanced and automated agricultural facility in the world.”

The Aurora Sky facility has a modular design and was built using the same type of materials that will go into the company’s planned million-square-foot Denmark facility — the idea being to position Aurora as a global leader.

Both Aurora and Canopy are already selling into Germany’s fledgling medical market, and they’re both counting on continued growth in the coming years.

“Most people are paying attention to consumer legalization (in Canada) because it’s such a big deal and it’s a major social change. And it is a big deal. It will take the market from 300,000 patients with a prescription to several million — probably five to seven million Canadians,” Battley said.

“But take a look at Germany, for example. That’s a country about two-and-a-half times our population, about 82 million people. And Italy, about 60 million people. They’re just at the outset of creating their medical systems.”

With their technological innovation, proprietary genetic strains and growing experience, Canadian companies are hoping that other countries will follow Canada’s lead by initially allowing the sale of medical marijuana and then perhaps entering full-blown legalization.

If that happens, these pioneers could have a competitive edge in global competition for years to come.

Financial Post
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