Powdery mildew, botrytis, root aphid – you seldom hear these words from cannabis CEOs. Yet according to agriculture experts in and around the industry, diseases and pests, as much as licensing and logistics, are at the heart of the shortage of legal cannabis in Canada.
“Powdery mildew is pretty much omnipresent,” said Kevin Cullum, the national sales and technical manager with Koppert Canada, which provides biological controls – insects that fight pests – to vegetable, flower and cannabis growers across Canada. Powdery mildew is a fungal disease that thrives in humid conditions and can lead to serious quality concerns and even wholesale crop loss if not managed properly.
“Eighty per cent of facilities have it in their crop, whether it’s 10 per cent [of the crop] or 100 per cent, they’re battling it,” Mr. Cullum said.
The issue of disease goes largely unmentioned by Canada’s licensed cannabis producers (LPs), most of whom are publicly traded and eager to telegraph success to the market. But behind the scenes, LPs are struggling to scale up rapidly, often inside aging greenhouses and without the horticultural management skills or genetics needed for industrial-scale plant production.
Companies that raised tens or hundreds of millions of dollars by touting their “funded capacity” and “licensed square footage,” are falling dramatically short of production targets. This has led provincial governments to slow the roll-out of retail stores, and financial analysts to cut LP price targets, pushing predictions about profitability further into the future.
“A lot of the CFOs like to put out their predictions, but we're not making widgets,” said Bill MacDonald, who leads Niagara College’s Commercial Cannabis Production program. “Growers are struggling, not because they're doing a bad job, but this is agriculture.”
Health Canada’s prohibition on using most fungicides and pesticides to grow cannabis makes things even harder.
“There’s always disease pressure. Anybody who tells you they don’t have disease pressure in their greenhouse, they haven’t run it for long enough,” said Sebastien St Louis, CEO of HEXO Corp. He said his yields took a 30 to 35 per cent hit a few summers ago, when the temperature spiked in the company’s Gatineau greenhouse.
“We’ve had every single bug you can imagine, we continuously have disease pressure around powdery mildew and botrytis, the question is how to control it. Our team has really developed great SOPs, we keep the greenhouse impeccably clean, and we have continuously improved our processes," he said.
The scale of disease problems differ from LP to LP, Mr. MacDonald said. This largely depends on the skill of the company’s horticulture team and the type of facility they’re growing in.
“If you’ve got a brand spanking new greenhouse, with the environmental controls in there, you can do a really good job [controlling disease]. One problem LPs have is in order to race ahead, they bought older greenhouses. Basically, it was ‘let's buy an older greenhouse, let's get our square footage, and then we'll build newer greenhouses after.’ But in those older, lower greenhouses, you can't control the environment as well,” he said.
In extreme cases, powdery mildew can cause wholesale crop loss. Even if the crop isn’t wiped out, the presence of fungus can increase microbial counts, impacting how the product is sold and, in turn, how much supply an LP can bring to market.
“As soon as you have powdery mildew, you can’t sell it, you won’t pass [Health Canada’s mandated] microbial counts. So you either have to run it through an extraction, which gets rid of any of that stuff, or you’ve got to irradiate it, if [the microbial count] is still at low levels,” explained Mr. Cullum.
Even though most extract-based products – edibles, vaporizers, creams – won’t be available until late 2019, a large proportion of cannabis is being turned into oil in order to salvage an otherwise unsaleable product.
Aphria Inc., for instance, turns approximately 30 per cent of the plants grown in its Leamington greenhouses into oil, said Aphria communications director Tamara Macgregor.
“Given the nature of the growing environment in greenhouse and indoor grows, powdery mildew is common to the industry as a whole,” Ms. Macgregor wrote in an e-mail, adding that the company has an enhanced quality management system, and that “Aphria products must meet all specifications prior to release for sale.”
The question about quality across the industry was addressed earlier this week by Bank of Montreal analysts Tamy Chen and Peter Sklar, who published a note drawing attention to the growing amount of “unfinished inventory” reported by producers which may not make its way to market, and could have to be written down.
“We have also heard anecdotally that some of the ‘unfinished inventory’ may include dated dried flower deemed as not competitive for the [recreational] market under certain qualitative criteria (lower potency and terpenes, smaller bud size, inconsistent colouration, etc.). We believe this is due to the learning curve associated with growing cannabis at scale as the first few harvests in a new grow area could produce lower yields and quality than anticipated,” wrote Ms. Chen and Mr. Sklar.
In the end, all indoor agriculture comes down to controlling light, carbon dioxide, temperature, humidity, nutrients and water, explained Prof. Mike Dixon, who leads the University of Guelph’s Controlled Environment Systems Research Facility and who has worked with cannabis companies. The problem in the cannabis industry, he said, is the lack of research into optimizing large-scale growing environments for cannabis.
“This plant has been illegal for almost 100 years, so it’s been devoid of being the topic of any significant horticultural management research, other than the anecdotal stuff that has come out of the basements of Vancouver for the last 50 years. That had its place; it still does in many respects. But it doesn’t translate well to an industrial scale," Prof Dixon said.
Many of the “master growers” working for LPs are highly skilled when it comes to small-scale cannabis production, where care can be given to individual plants. But industrial agriculture requires a wholly different skill set, Prof Dixon said.
“The highly-qualified personnel is the main bottleneck right now. It's not really just the science and technology requirements; it's the people who know where the on-switch is, they're so desperately few and far between.”
The other key piece of the puzzle is genetics. Over the past 60 years, greenhouse crops such as tomatoes or peppers have had their disease resistance optimized through breeding programs or genetic engineering. Cannabis, on the other hand, was bred by illicit growers more to meet market demand for smell, taste and appearance, than for its disease resistance.
“It’s such a strange thing that we have going on here, because we’ve got these multi-billion dollar companies… being built on the backs of plants that Joey selected in his basement,” said Ryan Lee, a respected cannabis breeder, who runs a company called Chemovar Health Inc., which sources cannabis seeds and genetics.
Companies need to introduce new genetics and undertake aggressive breeding programs to figure out what plants work best for a given greenhouse environment, said Mr. Lee. To date, however, many seem reluctant to do so.
“This multi-billion train is rolling down the tracks and nobody is going to put on the brakes and say, ‘hey, we need to grow different plants.’ That’s a cost sink, and the CFO doesn’t want to hear that. They want to hear, ‘50 grams a square foot,’ so just grow whatever you got and we’ll just squeeze it into this magic oil if it doesn’t look that good as bud,” Mr. Lee said.
Scientifically-robust breeding programs are starting to emerge, said Niagara College’s Mr. MacDonald, and there’s little doubt that over time growers will dial-in genetics and environmental controls to be able to grow cannabis at a massive scale. But cannabis is years away from looking like other greenhouse crops.
"Once the breeders get a hold of it, then we’re going to be five, 10 years down the road, and we won’t be quite pulling our hair out the way we are now,” Mr. MacDonald said.
In the short term, companies need to take a more measured approach to scaling up, said Jesse McConnell, CEO of Rubicon Organics, and co-founder of Whistler Medical Marijuana Corp., an indoor growing facility which was sold to Aurora Cannabis Inc. in March for roughly $173-million.
Mr. McConnell thinks greenhouse growing is the future, because “you have so much more power in greenhouse” – that’s why he cashed out of Whistler and is focusing on Rubicon’s greenhouses in Delta B.C. and across the border in Washington. But greenhouse growers need to approach cannabis like the agricultural product it is, and be realistic about what they tell the market.
"For us, it was about ramping into it slowly; we planted way less density than a lot of these other producers have planted, and we did that intentionally, so that we would have the time to properly ramp up and understand what those disease pressures are,” he said.
“Guys are scaling up in ways that a farmer would never do. But when you happen to be a junior mining executive running a cannabis shell and have never grown a plant in your life, you’re not worried about those things. You just want to press release something,” he added.