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Future commercial cannabis production might have no use for the natural marijuana plant.

Building multimillion-dollar greenhouses or cultivating vast fields of marijuana crops are currently the only ways of producing cannabis at a large enough scale and a low enough cost to be economically viable. Yet, just as scientists eventually found a way to stop raising pigs to produce insulin, researchers are now aggressively trying to recreate the active ingredients found in cannabis flowers that most consumers ultimately crave.

“Cannabis is a commodity, so the question is what is the quality and what is the price you can produce at to position yourself in the long term to have the winning technology for producing the highest quality at the lowest price,” said Jason Kelly, co-founder and CEO of Gingko Bioworks.

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In September, his Boston-based company won a US$22-million contract from Toronto-based cannabis producer Cronos Group to investigate new ways of producing cannabinoids – such as THC or CBD that produce its psychoactive and therapeutic effects – by altering the molecular structure of brewer’s yeast. That process is already commonly used to create products such as rose oil without having to grow roses, or insulin without having to dissect a pig or cow pancreas, though it has never been successfully applied to cannabis.

“You need the yeast to be reprogrammed, we need to put new code in the yeast genome that gets it to produce the cannabinoids alongside all the other things it is doing and it needs to produce it at a high enough level that we get it at a lower price point per kilogram than what you would get out of the plant,” Mr. Kelly explained. “That is the whole game, [because] once you get that, the nice thing is it is totally scalable.”

His deal with Cronos could ultimately be worth as much as US$100-million, since Gingko is due to receive set amounts of Cronos stock based on achieving certain milestones. The ultimate goal is to produce a kilogram of pure cannabinoids for less than US$1,000 at a scale of more than 200 litres, which compares to the current cost of anywhere from US$5,000 to US$20,000 to produce a kilogram of pure cannabinoids by growing and processing plants into oils.

Of course, Gingko and Cronos are far from the only ones racing to realize the economic potential of producing cannabinoids without having to physically grow plants. Barely one week after Cronos and Gingko announced their partnership, New Brunswick-based cannabis producer Organigram announced a $10-million investment in Montreal-based Hyasynth Biologicals with a nearly identical goal.

“Everybody is still at the scientific stage of this stuff for starters,” said Kevin Chen, Hyasynth’s co-founder and CEO. “We might be the ones that are closest to actual production fairly soon, [but] until that happens people are just talking about what they can do.”

Much of Organigram’s investment is being allocated to Hyasynth’s first production facility, Mr. Chen said. While he hasn’t settled on a location, or whether to use an existing third-party manufacturer, he expects to have a profitable facility online within the next five years.

“The real benefit of this technology also comes with scale,” said Mr. Chen, “so once you can show that you’re close to being profitable at a small scale you are golden.”

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In the race to find the winning genetic formula for yeast that can produce cannabinoids at scale, however, Mr. Kelly argues Gingko will get there first. Most of his company’s facilities – which it calls “foundries” – employ a significant degree of automation in hope of maximizing the efficiency of the guess-and-check process.

“The whole reason we invented the platform at Gingko is because unless you can get enough shots on goal, enough designs, you can fail at these projects,” Mr. Kelly said. “It is a race in that someone is going to pull it off first, but there will be plenty of people who are going to try and not succeed, it is not an inevitability.”

There will always be at least some demand for smokable cannabis flower, but someone will eventually find a way to efficiently produce its coveted cannabinoids without having to cultivate the plant. Whether that ends up being Gingko or Hyasynth or another outfit, others can be expected to follow quickly as the industry evolves beyond what may soon be seen as the old-fashioned cannabis plant.

“I think there is a real opportunity where you might just have all your cannabinoids made through fermentation. My expectation is that is where this ends, but in terms of timelines, if you can nail the economics you can scale very fast… maybe even just a few years to meet worldwide demand,” Mr. Kelly said.

“That is where the industry is going to end up, I mean, we don’t get insulin from pigs anymore.”

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