Last week, Cronos Group, one of the largest publicly traded medical-marijuana companies, announced a $122 million deal with Ginkgo Bioworks of Boston, to genetically engineer THC. And with that announcement, “weed stocks” went crazy.
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Cronos said in a press release:
“Many pharmaceutically relevant cannabinoids are present only at very low quantities in the cannabis plant, making them economically impractical, difficult or impossible to extract at high purity and scale.
The landmark partnership between Cronos and Ginkgo will leverage the expertise of both organizations to solve this challenge and make more accessible the benefits of cannabinoids in an economically sustainable way.” 1
(Ginkgo scientists can replicate the THC molecules found in marijuana plants in a lab, including specialized compounds.)
Lab-engineered cannabis will help companies increase their margins by “requiring less cultivation of actual plants, which require human tending, light, water, and climate control in order to flourish.” 2 And, since consumers are increasingly favoring non-flower ways of getting high, edibles and vaporizer oils will provide more regularity in dosage and effect. (Fun fact, when legal weed sales began in Colorado, dried marijuana accounted for 65% of sales but today that number is around 40%.)
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Since their initial public offering back in March, Cronos has seen explosive growth in the value of their stock (up 45%)- likely due in part to Canada’s vote to legalize marijuana nationwide beginning this fall.
What will be most telling for Cronos in the US is what the DEA decides to do about CBD as a Schedule 1 drug. Stay tuned.
