Canadian companies are racing to get an edge in the new frontier of the cannabis industry — which does not involve the leafy green plant at all.
An increasing number of licensed producers and biotechnology firms are moving towards synthetic production of THC and other cannabinoids in a lab, using ingredients such as sugar and yeast, eyeing the potential to produce these active compounds more cheaply than traditional cultivation and extraction.
CannTrust Holdings Inc.'s chief executive Peter Aceto said the Vaughan, Ont.-based licensed producer has a short list of biosynthesis companies that it is in active conversations with, which could result in either a partnership or acquisition.
"We do believe that cannabinoids will be created through biosynthesis, whether it's yeast or sugar or other compounds, at scale at an extremely low cost... And do expect to be investing in that space in the not-too-distant future," he said.
Canada is on the verge of legalizing the next-generation of cannabis products such as edibles and topicals in the coming months, which will allow the industry to tap a broader range of consumers who aren't interested in smoking dried flower.
In turn, the demand for cannabinoids and isolates for use as an ingredient in consumer products is expected to grow "exponentially in the coming years," said AltaCorp analyst David Kideckel.
Synthetic cannabinoid production has the potential to disrupt the cannabis industry supply chain, he added in a recent note.
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