Genetics Is Key To Aurora’s Future, BC Study Finds Pathogen In Illegal Canna Article

As competition drives the market, Aurora relies on new genetics to differentiate itself

The future of Aurora Cannabis Inc. could lie in a nondescript refrigerator tucked away in a humble industrial building on Vancouver Island.

Lying in a refrigerator no dissimilar to the one in your kitchen are hundreds of thousands of cannabis seeds, dutifully cataloged and stored in cool, dry conditions, which are a crucial part of the Edmonton-based company’s plan to flex its scientific muscles to help stand out from the rest of the crowded Canadian cannabis market.

Aurora’s facility in Comox, BC – called the Coast – is home to these seeds, along with dozen of cannabis tissue samples and 2,500 plants, each carefully examined to find new, unique strains that will one day cost millions of dollars said Charles Pick, senior vice president of science and innovation at Aurora Cannabis, who runs the facility on the coast.

“We have a lot of great genes to work on, but we’re already going beyond what we had,” Pick said in a phone interview. “We take plants that are already super interesting, hybridize them and can produce hundreds if not thousands of seeds.”

In a market plagued by a deluge of unmarketable cannabis, finding a unique strain of cannabis could be worth its weight in gold. Much of the country’s oversupply of cannabis is due to too many producers cultivating the same strain that was purchased from the old market and introduced into the federal system through Health Canada’s one-time amnesty program.

Jamie Blundell, chief executive officer at Segra International Corp., which develops new cannabis genetics, said the company examined about 300 cannabis products on the market, analyzed their genetics, and found that there are 40 or 50 unique strains for sale in Canada.

“These big producers can’t be the best at everything, and they can’t expect to be,” said Blundell. “Over time, companies are likely to outsource their pheno hunt, where experts will help match genetics with what they’re looking for.”

That makes finding a new strain with the right mix of high THC potency, terpene count, and visual appeal even more important for top producers, each with a similar robust seed bank and R&D program as Aurora.

The result is a dried flower product that companies can charge a premium for and grow their sales. But the space is getting tighter as manufacturers, including Aurora, move away from selling cheaper brands and focus on higher-margin products, said David Kideckel, an analyst at ATB Capital Markets.

“They compete with other, more established brands that existed before legalization,” he said in a telephone interview. “The LPs have to pursue this premium strategy, but how this will resonate with consumers who have already bought them illegally will be a big question.”

In the case of Aurora, it takes a lot of growing – and waiting – to find this new strain. The company starts with 2,500 seedlings grown from an equal number of different varieties, 80 percent of which will be put into a new growth cycle, Pick said.

These remaining plants are cloned about a dozen times and shrunk another 80 percent. The survivors are going through another strong growth cycle and if they continue to meet certain thresholds they will be sent to one of Aurora’s main manufacturing facilities for a test run before deciding whether to put them up for sale, Pick said.

It could also be licensed for sale to other producers, with Aurora getting a three to five percent royalty back on each purchase, increasing up to 10 percent for a strain with particularly unique traits like high potency or resistance to powdery mildew, Pick said.

“There’s a lot of emphasis on higher potency, so people will be looking for it because they don’t have it in their portfolio, so we’ve seen a lot of interest on that basis alone,” Pick said.

Kideckel – who maintains an “underperform” rating on Aurora stock with a target price of $ 7.50 – describes the company’s science-based approach as key to “making headway in the Canadian market,” though that is not an immediate solution for the company’s long-term development will be. standing financial problems.

“I think Aurora is well positioned to be competitive in the future, but not necessarily now as these scientific advances take time to evolve,” he said.

THE TOP STORIES OF THIS WEEK

Mississauga continues to ban cannabis deals despite the mayor’s vocal support

Mississauga city councils have voted to allow cannabis retailers to continue operating in the city. The move, which was endorsed by Mayor Bonnie Crombie, fell 8-4 earlier this week, although it has yet to be submitted to the city council for a final vote. A study released by the city said that approving the sale of cannabis in Mississauga would result in $ 74 million in sales, offering “new opportunities for small businesses” and likely additional cash for the city’s coffers. Approximately 100 to 150 illegal dispensaries operate within the boundaries of the Peel region, which includes Mississauga. About 70 percent of the city’s residents are in favor of opening cannabis retailers, Crombie said in a tweet. Meanwhile, in southern Ontario, Tecumseh, Essex County councilors voted to allow cannabis retailers in the city.

In a recent study, BC finds a pathogen, arsenic, in illegal cannabis

What’s in your illegal cannabis? Lots of bacteria, pathogens and arsenic, according to a research report from the British Columbia’s Cannabis Legalization and Regulation Secretariat. As part of the study, samples of 20 dried flower products were taken from the illegal market and checked whether these samples are considered salable and meet the regulated consumption standards. Of those 20 samples, only three met the criteria for sale, the study found. Only two samples contained no pesticide residues, a frequency that is considered “abnormal” when compared to legal cannabis. “Don’t buy illegal cannabis because you don’t know what’s in it and it could be contaminated,” UK Public Safety Secretary and Attorney General Mike Farnworth told reporters.

TGOD sells Quebec facility for $ 27 million – after spending $ 229 million on construction

Green Organic Dutchman Holdings’ $ 229 million Quebec facility – mired in cost overruns and construction delays – has been sold to Cannara Biotech, both companies said in a statement. TGOD sold the facility for $ 27 million – which originally had an annual production capacity of 185,000 kilograms – but also signed an agreement to lease part of the facility back for a period of two years. Once the sale is complete, TGOD will repay $ 31.8 million in debt to its senior lender. Canaccord Genuity analyst Derek Dley said in a release that the sale will lower ongoing overheads and interest costs and the company could continue to outsource assets including its subsidiary HemPolen.

Quebec’s cannabis business posted fiscal 2020 profits of $ 66.5 million and $ 171.4 million in tax revenue

Quebec posted $ 66.5 million in profit from its provincial cannabis business in fiscal 2020, more than twice the amount a year earlier, the Société québécoise du Cannabis (SQDC) said on Wednesday. The province sold a total of 91,529 kilograms of cannabis in fiscal 2020, an increase from 46,863 kilograms sold the previous year. About $ 171.4 million in consumer and consumption taxes were collected by Quebec, nearly 30 percent of which went to the federal government, the SQDC said. Over the next year, SQDC plans to “expand its branch network and use sound management practices to control costs across the company,” without giving details.

NFL pledges $ 1 million for alternative pain research

The NFL is pledging up to $ 1 million in grants to research alternative pain relievers to opioids, including cannabis, to help better treat injured athletes. Bloomberg News reports that the NFL is particularly keen to learn more about cannabis and CBD as players have turned to the drug for pain relief. The announcement comes as some former NFL players admit that after years of injuries in their careers, they became addicted to opioids and other pain relievers. Prior to last year’s collective agreement, the NFL would normally suspend a player if they tested positive for cannabis multiple times. “When we talk about top athletes using CBD to manage pain, we want to make sure it’s number 1 safe and number 2 effective. I think we’re not there yet, “said Kevin Hill. Co-Chair of the NFL’s Pain Management Committee and Director of Addiction Psychiatry at Beth Israel Deaconess Medical Center.

Analyst Call of the Week – Desjardins previews Hexo’s third quarter results

high

John Chu, an analyst at Desjardins Securities, expects Hexo’s third-quarter sales to be around $ 36.5 million, slightly above the consensus of $ 34.5 million as of the Ottawa-based cannabis producer on Monday reported. But the most important story to watch closely is whether Hexo can continue to post positive Adjusted EBITDA after first hitting profitability in the previous quarter, Chu said. Hexo’s third fiscal quarter could also feel the impact of the pandemic lockdowns that many of Canada’s legal cannabis retailers are experiencing, he added. Truss – Hexo’s beverage joint venture with Molson Coors – will also show how initial sales of its CBD-soaked beverages in the US (Colorado only) have developed, while pot maker Original Stash Value Brand in the US is experiencing a sustained loss of market share could be a quarter, notes Chu. Other things to look out for are more color in Hexo’s acquisitions of Redecan and 48North, and any signs of the company may be looking for additional funding. To learn more about Hexo, click here.

CANNABIS SPOT PRICE: $ 5.57 per gram – This week’s price is down 0.8 percent from the previous week, according to Cannabis Benchmark’s Canada Cannabis Spot Index. At current exchange rates, this corresponds to US $ 2,090 per pound.

WEEKLY BUZZ

53%

– The number of people in Quebec who buy their cannabis on the legal market, according to the Société québécoise du Cannabis (SQDC). Exceeding the 50 percent threshold in less than three years after legalization exceeded the province’s target set in its strategic plan 2020-2023.

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