The cannabis industry is projected to exceed $50 billion by 2026, according to Cowen & Co., driven by the legalization of medical and adult-use cannabis throughout the United States.

While most companies are focused on cultivation and retail sales, there are some companies focused on making the industry safer, better, and more efficient. The techniques pioneered by these companies are becoming increasingly necessary to help the industry scale to meet demand.

Segra International Corp. is a pioneer in micropropagation, also known as plant tissue culture, which is designed to help cultivators increase their yields, reduce harmful pathogens, and ultimately help scale production to meet growing medical and adult-use demand worldwide. The company plans to go public later in 2018.

How most cannabis is grown

You might think of seeds as the natural starting point for growing plants, but growing a plant from a seed takes a long time and each resulting plant is different.

Large-scale commercial cannabis cultivators prefer to use clones, or genetically identical plantlets, derived from mother plant cuttings or other methods. By cutting a healthy lower branch, placing it immediately into water, and transporting the clone into soil, these cultivators can grow genetically identical plants. The clones have a much shorter growing window than plants derived from seeds, while each plant has identical cannabinoid and terpene ratios.

The problem is that this approach is labor intensive and requires a lot of physical space to maintain mother plants. This space for mother plants and cloning could otherwise be used for production and generate revenue if not required for nursery operations. In addition, mother plants have a finite lifespan and are more susceptible to pathogens as a result of their long residence times.

Any clones derived from a pathogen-carrying mother plant will have the same infections and carry those into the vegetative and flowering stages of production. All of this means that the current process is not efficient, safe, or scalable and could lead to complete crop (and strain) loss in the event of an uncontrollable pathogen outbreak - a cultivator’s worst nightmare.

Why Micropropagation?

Many traditional agricultural crops have faced these same issues, but they have managed to effectively scale using a tissue culture technique known as micropropagation.

Micropropagation is a method of plant propagation using extremely small pieces of plant tissue taken from a carefully chosen and prepared mother plant, and rapidly growing these under sterile laboratory conditions to produce new plants.

Most plantlets produced this way are sold at the rooting stage when the plantlet is ready to be acclimated the final growing environment. Commercial cannabis cultivators can purchase these plantlets and acclimate them to their unique growing environment before moving them into the main greenhouse. This process takes very little time compared to the time it takes to grow a plant from a seed or clone a plant from cuttings from a mother plant.

Gaining traction among LPs

Many licensed producers are embracing tissue culture techniques and micropropagation as a way to dramatically lower their costs, reduce the risk of pathogens, and ensure the best products for patients and consumers. In fact, LPs can effectively increase their productive square footage by five to 20 percent by eliminating the space that was used for mothering plants. They can also avoid pathogens without the use of pesticides, creating cleaner and safer products.

Segra International recent partnership with The Hydropothecary Corporation (TSX-V:THCX) is a perfect example of these benefits. Under the terms of the deal, Segra will provide its expertise and unique tissue culture techniques to help the licensed producer scale up its operations to meet market demand in Canadas upcoming recreational market this summer. The partnership is expected to rapidly scale into millions of plantlets per year.

Working with Segra will allow us to meet one of the biggest challenges as we meet the demand for cannabis products across Canada and beyond, balancing quality and quantity in our cannabis production, said Hydropothecary CEO Sebastien St-Louis. Thanks to Segras plant tissue culture technique, we will scale up our production process while maintaining the industry-leading quality standards that have made us so successful.

Looking ahead

Segra International Corp. is targeting a major pain point for licensed producers and is developing micropropagation labs to deliver tens of millions of plantlets to LPs across Canada. The company plans to go public later in 2018.

Segra’s world-class management team includes Director of Tissue Culture, Dr. Sma Zobayed, a leading specialist in plant tissue culture with two patents related to the subject and over 50 published scientific papers; Chief Marketing Officer, Ian Davidson, who founded Davidson Organics, one of the largest cultivators in California; and, Chief Operations Officer, Ryan Tiberti, who has developed, built, and operated several multi-million dollar cannabis firms in the U.S.