Cannabis technologies are spanning the supply chain, from consumer-facing services like AI-powered apps that match users with the exact strain they’re seeking to digital marketplaces that make shopping for products simpler.
But there is still quite a bit of work to be done upstream when it comes to cannabis plant science and the influx of capital backing technologies in the space is closing the gap.
Front Range Biosciences recently announced an oversubscribed insider round totaling $8.5 million from Militello Capital, Welcan Capital, AFI Capital, Phyto Partners, Harvard Business School Alumni Angels of New York, New York Angels, Sand Hill Angels XVI, Arcadian Capital Management, Halley Venture Partners LP, and Salveo Capital, and other returning investors.
The funding comes less than a year after the company announced a $10 million Series A, marking the largest funding for a US cannabis company at the time. To date, the Colorado-based company has raised over $23 million in capital.
The hemp and cannabis industries are experiencing massive growth and demand, which means that the competition to produce the best-performing, high-quality seeds is getting stiffer by the day. Front Range Biosciences is hoping to outpace the competition with the new funding to expand its Clean Stock program. The program leverages tissue culture, the sterile propagation of baby plants through duplication on a nutrient culture medium, to address problems that growers face like disease, inefficiency inconsistency, and scale.
The startup also claims that this process allows it to produce at a much larger scale due to the health and vigor of its plants. It includes documentation reflecting the testing done to ensure that the nursery stock is free from potential problems.
The capital will also be used to expand its breeding program that is seeking out varieties that meet growers’ individual needs.
“We also use traditional selective breeding and combine that together with a process called marker-assisted breeding. We leverage our understanding of the cannabis plant’s biology to improve efficiency so we can get really targeted around certain traits that are valuable to commercial growers like drought resistance, performing well in humid environments, or making sure that plants used for CBD products stay low in the amount of THC in the plant,” CEO and founder Jon Vaught told AFN in October 2018.
Although deeply focused on providing cannabis stock, it also provides clean stock for high-value crops like coffee. It partners with Frinj Coffee to provide root cuttings in its clean stock program to farmers throughout Central and Southern California.
The cannabis genome is still a relatively unexplored realm compared to other crop categories, which will likely change as decriminalization continues to sweep the US. Since Front Range Bio made cannabis investment history with its $10 million Series A, other cannabis plant science companies are starting to make a splash including ZeaKal’s $10 million investment from Toronto-based cannabis investor Canopy Rivers.
ZeaKal has developed a genetics-based technology that improves plants’ growth and macronutrients by boosting their capacity to convert sunlight and carbon dioxide into energy. It’s proprietary technology, PhotoSeed, has been tested on several major crops like soy, perennial ryegrass, and rice. With Canopy Rivers investment, ZeaKal is turning its PhotoSeed tecnology towards cannabis and hemp.
“There are few, if any, stabilized seeds in the sector so we have challenges with [crop] stability, standardization, growing outdoors,” Canopy Rivers’ Mary Dimou told AFN. These are issues that “good breeding programs” can solve, she adds, but the hope is that more advanced technologies will help cannabis catch up faster.
Deal flow is intense in the cannabis space, by her account. Dimou has a storied background in ag biotech and now directs Canopy Rivers’ investment team.
“I recently heard a stat that there are seven to eight new cannabis companies created every day in North America alone and I’m not surprised; in the short time our fund’s been operational, we’ve seen over 1,500 companies,” she explained. “The quality is more varied than agritech and because the industry is so young, there’s still so many foundational events still to come, but the quality of the entrepreneurs is becoming more and more sophisticated every day.”