Cronos joins forces with Ginkgo Bioworks to create cannabinoids in the lab

Here’s a partnership that’s sure to ruffle some feathers. Canadian cannabis producer Cronos has just entered into a $122 million partnership with Ginkgo Bioworks, a company specializing in the creation of molecules in the lab, to genetically engineer the active compounds in cannabis.

Ginkgo, whose partners include Bayer, will work with Cronos to identify the cannabinoids the rarest parts of the plant, extract their DNA, and produce them in a laboratory. Following the announcement of this partnership, Cronos’s stock rose 16% on the Toronto Stock Exchange.

Mike Gorenstein, CEO of Cronos, said to Bloomberg that this partnership was like combining «a footrace with a Formula 1 race.» It means they’re way ahead of the pack.

Ginkgo, based in Boston, has begun working on creating scents for the fragrance industry. Just as beer is brewed, the company isolates the part of the DNA that gives roses their scent and transfers it into yeast.

«Now, when you make it with this yeast, instead of beer, rose oil will come out,» explains Ginkgo’s CEO, Jason Kelly, who holds a PhD in bioengineering from MIT. «It’s cheaper, it isn’t affected by the weather, and it doesn’t matter whether you’re in Morocco or somewhere else—it’s simply a better product.»

The technological applications for the cannabis industry are clear to Mike Gorenstein. For example, tetrahydrocannabivarin (or THCV) reduces appetite, potentially counteracting the «munchies» effect of cannabis. THCV is present only in very small quantities in the cannabis plant, making it expensive to extract on a large scale. Using Ginkgo’s technology, pure THCV can be produced in a laboratory.

«Being able to consistently and efficiently produce high-purity cannabinoids is the Holy Grail,» says Gorenstein.

Cronos will provide $22 million in funding for research and development, while the remaining $100 million will be distributed in the form of shares as Ginkgo makes progress in its research.