CO2 Gro Inc (CVE:GROW) (FRA:4O21) VP of Business Development Sam Kanes discusses how Co2 is most efficiently delivered to plants in order to maximize their growth potential. Co2 Gro have a patented way to dissolve carbon into water which helps plants grow, but also reduces wasting Co2 from other methods such as blowing it into the air. This is because the water stocks to the plant and the Co2 stays there until it is used by the plant. Sam talks about their various trials and results they’ve been observing the efficacy of their systems.
James West: Hey, welcome back to Midas Letter Live. My guest this segment is Sam Kanes. He is the VP of Business Development of CO2 Gro Inc. Sam, thanks for coming in.
Sam Kanes: I’m glad to be here.
James West: Sam, let’s start with the traditional overview: what does CO2 Gro do?
Sam Kanes: All we do is dissolve carbon into water, combining gas and water through our technology, patented, DOW Chemical originated and kept by the inventor of that technology I helped finance 18 years ago.
James West: Okay. So this is a product that’s going to enhance the growth of crop plants though the addition of CO2, but without all that CO2 getting wasted and blown out the doors when they put it in through the air.
Sam Kanes: That’s correct. The average greenhouse will go through $500,000 a year of CO2, in giant gassing towers they get from AIRELEC Heat, or Praxair or Linde, and we’re going to cut that use in half by targeting that CO2 directly on the plant leaves in water. And when we put it in water and dissolve it, it does not come out till used by the plant leaves themselves.
James West: Really. So I guess this would – I mean, you can’t use those CO2 enrichment projects for outdoor crops per se.
Sam Kanes: Well, we certainly can, and that’s the difference.
James West: You can. Right.
Sam Kanes: That’s right. So we do have outdoor trials lined up this summer in Colorado for cannabis, California. We’ve got potato trials in South Alberta and BC, in the valley. We have grape trials in Osoyoos, and we’ll be trialing – because the more dry the areas are, the more water irrigation those particular plants need, the more often we’ll be able to get our CO2 dissolved into that irrigation.
James West: So what is the difference in terms of yield over the course of yield for your average, let’s say, cannabis crop, for one that is CO2-enriched versus one that is not?
Sam Kanes: In general, if you’re in the greenhouse business, you have to add CO2 into every building, because plants are continuously consuming CO2 for their carbon needs whilst they’re awake. So those facilities have been around for 100 years using CO2 gas, and they’re averaging about 33 percent increased yield, otherwise why do it in a greenhouse environment versus outdoors? We expect to take that to 50 percent, relatively speaking, or in the case of the cannabis world, we’ll add one more grow cycle per year.
James West: Wow.
Sam Kanes: We’re in six trials now indoors here in Ontario; our most advanced one is in flowering stage. We’ll know the flower bud analysis of adding carbon about five, six weeks from now, and we’ll be using that with other folks interested in seeing what we did on incremental size. That size to date is probably about double in biomass we can grow, which is the plant leaves, the stems, to be determined how effective we have been on the actual buds, because that is the end product.
In the case of lettuce, we have grown double, beach-ball sized lettuce at University of Guelph, relative to a baseline head of lettuce in the same 28-day period as compared to gassing CO2. That was our baseline; it was not no CO2, it was gassing CO2 at 800 parts per million in their chambers.
No one wants beach-ball-sized lettuce, but if you get it twice as fast, you can grow twice as many crops. That’s exactly what we want to do in California outdoors.
James West: Right, okay. So then, what is the cost to use your product relative to the cost of enrichment through gaseous CO2?
Sam Kanes: Well, gaseous CO2, if the cost is X, it varies of course by size of facility, we’ll take that to 0.5X, because we’re targeting it directly onto leaves, dissolved, where it does not dissipate out of water unless it evaporates. You lose some in evaporation of course, because you won’t have perfect canopy coverage; it’s not spillage. Probably about 20 percent of the water that’s hitting canopy will miss, but so roughly speaking, we’ll save 90 percent of the excess gassing not required in greenhouses, plus grow an additional crop indoors.
James West: Mm-hmm. So you’re telling me that you’re using this in crops, not cannabis right now, but you’re testing cannabis?
Sam Kanes: Yes, we are. We have six trials underway. Outdoors, we expect trials in California; in Colorado, our largest one will be five acres outdoors, using overhead irrigation equipment, mobile, and our objective will be to pulse it more frequently with less moisture, to get the additional carbon on. Imagine drinking five milkshakes every morning, once a day. You’ll be bigger, but if you drink one every three hours, on a more consistent basis, you’ll be bigger and more effectively consuming those milkshakes. That’s what we do, is add a carbon milkshake to plants.
James West: Okay. So that brings me to an interesting point: is this a natural product? I mean, could it qualify, can you spray it on organic crops and still call them organic?
Sam Kanes: Yes, and so the limitation is, we have to use CO2 that’s either from an ethanol plant or a biogas plant, but not from cement, lime or coal-fires. So that’s the cut point for organic labelling, or just it directly from Praxair, AIRELEC Heater, or the guys at Air Products that sell it in these giant towers, and they’re purifying to beverage grade. So we need a beverage grade quality, and there lies our variable cost, or the variable cost for our clients, is the actual delivered CO2 itself.
James West: Okay. So I’m assuming, correct me if I’m wrong, that the IP surrounding this technology is in your ability to take carbon and dissolve it in water?
Sam Kanes: That’s right. Originally DOW Chemical technology, millions spent on it here in Canada in the 1990s by a Craig Glassford, who got to keep this research when he was let go as DOW Chemical left Canada in the Asian crisis at that time, in Sarnia.
I helped bank him in the year 2000 to file patents behind this – the gas-infusion patents, the ability to dissolve any gas into any solution, is what they have patents for, received in 2000 and 2009. The license to use those for CO2 is behind the IPO of CO2 Gro in 2012 by MacQuarrie in Calgary here. So we’ve been live, public, for six years now.
James West: Wow, great. Do you anticipate – what percentage of your business, do you think, will become cannabis-related, given the current mania surrounding cannabis around the world?
Sam Kanes: Well, the overall market for what we could potentially enhance the growth of is about $10 trillion – that’s the world of food, non-food, ornamentals, flowers, tobacco…they’re about 150 times bigger markets than cannabis is potentially going to be; from a scope scale, cannabis is puny. But, it is by far most valuable enhanced opportunity in the short term; that’s where our focus is.
James West: Sure, okay. Last question: are there any other companies or technologies that can deliver carbon in such a cost-effective way to plants, in such a consistent way?
Sam Kanes: Well, the patent we filed last summer, provided it’s granted to us, is for dissolving carbon to water to spray in a foliar mechanism; any mechanism will do – misters, foggers, sprayers, irrigation guns, you have it. To the extent that that patent is received, there’s no other patent similar to it, in the 10 million we searched. My previous CEO is a microbiologist patent attorney. So if we get that patent, then no one else will be allowed to.
But there are other ways, less efficient, to dissolve gases into solutions like Coca-Cola; they’ve been doing it for 100 years. Perrier has had it naturally, this is right in front of them to do, but they were busy making money off humans. But there were other industrial ways of squeezing carbon into solutions, it’s just we do it more efficiently, and the reason why is, it breaks down into particles that are sub-two microns in size. And that’s the trick. You have a sub-two micron size particle, it does not have the inertia to come out of water. If you saturate, that’s as far as you can go, in our case, 2,000 parts per million is what we’re capable of putting in, and most greenhouses run at 800. So immediately, we have a 2.5 times additional kick in dissolved form versus a greenhouse.
Other people do it less efficiently, but we simply have the potential patent to say we’re the only ones on the planet that can do it in, of course, respected countries for patents, we hope, that does it through foliar spray.
James West: Very cool. That’s a fascinating story, Sam. We’re going to leave it there for now; we’ll come back to you in a quarter’s time and see how you’re doing. Thank you for your time today.
Sam Kanes: Love to, James. Thanks for having me.
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