CO2 Gro Inc (CVE:GROW) (FRA:4O21) VP of Business Development Sam Kanes discusses the company’s recent trials which are getting traction in the marketplace. Sam goes on to share his thoughts on CO2 Gro’s potential in the cannabis space.
James West: Hey, welcome back to Midas Letter Live. My guest this segment is Sam Kanes. He’s the Vice-President of Business Development – and I almost gave you a promotion there – of CO2 Growth Inc, trades on the CSE under the symbol GROW, very appropriate. Sam, welcome back.
Sam Kanes: Nice to be back, thank you.
James West: Sam, recently we saw an announcement from your agro-industrial partner, one of your CO2 spray trials, and testing on hydroponic growing. What was the outcome of that?
[stock_chart symbol=”GROW:TSV” align=”left” range=”1Y”]Sam Kanes: We’re in the process of trialing. They’re from Ottawa, they’re called The Growcer. They’re getting traction in the marketplace – they started in the Arctic, where you could pay $20 per head of lettuce in the winter from California delivered through Fairbanks to Tuktoyaktuk, or grow your own! And there’s a high cost of power up there also, and so the idea and the economics of creating triple-pane glass grow containers is what The Growcer started with, and now they’re looking towards much larger markets south of the Arctic Circle. And we’re hopeful to basically be part of their offering, and so they are proceeding to trial varying spray, misting, fogging mechanisms with us, and will keep doing that at their research labs in Ottawa for probably the rest of the year.
James West: Okay. And so you recently also heard some news from Health Canada?
Sam Kanes: We did. It was partially encouraging – there’s a number of sections in Health Canada that relate to cannabis, and we’ve been waiting patiently with other LPs that collectively have 15 million square feet of greenhouses –
James West: Wow.
Sam Kanes: -Under construction or already operating, willing to trial dissolved carbon on their plant leaf to stimulate additional growth. So what we received from PMRA, which is the Pesticide Management Regulatory Agency, is a conclusion that we are not a pesticide, herbicide, insecticide, fungicide – and that had to be done first -and that you’re likely a water fertilizer or just plain water. And so we have now moved forward with CFIA, Canadian Food Inspection Agency, who are responsible for Canada’s Fertilizer Act to regulate fertilizers.
Some things blend across the table where a pesticide could also be a fertilizer or vice-versa, or you blend them together. So the rules for cannabis are intertwined with PMRA, CFIA, as well as the specific office we’re most interested in hearing from: the Office of Medical Cannabis, that banned all foliar spray of any nutrients and additives other than water.
James West: Hmm. Sounds like the government’s configured it for maximum confusion.
Sam Kanes: There is a process, we understand it, we respect it. I wish it was faster; we could have started six months ago. We first filed six months ago with what we thought was Office of Medical Cannabis for an exemption, and we know the process now to the finish line, and they’ll have to determine whether or not improving the safety of workers in greenhouses – which is part of what they’re responsible to do. Health Canada, the MRA, Fertilizer Act, Office of Medical Cannabis, human health is at the top of their list, and we believe using foliar spray of dissolved carbon is safer, because you’re only going to use half of the amount you’re using now, and are going to be more effective at growing plants quicker and larger.
James West: Mm-hmm. So one of the reasons to trial this, apart from the human safety component, which is almost elementary given that this is only carbon dioxide dissolved in water, is the effect on the quality of cannabis as defined by its terpene and cannabinoid content.
Sam Kanes: Yes, as well as THC. So our first independent lab work is now only two to three weeks away; we are budding. We know we have bigger buds and more of them; what we don’t know yet is their quality. And we have ideas on how to improve quality if need be through additional nutrient packages. We are working with St. Cloud State University on that, because you just can’t add carbon to a plant without – and it could grow a lot faster, but it’ll grow a lot hollower, if you may. It needs the equivalent nutrition; we all do, with multivitamins. You just can’t use Vitamin A and think you’ve covered all the bases of growing up healthy.
But that’s down the road for a second or third trial to get it right in terms of optimization. First trial in biomass is clear to us already; we’re highly confident we can grow a lot more biomass, and more buds, and more of them, but we will know our scientific data probably about three or four weeks out now from local labs in terms of analyzing three different strains.
So we went with an Indica strain, Sativa strain, and a hybrid called G-13 as the three strains in our control group, and a CO2 spray group, if you may. So we’ll be testing all six of those buds against each other, and weigh where we go from there, but the weigh scale will work in favour of adding carbon onto plants.
James West: If you were a betting man, how soon till you think until Canadian LPs would be allowed to use this as a CO2 beneficiation process?
Sam Kanes: Well hopefully it’s about 50/50. At the end of the day, we’re just making Perrier for plants. And we’re drinking Perrier every day by the billions of gallons, Pellegrinos and draft beer that’s pumped up with CO2; we’ve all concluded that CO2 is benign, as not just individuals drinking carbonated water, but also the fertilizer Act has exempted, the Canadian Food Inspection Agency has exempted, adding carbonation to water as an exemption. It’s not an additive, they’ve exempted it. So it’s in writing for all to see.
So what we’re doing is carbonating water; if they’ve exempted it in their act, then presumably this will be the last straw we have to go through in terms of being able to use it as foliar spray on plant leaves.
James West: Okay.
Sam Kanes: For those that want to trial it.
James West: Sure. If we took the 10 biggest LPs in Canada and they all used your product, what is the dollar value of the product that that would be on a top line basis for one year?
Sam Kanes: Well, to them it would be $5 billion of growing buds, and we’re convinced so far that we can add another $1 billion to that per year.
James West: Okay, so that’s a pretty big umber.
Sam Kanes: Well, that’s 100 percent usage, but let me clarify how usage will work. We don’t bother putting any carbon on during budding or even flowering; all we’re doing is growing up juveniles much faster to adulthood, at which point we stop usage. At that point, once you’re into your harvesting area, your plants do not want any more carbon whatsoever. And so we’ll allow these big LPs to tailor the first half of their growth cycle, which is called vegetative state, to grow up bigger, stronger, better, and then back right off. And so we’ll only be working about half the greenhouse room if you may, for the juveniles to get to be bigger, stronger, and faster to maturity.
James West: Sure. Now, you’ve got your programs, your trials sort of happening in Canada that you’re moving towards. But in the US, you’ve got a lot more going on.
Sam Kanes: No, not yet. We’d love to. Right now in Michigan we have, in Kalamazoo, it’s like our Niagara Falls of flowers, if you may, and about to be cannabis, one of our master growers lives there. He’s been a 30-year veteran grow consultant, and he’s trialing right now on 30 different varieties of flowers and strawberries; we let him do that because that’s his expertise. Flowers are pretty expensive, if you know what Mother’s Day costs for flowers, Valentine’s Day.
James West: Sure.
Sam Kanes: So that’s a high-value crop to us. But we’re focusing down now to cannabis; lettuce, which we’re much more experienced with; and micro-greens. We’re going through multiple rounds of that, and that’s plenty to do for the rest of the year.
So Michigan for flowers, the overflow in their medical cannabis. Illinois is more advanced, and we’ll probably do Illinois trials from Kalamazoo. Colorado is where we’re going to be next outdoors; we’re finalizing our timing about two weeks out for that. They’re going to connect with California outdoor growers, and it’s outdoors we’ll have a bigger impact, we think, because there’s no other way of adding carbon onto plants outdoors that we can see so far.
James West: Sure. All right, let’s leave it there for now. Again, Sam, it’s a fascinating technology, and it’s why we’re going to follow with interest. Thanks again for coming in.
Sam Kanes: Thanks a lot for having me, Jim.
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