Cannabis firm Cronos inks $122 million deal to produce lab-grown cannabinoids

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(This story has been updated to include Ginkgo’s partnership with Bayer.) 

Canadian cannabis producer Cronos Group has tapped Boston-based Ginkgo Bioworks in a $122 million endeavor to biologically engineer a wide range of cannabinoids found in cannabis.

Under the deal, announced Tuesday, Ginkgo, which creates customized microbes, will work exclusively with Cronos to research and design microorganisms capable of producing cannabinoids.

It’s not the first such partnership for Gingko. Last year, the company struck a deal with the German pharmaceutical and life sciences giant Bayer to create a microorganism called a “plant microbiome” for use in the agricultural industry, according to Forbes.

According to a Cronos news release, many pharmaceutically relevant cannabinoids are present only at very low quantities in the cannabis plant. That makes them economically difficult to extract at high purity and scale.

By genetically engineering certain strains of yeast, Gingko will set out to create a method to produce cannabinoids through a fermentation process that’s part of its organism design platform, according to the release.

“The potential uses of cannabinoids are vast, but the key to successfully bringing cannabinoid-based products to market is in creating reliable, consistent and scalable production of a full spectrum of cannabinoids, not just THC and CBD,” Cronos CEO Mike Gorenstein said.

Under terms of the deal, Ginkgo will receive $22 million from Cronos to cover research and design. If the firm is successful in producing the target cannabinoids, Cronos will issue up to $100 million in common shares in tranches as Ginkgo reaches certain production milestones.

Cronos is traded on the Toronto Stock Exchange and the Nasdaq under the ticker symbol CRON. Ginkgo is a private company.