Canopy vows to ‘forge forward,’ says no mold issues in marijuana greenhouses

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Image of a Canopy Growth facility

An executive at Canadian licensed producer Canopy Growth acknowledged that images circulating on social media depicting cannabis plants laden with powdery mildew were taken at its facility in Smiths Falls, Ontario.

However, Mario Castillo, vice president of manufacturing, said the photos are not representative of Canopy’s cultivation operations.

He said the plants depicted in the images had already been slated for destruction after an irrigation-system failure in a small number of rooms.

“There are quite a few fairly upset cultivation employees in our Smiths Falls facility, because it is a photo taken completely out of context. We had an irrigation system failure on Dec. 25 and 26,” Castillo said in a phone interview.

Castillo said the plants would not have passed the company’s quality-assurance standards before being shipped for sale to consumers.

“It’s unfortunate that (the release of the pictures) reflects on the rest of our employees who do a great job in our facilities and who didn’t particularly like that was put out there, out of context, for people to think that’s the quality of work that they do,” he said.

Castillo agreed to an interview with MJBizDaily to address a number of topics, including the images circulating on social media, an inspection for mold at its now-closed greenhouse in British Columbia in 2019 and the work that goes into Canopy’s pipeline of new products.

Canopy says no mold issues

The Canopy executive said the company does not have a disproportionate problem with mold at its Canadian marijuana greenhouses.

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However, Castillo said occurrences of mold are part of running a large cannabis company.

“Is it normal to have a crop that does suffer from (powdery mildew) every once in a while? For sure. That’s part of this industry. And anybody that tells you they’ve never dealt with (powdery mildew) just hasn’t grown cannabis,” he said.

“So is there (powdery mildew) that’s acceptable? I think it’s all about how you treat it before it gets to the customer. Is it acceptable for the customer to have it? No,” Castillo said.

Canopy has between 100,000 and 120,000 plants growing at any given time, plus the clones needed to sustain the network of plants and others needed for research and development.

“We have really talented people that grow our cannabis, and they’ve made humongous strides in being able to handle the pressures that they see on the plants,” he said.

The Canopy executive added that: “Beating each other up because somebody had a room that failed for mechanical reasons is not good for the industry, because it happens to everybody.

“And if everybody’s failures of irrigation, or everybody’s failure of a trial of a new genetic, was brought to light, this industry wouldn’t move forward, because you would be forced to just stand still. So, you know what, we’re not going to stand still, we’re going to continue to forge forward.”

Premium cannabis at scale?

Responding to an MJBizDaily question, Castillo said it’s possible to grow premium cannabis at scale, despite the significant problems producers have had scaling their operations.

He cited the facility in Kincardine, Ontario, that Canopy acquired from Supreme Cannabis in 2021 as an example.

The facility utilizes hang-drying, has 10,000-square-foot grow rooms and is a hybrid greenhouse.

He said Canopy also introduced hang-drying at its Smiths Falls facility, instead of tray-drying.

“We’ve also improved our moisture content and retention through a bunch of research on how much can you actually leave in the plant, as far as moisture versus water activity, and what’s that fine line between moisture content, which is what the consumer likes, and the potential for plant mold and anything else to grow.

“We’ve improved on that over the last 12 to 14 months. We’ve introduced higher-end strains, with higher THC and higher content, larger buds to denser buds and different terpene profiles,” he said.

Castillo said Canopy no longer uses a powdery mildew scale to grade the disease.

Previously, he said, Canopy developed a powdery-mildew scale, Levels 1-4, with 4 being bad and 1 barely noticeable.

By 2019, he said, the company had developed the systems and processes that took care of the powdery-mildew concerns.

Pipeline of new products

Mold issues can stem from a number of factors, Castillo said, including mechanical failures.

Mold can also flare up when a new crop is introduced, especially during the first grow.

He said Canopy is doing research and development, which involves breeding powdery-mildew resistance into new strains.

Driving that R&D is the consumer’s appetite for new, fresh, high-quality products, Castillo said.

“If we didn’t take risks, and we didn’t innovate, and we didn’t do R&D, we wouldn’t be putting new stuff into the market,” he said.

In fact, Castillo said Canopy’s R&D efforts are what allows the company to be able to introduce a new cultivar in a roughly four- to five-month period.

“That’s a competitive advantage that, unless you have the footprint, that’s something you can’t do at a smaller scale,” he said.

The Canopy executive said it can take more than a year to introduce a cultivar, so being on the wrong side of a new trend can be a major setback for any cannabis producer.

Castillo suggested that Canopy was caught flat-footed when consumer preferences shifted to higher-THC products in 2020 and 2021.

“I will tell you that I think we didn’t react quickly enough as a company to the trend of the higher THC over the last year and a half,” he said. “And maybe we didn’t react quickly enough to the premiumization of the expectation for cannabis across the board.

“But I will tell you one thing, we’re not going to get caught again, and in developing the skill set to do at scale what craft growers do is what I’m focused on right now.”

BC Tweed mold inspection

The latest mold incident isn’t the first time that Canopy has confronted the problem.

A mold issue at Canopy Growth’s now-shuttered BC Tweed joint venture in Aldergrove, British Columbia, led to a 2019 inspection by provincial health and safety officers, according to an inspection report by WorkSafeBC released to MJBizDaily via Canadian access-to-information laws.

The inspection report states that mold identified in the facility’s drying room prompted joint health and safety committee meetings on July 10, 2019, in which participants discussed the actions Canopy would take.

No penalties were outlined in the report relating to the inspection.

Canopy ultimately closed the greenhouse for other reasons, but not before taking a substantial financial hit.

“There were two complaints made regarding exposure to mold,” Castillo acknowledged.

He said the instances were investigated, and “both were dismissed.”

“It goes back to, do you expect to have (powdery mildew) or mold in a crop? The answer is yes,” he said. “It is an occurrence. It’s not something we expect to have every day.

“But it is an occurrence that can happen for many different reasons.”

Castillo said those “particular facilities … were not meant for growing cannabis. And therefore, when you look at environmental controls and conditions, it’s difficult to create the right environment.

“While (greenhouses are) being retrofitted and you’re learning to cultivate at scale, you’re going to have crops that fail. Those particular crops were destroyed. They never made it to market.

“And when we’ve had that kind of an event, they don’t make it to market.”

The executive said he’s not aware of any injuries to any Canopy workers stemming from the incidents.

Asked if Canopy’s two gigantic greenhouses in British Columbia were lemons, Castillo said, “… if somebody wanted to grow good high-quality cannabis at a very large scale, they could potentially have used one of the two sites.”

Canopy shares trade as WEED on the Toronto Stock Exchange and CGC on the Nasdaq.

Matt Lamers can be reached at mattl@mjbizdaily.com.