In an effort to differentiate itself from the emerging cannabis market in Canada, AgraFlora Organics International Inc. (AgraFlora) (CSE:AGRA) (Frankfurt:PU31) (OTCPK:AGFAF) has taken a novel approach to producing cannabis that should prove to be every bit as lucrative as growing it. With the idea of separating itself from the competition in mind, the innovative Vancouver-based company partnered with Casey Houweling, who has 4 decades of experience with plant propagation, to form Propagation Services Canada Inc. (PSC), to introduce the concept of science-based vegetative propagation to the cannabis industry in Canada.
With the federal government in Canada passing Bill C-45 or the “Cannabis Act” and recreational cannabis becoming legal on October 17, 2018, the cannabis market in Canada has become an economic juggernaut. AgraFlora will use its third-party propagation services to navigate the landscape there and develop what should be an operation with long-term success in the industry.
While new to the cannabis industry, large-scale scientific vegetative propagation is commonplace in other plant markets like the tea industry and with many types of vegetables. The greatest benefit to using third party vegetative propagation in the cannabis industry is that it allows licensed producers the opportunity to use valuable floor space for growing revenue-generating flowering plants.
According to the analysis conducted by AgraFlora while the company was reviewing opportunities within the Canadian cannabis industry, it learned that approximately 20 to 30 percent of a licensed producer’s greenhouse is dedicated to cannabis propagation. If this area could be repurposed to growing flowering plants, licensed producers could, in turn, realize a similar increase in revenue.
Another advantage of vegetative propagation is that the new propagated plants contain the same genetic material and are essentially clones of the parent plant. Once the strain has been established with desired traits, it can be reproduced indefinitely. This is important when maintaining consistent quality and taste in products made from plants or crops such as teas, coffee, fruits, and vegetables.
Propagation becomes especially important for commercial cannabis growers who want to reproduce the highest-quality cannabis with consistent strain genetics.
Large-scale cannabis propagation has become a reality in Canada due in large part to the efforts of Derek Ivany, President and CEO of AgraFlora, and Casey Houweling, President of the Houweling’s Group. The unlikely partnership comes from Ivany’s quest to become a top-five licensed producer in Canada and Houweling’s desire to leverage his 40 years of plant propagation experience, and a 2.2 million square-foot facility in Delta, British Columbia. The Delta facility is considered one of the most technologically advanced greenhouses in North America, offering full propagation services with an experienced staff in a facility with 18 megawatts of power.
“Over time I believe that cannabis will become a commodity with the price per gram dropping to levels close to the cost of production,” said Derek Ivany. He continued by saying, “After a thorough analysis of the industry indicated that outsourcing plant propagation could bring significant benefits to the many licensed producers operating in Canada, we approached Casey Houweling to talk about a partnership. By specializing in an ancillary product, like propagation services, we can ensure that AgraFlora’s long-term revenue stream is optimized by offering high margin scientific expertise and high-quality products to the overall market.”
By leveraging Casey Houweling’s experience in plant propagation, PSC can ensure high-quality clones without disease and contaminates and offer starter plants to the industry’s growers that can help mitigate these challenges and focus on growing and processing flowering plants.
AgraFlora hired Cannabis Compliance Inc. to help it prepare the new commercial propagation facility in Delta, British Columbia. Cannabis Compliance is a cannabis consulting firm with more than 10 years of experience providing risk mitigation, due diligence, and regulatory compliance to commercial cannabis producers and resellers worldwide.
Nico Hache, Director of Compliance at Cannabis Compliance Inc., said of PSC’s operations and its large-scale facility in British Columbia, “The combination of one of the most technically advanced greenhouse sites entering the cannabis industry and more than 40 years of propagation experience, is precisely what the cannabis industry requires to deliver clean, pure stock plants. The nursery plant mortality rate in the industry is very high due to the lack of facility and technical expertise to grow at scale. PSC has a facility, the technical expertise, and with a few modifications will change the way cannabis is grown. This expertise is what has been missing in the industry and will be welcomed by licensed producers.”
AgraFlora’s Ivany added, “I believe that independent propagation services in the Canadian cannabis space will massively disrupt cannabis growing methods in a very positive way.”
The value proposition that PSC brings to the licensed producers in the market is the specialized science of plant propagation, offering healthy flowering cannabis plants free of contaminates, pests and disease, less staffing requirements, and more greenhouse space to grow revenue-generating flowering plants—providing licensed producers with an advantage to optimize operations, reduce costs, increase revenue and ensure their long-term success in the industry.
In part 2 of our series highlighting AgraFlora and its efforts to become part of the cannabis landscape in Canada, we’ll focus on the benefits and economics of propagation and how AgraFlora can improve topline revenue and bottom-line expenses for licensed producers.
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Learn more about AgraFlora at: www.agraflora.com