Yesterday, Canopy Growth announced that its subsidiary Tweed had competed its cannabis breeding facility within its Smiths Falls, Ont.
“With few exceptions — like Bedrocan Canada who obtained world-class, standardized genetics from Dutch cannabis pioneer Bedrocan Beheer BV — most Canadian producers including Tweed have relied on starting from scratch using other people’s genetics,” said Canopy president Mark Zekulin. “For the past two years we have been refining the phenotyping process to refine the best plants in our genetic bank, and working with our partner DNA Genetics to enhance our processes towards perfection. Now we’re venturing into unchartered territory by breeding our own strains, unique to Tweed customers, and launching seed production for customers who choose to explore growing at home.”
Brown says Canopy is making strong and specific moves to ensure its future is bright.
“Exclusive strains will support Tweed’s, and thusly Canopy’s, brand position and product offering ahead of a rec market, which we estimate begins sales in H2/18,” says the analyst. “Now that construction of the facility is done, Health Canada will be invited to inspect the new rooms before they are brought online. Tweed aims to provide advance access to its patients in 2017 with the new proprietary strains to be finalized by early 2018. In a rec legal market, we view the quality of products offered just as important as the customers’ perceptions of brands; focusing on genetics to give its customers a variety of quality offerings while building a strong rec brand, Canopy continues to position itself to take an early lead in the rec market.
Phenotyping for the past two years, Tweed can now reinforce its decisions with hard data from the breeding facility and looks toward selecting seeds based on genetic traits rather than fully growing out the plants. Tweed plans on creating new exclusive genetics, selecting male and female plants with desirable traits and breeding new strains under strict controls. Beyond obtaining genetics from plants, Tweed has expanded its research and development capabilities and will soon be able to select seeds based on genetic traits. This development will enhance and expedite the company’s breeding process as it removes the need to grow out the seeds to mature plants.”
In a research update to clients yesterday, Brown maintained his “Buy” rating and one-year price target of $5.80 on Canopy Growth Corp.