SITE TOUR: Cronos Group Inc Cannabis Production Backstage Pass

The Cronos Group Inc (NASDAQ:CRON) (CVE:CRON) (FRA:7CI) showed us around their Peace Naturals facility in Stayner, Ontario, Canada where there was a lot of high tech stuff going on.  They are currently building the world’s largest, purpose built, indoor cannabis growing facility.  Cronos also has a sizeable greenhouse operation which will start production anytime now as well because they want to be able to leverage their diverse expertise anywhere in the world it makes sense to do so.  They also showed us a strange and exciting bud they developed casually referred to as ‘white walker’ because of it’s signature white colour.  After visiting  their top-notch Peace Naturals facility, it’s clear that The Cronos Group belongs among the top companies in the cannabis space.

TRANSCRIPT:

Mike Gorenstein:     I was at a fund where we looked at everything and anything, and we saw Peace Naturals key: the largest land package of any of the licensed producers, access to free, onsite water, methane co-generation Phase III power…so it was a huge advantage. This was the first facility to get licensed under the MMPR. It’s exciting to see what we’ve done with this, and where we’ve gone since.

As you can hear, the extraction machine is working away. That extraction machine is working 24/7; we can actually control them from the phone.

We wanted to make sure everything was easy for people to join the company. So you’ve got Building 1, Building 2, Building 3 – very creative names – Building 4.

So, welcome to Peace Naturals. As a licensed producer, we don’t want patients to come to us for medicine because it’s legal; we want them to come to us because of the quality. Quality is the Number One priority.

This is a proprietary strain we have called Infinity. This is a very high THC strain, and that’s quite popular in Germany right now, and if we were to allocate all of our supply to Germany, it still wouldn’t scratch the surface. But for us, it’s a balance, and we’re a Canadian-based company, and we want to take care of Canadian demand first. And as you can see, this is still two weeks from maturing; the leaves haven’t gotten to the point where you start seeing colour adding during flush, but that’s the quality and the care you put into each plant to be able to have something that’s differentiated.

So one of the things we do at Cronos Group is use different light spectra and different genetics in strain-specific rooms to get different effects and different results. And to do that, you have to switch things up a little bit.

Lasse Schulze:     So here in this room we have the very purple spectrum, which has a lot of blue and a lot of red, which creates a purple colour. And with this purple colour, we are able to capitalize the production in these cultivars, create a photo bleaching effect and create a white flower which is very unique in the cannabis space.

Mike Gorenstein:    This is Building 4, this is the largest purpose-built indoor facility in the world. I don’t know if you can even pick it up on the camera how far it spans and how wide it is. Just say, you don’t want to forget your keys in the facility; it’s a long walk.

You think about it, when you’ve got a baby plant, if you were to leave that in one room the entire time, you’re getting much less efficiency than if you had that in a room specific where the plants are closer together. So we divided, and then the benches will automatically move the plants into the appropriate stage, and as they get larger, they take up more space and they move into rooms specifically designed for flower.

Is it best to have poly, diffused poly, glass, diffused glass? The one you’re looking at now is glass, but if you walk over to this head house, you’ll notice this is a diffused poly, so it’s a little bit different in the way that it deals with the light. It’s making sure that when we move into some of the other jurisdictions, right now there are parts of the world where it does make a lot of sense to do greenhouse versus indoor. We already have the technology, we know exactly how our genetics perform, and we’re able to roll things out seamlessly and efficiently.

Lasse Schulze:    We’re not just engaging in accumulating and adopting the best practices from the horticultural and agricultural industry, we are also hiring scientists including myself with PhDs that are able to evaluate whether best practice is applicable to our growing methodology. That way, we are staying always on top of the game, and able to grow the highest quality cannabis and having the greatest yields.

Mike Gorenstein:     Science!

Lasse Schulze:     So what we are looking here in a good harvest and a good plant structure is very tight nodal spacing to allow for big buds development. That’s something that our customers really like and appreciate.

David Hsu: You know, like we’re in nice finance jobs, New York City, Manhattan, and what we’ve built from just this barn when Mike first brought me up here, it is absolutely incredible. We’re now making Staynor, Ontario our home, and we’re building an amazing team. We have over 100 employees now. I’m so happy to be in Canada, and we’re loving every minute.

Mike Gorenstein:     Look at alcohol. Which alcohol company is the best because they produce the most or the cheapest? It’s who has the best beer, who has the best wine, who has the best liquor, and that’s what our focus is, is product quality.