BPH Energy’s investee company Patagonia Genetics acquires rights to Carmagnola hemp strain

Investment company BPH Energy (ASX: BPH) has received amiable news with respect to its investment in Chilean craft cannabis company Patagonia Genetics.

In news announced early this morning, BPH said the craft cannabis company has continued its genetics acquisition spree by securing the rights to a recently discovered and rare phenotype of the EU Certified Hemp cultivar ‘Carmagnola’ – a long-established strain of industrial hemp derived from Italy which has been cultivated for more than 15 years.

BPH currently holds a 10% stake in the company and is hopeful that it can begin cultivating medicinal cannabis and stabilised seeds by the middle of the next year.

If Patagonia can develop and commercialise its range of craft cannabis assets, it stands to tap into the growing demand for medicinal cannabis across the globe, although initial sights are set on Latin America.

In order to make developmental progress, Patagonia has partnered with Chile’s largest cannabis fertiliser brand, Wonderland Agronutrients, with an initial purchase of 1,300 litres of Wonderland products already done.

Around two weeks ago, BPH revealed that its investee acquired an additional 24 cannabidiol (CBD) and hemp strains to add to its existing collection of over 260 strains, thereby expanding and expediting its plans to commercialise its overall genetic library next year.

Medicinal cannabis market growth

According to Patagonia, its newly acquired strain’s hemp seeds are “dioecious” meaning that both male and female plants can be grown for fibre production as well as for CBD oil and resin extraction.

Importantly, the strain has a CBD content of 18.4% with an ultra-low tetrahydrocannabinol (THC) content of less than 0.11%, meaning it is entirely non-psychoactive and is, therefore, a prime candidate for medicinal use.

“After cultivating, testing and phenotype searching literally thousands of Carmagola plants, the breeder was able to identify a particular phenotype that would be considered a unique find as it carries exceptionally high levels of CBD compared to traditional Carmagnola whilst maintaining THC levels well below 0.3%,” the company said.

To verify the discovery of the new phenotype, the plant was tested by the Centro Tecnológico Nacional Agroalimentario Extremadura (CTAEX) in Spain with a Certificate of Analysis (COA) already issued, making the cannabis strain officially recognised and easier to progress through regulatory testing schedules.

Furthermore, the low THC content means Patagonia can actively market extracts of the new phenotype in the US where current regulations set forth by the US Department of Agriculture (ASDA) prohibit any products with a THC content above 0.3% from being cultivated, sold or used.

Patagonia said the ultra-low THC content also means it can sell the new extract worldwide under the banner of hemp rather than cannabis with limited risk to the cultivator of exceeding THC limits.

Currently, ten Latin American countries have legalised cannabis for medicinal use while three have chosen to decriminalise recreational use. There are over 40 licensed producers operating in the region that boasts some of the most prime real estate and growing conditions in the world.

A key component to successful cannabis growing is providing the plant quality nutrients, pest prevention and natural growing conditions. Patagonia hopes it can develop and cultivate a range of high-quality craft cannabis and thereby vertically align itself into the medicinal cannabis industry.

Commercialisation plan

With its expanded seed portfolio Patagonia is immediately turning its attention to commercialising its newly acquired Carmagnola strain.

BPH’s investee has signed an exclusive distribution agreement with Gibraltar-based company Calperina Planters which holds licenses to import and export hemp and cannabis-related genetic material.

Under current capacity, the company can supply feminised seeds “in the vicinity of 20-30 million seeds by mid to late 2020, with the ability to scale into 2021 and beyond,” according to Patagonia.

The terms of the distribution deal state that Patagonia can immediately commence selling its newly discovered genetic phenotype under Calpernia’s hemp license.

In order to maintain exclusivity, Patagonia must purchase 3 million seeds by 2020, 10 million seeds by 2021 and 15 million seeds by 2020.

Patagonia’s managing director Matthew Critchley said he expects to supply genetic cuttings or clones of this phenotype by Q1 2020 and feminised seeds by Q3 2020.

“Patagonia has already sent the COA results to major grow shops, distributors and licensed producers worldwide and has received significant interest to supply them with genetics for 2020 cultivations,” he said.