The flurry of medicinal cannabis market tie-ups between Aussie, US and Canadian companies continues with Roots Sustainable Agricultural Technologies (ASX: ROO) announcing this morning that it will enter the agriculture technology – otherwise known as the so-called “Ag Tech” – sector by supplying the US$7 billion (and growing) US cannabis market.
The ongoing decriminalisation of medical cannabis across North America has formed a resurgent cannabis and hemp industry that’s expected to increase to US$22 billion by 2021 – and that’s only considering the medical cannabis portion alone.
If including other derivatives of the cannabis sativa plant, the emergent cannabis industry could stretch closer to US$300 billion by 2024.
Roots has signed a deal with American Farms Consulting LLC that will see the deployment of its Root Zone Temperature Optimisation (RZTO) technology in a pilot program, with first planting already scheduled for next month.
The core appeal of RZTO technology is its ability to manipulate a plant’s climate management and remediate the recurring problem of water irrigation shortages.
Roots has developed a proprietary method to lower installation costs and reduce energy consumption using its “two-in-one root zone heating and cooling technology” and “off-the-grid irrigation by condensation technology.”
The pilot venture will see the two companies installing Roots’ licenced breeding platform to assist cannabis growers for the legal cannabis industry in Washington State. They will cool the roots of cannabis in part of a 30,000 square feet open field licence.
American Farms currently manages multiple farms spanning over 100,000 square feet of green canopy. The company`s approach to farming and data collection involves the planting a variety of genetic strains of both seeds and clones that are grown in local soil, using drip irrigation and two main techniques: full-term open field and light-deprivation.
According to American Farms its methods “result in its ability to maximise value for its clients.”
The timing of the deal is significant because RZTO allows for more efficient and additional growing cycles which both companies want to initiate as soon as possible to generate two harvests by this time next year.
The RZTO system is expected to cool the root system of the cannabis seedlings and stabilise the temperature range between night and day normally occurring at this time of year in the open field.
The pilot will be installed in Trinidad, Washington, a semi-desert climate characterised by high-temperature variances between day and night, about 200 kilometres south-east of Seattle.
Assuming the pilot is deemed a success, American Farms had said it will then purchase the RZTO system for future use as part of its growing operation.
To cool market expectations, Roots said its pilot with American Farms is not expected to generate any significant revenue for Roots but is intended to demonstrate the viability of the RZTO system for the cannabis market in general which could lead to future products sales.
Roots says its system has three prime advantages for farmers.
Increased growth rates are expected to see an increase in flower yield compared to control plots.
Second, quicker growth rates and higher yield quantities could help facilitate growing two crop cycles per year rather than one. One key caveat being leveraged by Roots and American Farms is to develop farming practices that “leads to the farmer now being able to benefit from higher, premium prices for longer periods for a crop that would normally be out of season.”
And finally, Roots anticipates “greater uniformity” between the flowers as seen in results obtained from other crop roots’ cooling.
Roots said it will carefully gauge the impact of its technology and its “influence on cannabinoid values and composition,” as part of the collaboration with American Farms.
“This pilot is the first time RZTO system technology is being used in a Cannabis open field, a growing cannabis production method with increasing popularity due to lower initial capex and low opex. It should demonstrate how the Roots RZTO technology optimizes the root zone temperatures – in this instance by cooling – until the optimum temperature of the cannabis plant is reached and maintained,” said Dr Sharon Devir, CEO of Roots.