A Silicon Valley company says it has a 'flavour solution' to an emerging problem with the $1 billion CBD industry

Hollis Johnson/Business InsiderAmyris wants to use its experience in sweetener to make CBD-based drinks that taste good.
  • Amyris, a Silicon Valley-based company that uses living things to make sweetener and face cream, is the latest company to dive into lab-grown marijuana.
  • Several startups have said they aim to produce marijuana compounds like CBD and THC in a lab without the need for a farm.
  • This month, Amyris has inked a $US300 million deal with a new startup to make lab-grown CBD.
  • A key focus is the beverage industry, Amyris’ CEO told Business Insider.

The race is on to make marijuana’s active ingredients without the need for a farm.

For years, Silicon Valley company Amyris has been using an approach called synthetic biology to churn out the ingredients in its face creams and a new zero-calorie sugar substitute. Now, it’s teaming up with a new startup called Lavvan to make the cannabis compound CBD using the same tools in a $US255 million deal.

The primary goal of the partnership – the company’s largest collaboration agreement yet – is to make high-quality CBD for less money than the cost of traditional agriculture, Amyris CEO John Melo told Business Insider. CBD is a highly-touted but under-studied wellness ingredient found in marijuana and hemp plants.

Melo said he sees one potentially straightforward opportunity for the compound: using Amyris’ experience in sweetener to make CBD-based drinks that actually taste good.

“There’s an opportunity here for a flavour solution,” Melo said.

CBD is in everything, but some say there’s a problem

Sugary drinksShutterstockSome people think CBD-infused beverages taste bad. Amyris says it has a fix.

CBD currently exists in a legal grey area. Still, that hasn’t stopped dozens of companies from churning out a range of products proudly made with the ingredient. Whether it’s coffee, beer-like drinks, or patches and lotions, there’s likely a CBD version out there somewhere. This month, pharmacy giants Walgreens and CVS announced they’d even sell some CBD products.

The booming CBD market is valued at roughly $US1 billion. Just last month, Wall Street analysts with investment bankm Cowen said they believe that could explode to $US16 billion within the next six years.

Read more:
Wall Street thinks the $US1 billion market for CBD could explode to $US16 billion by 2025

But some news outlets have reported a unique problem facing one segment of the CBD market: beverages made with the compound taste bad, in their view. Some people have called the flavours “barnyard”-like; others say they taste like dish soap or even urine. Melo agrees.

“One thing that’s become clear is that CBD doesn’t taste good,” he said.

But Melo believes Amyris and Lavvan have a potential solution: putting the CBD they produce into beverages made with their zero-calorie sweetener.

Amyris’ sweetener is made using synthetic biology and an ingredient from the stevia plant. Some in the sugar industry appear to find it promising: last October, Amyris signed its first major supply and distribution agreement with ASR Group, the largest cane-sugar refiner in the world. Two months later, the protein-shake company Shaklee announced it would make its drinks with Amyris’ sugar alternative as well.

“We see a big opportunity here where our sweetener customers also become our CBD customers,” said Melo.

Making goods with living things could be the future of manufacturing

Ginkgo organism design 184277f1Ginkgo BioworksBoston-based startup Ginkgo Bioworks inked a $US122 million deal with marijuana maker Cronos to churn out lab-grown cannabis compounds.

At its essence, Amyris’ synthetic biology approach involves harnessing the power of cells to make everything from less-toxic sweeteners to superior face creams. They coax microbes like yeast and E. coli into making scents, emollients, and the ingredients in their sugar substitute.

Lately, investors have been pouring millions into startups in the synthetic biology space. They hope a range of new and environmentally-friendly materials will emerge within the next few years. So far, a range of startups is aiming to make everything from cheaper drugs to biodegradable bags to less-toxic insect repellant.

Read more:
After a kick-start from Bill Gates, a Silicon Valley company aims to be the ‘Intel Inside’ of the $US200 billion sweetener and skincare market

Lab-grown marijuana is the latest ingredient on their radar.

Last month, scientists at the University of California presented the first hard evidence that they could make lab-grown cannabis compounds like CBD and THC using synthetic biology. Lead researcher Jay Keasling created a new startup to licence the technology called Demetrix. Six months earlier, Boston-based startup Ginkgo Bioworks inked a $US122 million deal with marijuana maker Cronos to churn out similar ingredients, including those present only in very low quantities in the cannabis plant such as THCV.

And now Amyris is diving in too.

Little is known publicly about Lavvan, but its new CEO, Etan Bendheim, took on the role after a 10-year run at livestock pharmaceutical company Phibro Animal Health, where he served most recently as its director of strategy.

The deal between Amyris and Lavvan includes research and development, milestone payments, plus long-term royalties. It also includes the rights to manufacture 20 different compounds in the marijuana plant, Melo said. For now, they will aim to start churning out CBD.

“Our focus is the highest purity CBD at the lowest cost,” said Melo.

One potential obstacle that Amyris could face is demonstrating that their scientific approach to sweetener and skincare works with cannabis. Melo is optimistic, however. He expects to have the first commercial production of CBD by early next year.

“We have a pretty good idea of what we’re producing today in the lab,” he said.

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