Posts Tagged ‘Agritech’

Made in Canada: Sustaining a Global Competitive Advantage in Cannabis Technology

Last month marked the one year anniversary since Canada became the first G7 country to legalize cannabis. On October 17, 2019, the Canadian Cannabis Regulations were updated to establish rules for the legal production and sale of three new classes of cannabis including edibles, extracts, and topicals, which are expected to become available for purchase in physical and online stores beginning in mid-December 2019.

With Canada currently representing the second-largest legal cannabis market in the world, innovation is now more vital than ever to maintaining a sustainable competitive Canadian advantage in the global cannabis value chain.

While legalization has attracted unprecedented levels of investment and has paved the way for accelerated research, clinical Cannabis research remains in its infancy with limited and often conflicting open-source information requiring heavy R&D investments to distinguish companies in this oversaturated market. Additionally, with the expansion of the market in terms of volumes and formats, much research is needed in harvesting/ processing technologies and product development.

Fortunately, costs of innovation in the cannabis industry can be offset with non-dilutive funding which can critically extend a company’s runway, bridge the funding gap to commercialization, and reduce the risk for investors.

Funding Cannabis R&D in Canada

The SR&ED tax credit program is the most lucrative source of non-dilutive funding for companies performing R&D in Canada, providing up to 68% back on eligible R&D expenditures for Qualified Canadian Controlled Private Corporations (CCPC’s) and 43% for Foreign-owned or public corporations depending on the province.

Examples of SR&ED in Cannabis include:

1. Edibles, Beverages, Extracts, and Topicals

  • Enhancing nutrient content or eliminating allergens.
  • Increasing product quality, yield, or shelf-life.
  • Overcoming ingredient interference (i.e. chocolate) with potency testing.
  • Maintaining formulaic stability, solubility, and dispersion
  • Developing terpene-based organoleptic profiles.
  • Scaling up and improving process efficiency.
  • Overcoming limitations of processes that utilize reagents (ethanol, CO2, propane).
  • Improving/developing extraction sequences and process parameters, and new isolation methods.
  • Reducing water consumption, or improving heating/cooling processes.
  • Developing innovative sustainable cannabis packaging solutions.

2. Medicinal & Pharmaceutical

  • Developing novel cannabis treatments and medical procedures.
  • Clinically assessing patient response to different doses, strains, and cultivation practices. 
  • Developing new, innovative methods to assess cannabinoid concentration.
  • Developing methods to test medicinal ingredient accuracy for consumers and industry professionals.

3. Cultivation/Harvesting

  • Testing the effects of climate/growing conditions (temperature and humidity, mineral composition of soil ph., and light exposure) and relative cultivation sequences on yield/ potency and the resulting product quality (yield, potency, terpenes profile).
  • Assessing growth conditions relative to processing parameters and product efficacy.
  • Developing new bio-stimulants for disease resistance, new fertilizer blends for boosting yield or developing biological pest controls.
  • Performing gene editing and breeding studies.
  • Integrating automation processes and equipment.  

4. ICT

  • Improving diagnostic and data analytics.
  • Developing cloud biology platforms and software applications.
  • Developing Smart Farming, IoT, and security systems.  

Bridging the Funding Gap

SR&ED funding can be combined with other sources of non-dilutive financing at various stages of growth to bridge the funding gap from product development to commercialization. 

Advanced SR&ED Financing: While the SR&ED tax credit program is critical for the viability of Canadian companies, it often takes over one year to receive the funding, which can be challenging, particularly for early stage companies. Advanced SR&ED accrual debt financing helps to bridge the financing gap by enabling companies to gain access to up to 80% of their SR&ED refund as soon as six months pre-filing.

Agri and Regional R&D funding: The Canadian Agricultural Partnership (CAP) is a five-year, $3 billion, federal-provincial-territorial agreement, that will replace Growing Forward 2 (GF2), and provides cost-sharing funding for processors and other agri-related businesses. The FedDev Rural Innovation Initiative (RII) regional stream is a non-repayable grant for SMEs operating in rural Southern Ontario within priority sectors that covers up to 50% of eligible project costs for a maximum of $100,000.

Commercialization: The Industrial Research Assistance Program (IRAP) supports companies that are investing in new technology projects that lead to new products, processes, or services in Canada, with an emphasis on commercialization. IRAP will cover labour and subcontractor costs. IRAP can be paired with SR&ED to increase the total funding amounts, provided adequate deductions for overlap are made.

Export: CanExport is a government funding program that provides funding to Canadian small and medium-sized enterprises (SMEs) to support new export market development. Previously, the CanExport program excluded the agriculture and food processing sectors, since companies in these industries were already eligible for export funding through the AgriMarketing program. However, as of August 22, 2019, the program will also be expanded to include supporting companies from Canada’s agriculture, agri-food and agri-products industry, including fish and seafood. CanExport’s funding limit for SMEs will also increase to $75,000 to cover up to 75% of eligible expenses.

Having a first mover advantage with federal legalization, Canada is poised to lead the world in cannabis R&D and evidence-based cannabis policy; however, this will require continued investment in R&D and the commercialization of ‘Made in Canada’ innovations in cannabis.  

Contact us today for a free assessment of your funding eligibility

Workforce Development Funding for Biotech Companies

As issues with climate change and rapidly depleting resources are becoming more urgent, there is a pressing need to form strategies to achieve sustainable development goals (SDGs). In Canada, a bio-economy is being adapted as a key strategy to support SDGs. Bio-economy is defined as economic activities associated with the invention, development, production and use of products and processes that are based primarily on biological resources. This emerging paradigm spans several industries including medical technology, agri-biotech, renewable energy, and biomaterials.

Rapid developments in biotechnology require a skilled talent pool to meet industry demands. However, the shortage of skilled professionals in the biotech space and unwillingness to employ recent graduates stunt industry growth. As 80% of the Canadian bio-economy consists of small to medium-sized enterprises, limited resources are often cited as a barrier to hiring new talent.

Wage-subsidy programs, like the Student Work Placement program and the Science Horizons Youth Internship program offered by BioTalent Canada, can help knock down barriers related to initial hiring costs by providing financial support to employers. BioTalent Canada also facilitates connections between full-time students/recent graduates and employers seeking fresh candidates that may potentially meet future recruitment needs through student work placement and internship programs.

Student Work Placement Program (SWPP)

Wage subsidies provided by this program cover the cost of a co-op student’s salary by 50% (maximum of $5,000); or 70% (maximum of $7,000) for first-year students and under-represented groups. Since September 2017, the program has placed over 900 students with over 275 employers providing the students with industry skills and employers with opportunities to increase their workforce.

To qualify for the program, employers must:

  • Show a clear focus on bio-economy, in either the nature of co-op position or the employer.
  • Provide a full-time co-op placement position with a minimum of 16-week placement.

The participant/student must be:

  • Enrolled as a full-time student at a post-secondary education institution and studying in fields related to science, technology, engineering, mathematics (STEM), business and/or any other program
  • A Canadian citizen, permanent resident, or persons to whom refugee protection has been conferred and legally entitled to work in Canada

Applications are currently being accepted for 2019-2020 co-op placements.

Science Horizons Youth Internship Program

This program offers wage subsidies (maximum of $15,000) to bio-economy employers for hiring recent STEM graduates into a STEM position with an environmental focus. As of March 2019, the program has placed 106 graduates with 67 employers across 37 cities nationwide. Growing participation in this program would equip participants with tools to pursue career paths specific to solving environmental/sustainability issues and increase the number of skilled professionals in the environmental sector.

To qualify for the program, employers must:

  • Provide a position with a clear environmental component.
  • Provide an internship position with full-time hours and a duration between 6-12 months (minimum of 6 months)
  • Shoulder 50% of the internship cost.

The participants must be:

  • Aged 30 or under at the beginning of the internship and graduated in the last 3 years from a post-secondary institution from a STEM program.
  • Canadian citizens, permanent residents, or persons who have been granted refugee status in Canada, and legally entitled to work in Canada

The program is currently accepting applications until March 30th, 2020.

Bio – Economy Subsectors Eligible for Funding From Bio-Talent Canada

Bio-health

  • Medical cannabis
  • Medical Devices
  • Biopharmaceuticals
  • Nutraceuticals
  • Natural-compound bioactives
  • Bio-molecules
  • eHealth/Artificial Intelligence

Bio-energy

  • Biodiesel
  • Ethanol
  • Methane
  • Bio-oil
  • Sustainable development

Bio-industrial

  • Biocatalyst
  • Biosolvents
  • Bioplastics
  • Biocoatings
  • Bioadhesives

Agri-biotech

  • Agri-fibre composites
  • Animal Genetics
  • Plant Genetics
  • Livestock Vaccines
  • Animal Nutritional Supplements
  • Functional Foods

To learn more about how your company can leverage non-dilutive funding to develop your workforce, grow your business, support R&D activities, and accelerate commercialization contact us today for a free consultation.

Authored by Rebecca Galicha, Technical Writer at NorthBridge Consultants.

Capitalizing on the Growing Demand for Alternative Proteins

Alternative proteins are proving evermore propitious in the AgriTech and FoodTech sectors of Canadian industry as traditional meats lose favorability under the rising tensions brought on by climate change, population increase, and greater demand for healthy and sustainable living.

Meat poses a unique challenge to the future given the environmental limitations of land and water required to support livestock capable of feeding a global population approaching 10 billion, at which point the current North American dietary standard will no longer meet sustainable development goals. With inordinate greenhouse gas emissions and health concerns connected to excess meat consumption also to consider, there has been burgeoning investment to develop alternative plant-based proteins in Canada.

Despite substantial scientific progress in this area over the last decade, ever-increasing demand for plant-based food and beverages and meat-alternative solutions continuously strains the ability of Canadian companies to stay competitive. It is thus critical that a business leverage all possible avenues of funding to maximize their innovative potential and development capabilities when pursuing advancement in alternative protein technologies.

Innovation, Science and Technology

From the release of Canada’s 2019 dietary guideline promoting plant-based proteins to consumer interest in plant-based foods and beverages rising by 25% in Q1, there is real incentive to boost R&D efforts in areas such as clean meats, meat-alternative technologies, and non-dairy milk formulations. The work being done to formulate new plant-based products and design advanced manufacturing processes are key examples of where a company’s everyday business objectives can translate into funding opportunities.

Attempts to deliver simulated meat products to market using only plant ingredients while achieving comparable qualities in texture and taste to that of real meats should not go unrewarded. Methods, such as high-moisture extrusion (HME), to adjust substrate properties like fiber structure and density, whether through recipe design or alterations in temperatures and pressures, are riddled with uncertainty, and can thus often qualify for funding support.

Presenting itself as an even newer technique than HME is shear-cell technology, which claims to have a smaller carbon footprint while yielding higher quality analogues more closely resembling real meats. With synthetic meat products derived from this form of processing soon to reach our shelves, there are future funding guarantees as innovation works to keep up with excited consumer demand.

Development of brown algae and kelp culture techniques, such as the artificial induction of sporogenesis or gametophyte culturing in vitro, are other exemplary applications within the plant-based protein field where novelty is being wholly encouraged through a myriad of funding options.

Lab-based methods of developing self-reproducing animal cells of various proeins, strategized to reduce land and water utilization, and improving stem cell extraction and growth capabilities are other areas where experimentation presents a ripe opportunity for funding given the potential these areas have for improving meat consumption sustainability. Similarly, the engineering of methane-based proteins is another clear case of where innovation has the potential to accrue substantial backing in funds.

Additionally, innovation in the field of cellular agriculture serves to address food security and environmental concerns by providing a means of replacing traditional livestock with technologies capable of growing meat from living or once-living cells in the form of its own cell culture media. Acellular agriculture, too, is an area proving highly innovative as new and improved methodologies are being devised to efficiently grow and harvest products from cell cultures to produce alternative proteins and agricultural items such as milk and egg whites.

Insects are also becoming a growing trend for meat alternatives as manufacturers have started using crickets and mealworms raised at scale to make protein-rich flour. Not only does raising crickets produce 100x less greenhouse gas emissions relative to cattle production, but crickets also have a higher concentration of protein than either beef or chicken. Hence, any endeavors to create insect-based products with desirable organoleptic qualities will likely make a business a prime candidate for funding.       

Non-Dilutive Funding Options to Support AgriTech Innovation

When dealing in AgriTech innovation, Canadian companies have a variety of non-dilutive funding options, such as tax credits, SR&ED financing and grants/programs, to support project development across stages of growth from R&D to commercialization and export.

SR&ED Tax Credits and Financing: The Scientific Research and Experimental Development (SR&ED) program provides one of the most lucrative sources of non-dilutive funding to Canadian companies, with an average of over $3 billion in funds allocated each year. However, one of the main challenges with the SR&ED program is that it can often take up to a year to receive the refund. Companies can gain advanced access for up to 80% of their estimated refund through SR&ED accrual debt financing to accelerate the rate of funding when there are cash flow issues or government returns are delayed. This is particularly beneficial for early-stage companies as it allows them to obtain an advance on funding up to six months before filing to bridge the funding gap.

Grants/Programs: There are numerous grants and programs offered like the Canadian Agricultural Partnership (CAP), the FedDev Rural Innovation Initiative (RII), and the Climate Action Incentive Fund (CAIF) SME Project Stream. Take the CAIF for example, which focuses on SMEs operating in building, transportation, industry, waste, and agriculture sectors within Saskatchewan, Manitoba, Ontario or New Brunswick; if eligible, a company can receive a rebate covering up to 25% of project costs for a maximum of $250,000 to support reducing energy usage, costs and greenhouse gas emissions. The application intake period is open until October 15, 2019, or until funding is exhausted. The Industrial Research Assistance Program (IRAP) and CanExport are other funding sources to help with commercialization and export, which can then be combined with SR&ED tax credits to maximize funding potential. With $950 million in funding awarded to five high tech superclusters, including Protein Industries Canada, yet another means of funding an AgriTech business is available. Focusing on enabling agri-food technologies, Protein Industries Canada investment will be matched 50:50 by the private sector with the aim of making Canada a leading source for plant proteins.

Learn more about the specific details of each of these non-dilutive funding options here.

Canada’s strong appetite for change is a funding dream for those dishing out the next round of alternative protein solutions. To learn more about funding your AgriTech business, please contact us for a free consultation.


Authored by Philip Finkelstein, Technical Writer at NorthBridge Consultants.

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