They never could have guessed in 2014 that within a few years, they would be the subject of suspicion and outright contempt in some quarters of the tight-knit cannabis-growing world. But maybe they should have, because the transition from the illicit trade in marijuana to the mostly licit cannabis industry was never going to be without its complications and conflicts. Large science firms and Big Agriculture see an opportunity. Little cannabis sees a threat.
One of the first services Phylos launched was a “plant sex test,” which saves pot growers time and money by determining the sex of a seedling within a week of germination. (Only female cannabis plants contain usable amounts of THC, CBD, and other cannabinoids, so you want to cull the males ASAP.)
The company also began a collaboration with Rob DeSalle, a curator at the American Museum of Natural History and professor at Columbia University, to sequence the DNA of as many cultivated varieties of cannabis (or cultivars) as possible to shed some light on the plant’s evolution. The results were published—on April 20, 2016, 4/20 naturally—in an open source forum called the Galaxy.
A splashy visual representation of the genetic relationships between cannabis varieties, the Galaxy is also, in essence, a road map for breeders. At first, the Phylos Galaxy was a kind of community science project—anyone who sent in tiny piece of stem (swabbed with alcohol to remove any traces of THC) got their cultivars genetically sequenced for free. (A fee was added later.)
But later in 2016, Phylos began offering a “plant genotype test,” which included a placement on the Galaxy as well as a full report on its relationship to other cultivars. Because the Galaxy is public, it allows any breeder, scientist, or curious pot consumer to see how their favorite cultivar fits into the big picture—and it also helps growers decide what to breed next. (The farther apart two plants are genetically, the more likely they are to yield a plant with higher vigor and more disease resistance.)
Genotyping also offers a quick fact-check, allowing growers to know if they’re mislabeling cultivars—which, due to the clandestine nature of the black market, happens with some regularity. From the beginning, Phylos positioned itself as a “new kind of agriculture company,” one that mistrusted Monsanto and championed small-scale growers and breeders, the people responsible for the vast genetic diversity in the cannabis category. At last count, the Phylos Galaxy had 3,000 samples from 80 different countries, making it the largest database of cannabis genetics in the world.
So when Holmes announced on April 16 via Instagram that Phylos would be launching its own breeding program in a facility west of Portland, it wasn’t all hearts and smiley faces. Many in the cannabis community were outraged. “How about staying in your lane,” said one early response. “Damn, maybe you really have been stealing genetics this entire time,” began another. And finally: “Every idiot that allowed your company to put their genetics into their system just lost all their intellectual property.”
At first glance, the haters’ comments might’ve been dismissed as paranoia, jealousy, or at the very least anti-science. After all, you can’t resurrect a cannabis plant from a dead stem and 2,000 sites on the genome, which was all Phylos was sequencing.
But a few days later, a video surfaced that showed Holmes pitching investors at the Benzinga Cannabis Capital Conference in Miami in February. In it, Holmes tells a roomful of would-be investors that Phylos has a huge lead as a cannabis breeder. “We’ve been collecting data and IP for four years. We have really huge barriers to entry protecting us,” and that “we have more trust in the cannabis industry than any other science company.”
The real bombshell, though, was when Holmes introduced a few members of the Phylos advisory board, one of whom had worked for Syngenta for years, and another who was VP of technology acquisition at the merged Dow and DuPont. Holmes continued: “So, having these guys around is just critical for us, because we’re building a company that is ultimately going to be acquired by that universe.”
To breeders and growers who had often heard Phylos employees publicly disparage Monsanto, affiliation with Syngenta and Dow/DuPont sounded like a deal with the devil. Also the idea that Phylos would use its storehouse of genetic data—in some cases freely donated by small growers—to pump up its market value and attract a major industry buyer sounded like an underhanded double-cross.
It was too much for brothers Aaron and Nathan Howard, co-owners of Southern Oregon cannabis farm East Fork Cultivars, who had been working with Phylos on a high-CBD hemp breeding project since February as part of something called the Breeding Innovation Network. In late April, East Fork was still publicly defending Phylos—both on Instagram and in real life.
The Howards knew the company was about to launch a breeding program—it wasn’t a secret—and although they had believed in the company’s integrity and commitment to helping small family-run cannabis farms like theirs, they were growing increasingly worried that they had been misled. “For so long, Phylos had been talking about being a different kind of agriculture company,” says East Fork CEO Mason Walker. “It would be one thing to be under crazy financial pressure and eventually have to sell under duress, but to actually have that as an intentional strategy? That really changed my mind.” East Fork left the Breeding Innovation Network in early May.
The episode is emblematic of a larger trend unfolding in the still-nascent legal cannabis business: The science and technology of mainstream agriculture is about to revolutionize marijuana. But old-school, pre-legalization cannabis growers fear they’ll be snuffed out in the process.
Though cannabis remains federally illegal, 11 states plus the District of Columbia have legalized recreational adult use, and 33 states along with DC have legalized medical use. Overall, members of the legal cannabis industry view the prospect of federal legalization—which some expect to happen in five to 10 years—with a mixture of hope and trepidation.
Once cannabis is legal, Big Agriculture will be able to invest enormous sums into improving cannabis. Once that happens, it will become extremely difficult for longtime breeders and growers to compete. Other monied interests from Big Pharma and the alcohol beverage industries have already jumped in. (Look no further than liquor conglomerate Constellation Brands, which last year invested $4 billion in Canadian cannabis firm Canopy Growth.)
The small players—the breeders and growers who have created the wide-ranging diversity that we see in dispensaries from California to Massachusetts—are barely hanging on as it is. Will they be crushed by the next wave of consolidation?
Holmes, who was named after a character in The Jungle Book and grew up on a commune in the woods outside of Eugene, Oregon, seems more aware of this dynamic than anyone. A molecular biologist with a PhD from Columbia University, Holmes helped found the Open Cannabis Project in 2016 with the intention of protecting the genetic diversity of cannabis.
In 2015, when the US Patent and Trade Office granted the first in a series of so-called utility patents on cannabis, he and colleague Jeremy Plumb realized that all the genomic data Phylos was collecting could protect growers and breeders by establishing “prior art”—evidence that your invention is already known or available. (Plumb, who was the first executive director of the Open Cannabis Project, is now director of production science at Portland-based cannabis grower Prūf Cultivar.)
If you document prior art by putting genetic data in the public domain, it makes it harder for companies to get patents on those strains. The Open Cannabis Project would link to the raw genomic data, which Phylos would post—with customers’ consent—onto the National Center for Biotechnology Information, a public database at the National Institutes of Health.
As former Open Cannabis Project board member Reggie Gaudino, president of Berkeley-based cannabis tech company Steep Hill, told me, “Having this database says ‘Look, this already existed, so you can’t have that patent, Monsanto!’” (In 2018, Bayer acquired Monsanto.) Soon, breeders and growers from around the world—who might have been hesitant at first to share the genetic data of their beloved, proprietary cultivars—were sending them in to Phylos, who sequenced the DNA using a system that could read 2,000 sites on the genome.
Because cannabis does not grow “true to type,” planting the seeds from one OG Kush plant can result in enormous variety. And yet some breeders will call all the progeny “OG Kush.”
When I spoke to Holmes in early March about his genomic testing company expanding into breeding, he was already aware that some were leery of Phylos. “There is justifiable paranoia. Small growers are fighting for their lives right now,” he told me over daiquiris at the Cuban bar on the ground floor of Phylos’ office building. “They have never seen an ag company that’s been a good actor.”
In states like Oregon, where recreational cannabis was legalized in 2015, a glut of cannabis flower is driving prices so low that farmers are going out of business. Phylos’ new breeding program—rather than competing against small-scale breeders and growers—would give them an economic leg up, according to Holmes. “We have to give breeders the tools and genetics they need to keep producing interesting stuff,” he said.
If Phylos scientists can, for instance, breed cannabis strains that are resistant to botrytis (a form of mold that can ruin a crop) or powdery mildew, or are high yielding, or that have higher levels of lesser known (but medically promising) cannabinoids like CBG, CBC, or THCV, they could get those out to growers.
Holmes promised these plants will be “widely available and very affordable,” and in many cases they will be sold with an open source license—meaning other breeders can continue to work with them. (The company has teamed up with indoor ag venture Crop One to form a new business called Conception Nurseries, which will sell cannabis clones.)
Conception will also sell small-scale breeders’ starts, labeling them with the breeder’s name as well as the cultivar’s name, and will offer fair credit and royalties. But unfortunately for Holmes, these potential positives for small-scale growers were overshadowed by a creeping fear that Phylos would use genomic data for its own gain, and that it would adopt the tactics of despised Big Ag companies. Or maybe even become part of one.
The Benzinga pitch video certainly didn’t help. In it, Holmes told investors that all the cannabis around today would soon be gone, replaced by optimized new varieties that Phylos would develop. In the wake of the video, a handful of growers (East Fork, Prūf Cultivars, and Willcox Pharm in Arizona) abandoned the Breeding Innovation Network, at least two Phylos advisers have quit, and the Open Cannabis Project has dissolved.
In mid-May, when I asked Holmes if he was surprised by the intensity of the reaction to Phylos’ breeding program announcement, he paused before answering. “We were surprised. We were naive about it. We didn’t realize how threatening it would seem to people,” he said, speaking slowly, choosing his words with care. “We saw most of the cannabis industry as being composed of growers. And we thought they would be excited to have the new plants. I think we underestimated how much every grower sees themselves as a breeder as well.”
Over the past 50 years, cannabis breeding has been an experimental, crowdsourced project. That’s not to say that breeders from Humboldt County to Holland aren’t developing proprietary strains—they are. “There are old-school cannabis breeders who are masters of what they do,” Holmes told me back in March.
But because cannabis has largely been illegal the US, there haven’t been any large-scale directional breeding programs to help improve the plants for agronomic traits (resistance to pests and pathogens, increasing yield and vigor) as well as chemical components (novel terpenes and medicinally important cannabinoids). “We have never brought the full force of modern plant breeding to bear on cannabis,” Holmes added.
Because cannabis does not grow “true to type,” planting all the seeds from one OG Kush plant can result in enormous variety—with plants that have radically different genetics and also different chemical profiles than the mother. And yet some breeders will call all the progeny of OG Kush seeds “OG Kush.” That is why Phylos’ genotype test can be a valuable tool for cannabis growers and breeders.
It’s also one of the reasons why consumers have such a hard time finding consistency, even when they revisit the same strain again. Phylos’ DNA test tells growers where their strain exists in relationship to other strains, and that information allows them to breed smarter. The company had been morphing into a plant breeding concern for years, and “I don’t think we did enough to make sure people understood that,” Holmes said. The idea of launching a breeding program came when Phylos scientists found collaborating with other breeders was an inefficient way to find markers for powdery mildew or botryitis. “It was great working with those companies,” he acknowledged, „but it was painfully slow getting work done in other peoples’ facilities. It’s hard to get people to dedicate the scientific resources.”
Some breeders are working to stabilize the genetics of cultivars, creating commercially viable F1 hybrid seeds. (F1 hybrids are the first generation of offspring of distinctly different parental types; they are also largely uniform, meaning the seeds from the parents should produce plants with identical traits.) To do that, they need to develop two separate inbred lines, and then cross them, creating plants that are both hardy, disease-resistant, and identical.
Though Phylos has been accused of using the genomic data that was obtained when growers sent samples into the Galaxy, Holmes asserted that is not enough to help drive Phylos’ breeding program. To do “marker-assisted breeding”—which is what Phylos is planning—you need to both have the “phenotype,” or plant characteristics, as well as the genotype. As Holmes explained, the sequencing the company did for the genotype test only looked at 2,000 sites on the genome, which is not enough. In addition, Phylos never collected any plant information.
The need to get more complete data is actually what spurred the firm to launch a breeding program. But instead of celebrating this decision, growers and breeders felt betrayed. “It really angered people,” Holmes said. As for the allegation that Phylos now somehow “owns” the IP of cannabis breeders and growers, it doesn’t. “That’s the part that we could never figure out why that didn’t ring louder in peoples’ ears: We knew that people were touchy about the data, so we made all of it public. We don’t have any more of it than the whole world does!’”
Customers downloaded it and used it to do their own tests. Scientists around the world have worked with it. “We just did not have proprietary access to this data,” Holmes added. In any case, the Galaxy is there to serve as a road map for breeders.
Which brings us to the tempest over Holmes’ comment that he was positioning Phylos to be acquired by a Big Ag outfit. He maintained he was misunderstood.
During his pitch to investors, Holmes said, he wasn’t talking about the beating heart of the small-farm cannabis world—craft cannabis flower, the stuff people smoke and use to enhance their brownie recipes. He was referring to so-called concentrates, the mass-market, cannabis-extracted oil that fills vape pens and that makes up not only topicals and most edibles, but also alternative delivery methods such as dabs, waxes, shatter, and live resin. “The part that was so shocking to people was I said ‘All of the cannabis today is gonna be replaced by new stuff.’” But, he pointed out, he was talking about plants used to make concentrates, not craft cannabis flower.
Projections by BDS Analytics for the US cannabis industry say that the market will be 35.5 percent concentrates by 2022, up from 26 percent in 2018, and that the flower market will make up an increasingly smaller percentage of the overall industry. “The flower market is incredibly diverse and innovative. There are thousands of varieties. It’s absolutely not true that new varieties would end up wiping out the old stuff,” Holmes said. “We make this huge distinction at Phylos between the mass market and the flower market. And there is no preserving diversity for the mass market.”
In other words, Holmes is committing the majority of Phylos resources toward breeding for the mass market, which will help the company afford the scientists and sophisticated equipment it takes to do all kinds of breeding work. „This is expensive science, and if we’re going to succeed in doing it, we’d have to focus our resources on the mass market. We knew that the flower market would be a smaller percentage and that we wouldn’t be able to focus much of our resources on it. And we also knew that that’s an endangered world that needs protecting, and we realize it’s incredibly diverse and no individual varieties are going to dominate that world—or should be allowed to dominate that world. So we always kept it separate.”
One of rumors swirling around the cannabis industry is that Holmes and other Phylos employees told breeders that the company would never do plant breeding. Interestingly, the only person I could find who would go on the record about this allegation was Matt Riot, owner of Riot Seeds in Bakersfield, California. “I was really skeptical from the start,” Riot said of sending in samples to the Phylos Galaxy.
Phylos knew this, according to Riot, and was courting him. “Every time they had private meetings with us—on the phone—they were trying to get me to send in stuff,” he said. About two years ago, during a phone conversation with senior business development manager Ben Adams, Riot said he asked, “Do you ever have plans to be a breeding company?” “And Adams said, ‘No no, of course not, we are strictly a testing company.’”
Adams denies this. „No, I never said that,” he said. „I think I said, 'At this time, we’re not doing a breeding program.’”
The backlash in the industry has been so fierce it can be easy to overlook Phylos’ supporters. One of these is Kevin Jodrey, the cultivation director and owner of Wonderland Nursery in Humboldt County, California. He has been breeding cannabis for over 35 years, and it bothers him that his fellow breeders—so long in the shadows—often don’t get credit for all their research and development. “Breeders are artists,” Jodrey said. “They are focused and devoted on the art, and a lot of times they get screwed.”
When he first heard about the Galaxy, he sent in about 40 unique strains for genotyping. He did this, in part, to determine which dissimilar strains to breed with next. “Inbreeding allows you to ‘fix’ traits but—just like with the royals—you get some unbelievable superstar specimens but also a lot of really twisted ones,” Jodrey remarked.
But the main reason he signed on with Phylos’ sequencing program was to show that his varieties were in existence prior to other companies coming in and patenting them. “If you’ve been in the weed business your whole life, your lack of trust is pretty well-developed,” Jodrey told me in March. “I trust the company. They’ve always been very up front about what they’re trying to do. I respect the scientists—they have one of the best staffs I’ve ever met.”
He said he believes Phylos will work with old-school breeders and family-run cannabis farms, while the likes of Bayer won’t. “The people who are terrified of [Phylos] are going to have to deal with the guys who come next … I see Phylos as a lifeboat to be able to move forward scientifically.” Even since the notorious pitch video surfaced, Jodrey has remained steadfast. “Everyone is losing their fucking minds! Have you ever done a pitch? If you tell your investors ‘No, I’m here to help people out,’ they don’t give you any money.”
Jodrey reported he’s received countless emails and texts from growers and breeders begging him to renounce Phylos. “My relationship with the company isn’t as important as my relationship with the scientists in the company. I know they’re good people.”
“If you’ve been in the weed business your whole life, your lack of trust is pretty well-developed.” —Kevin Jodrey, Wonderland Nursery
Even the East Fork guys are hopeful that Phylos will regain the trust it has lost in some way. “We are pretty certain that they have nice licensing agreements and purchase contracts in place with a lot of genetics they brought in-house,” said Walker, the CEO, referring to the royalties that Phylos is paying to breeders. Until recently, this sort of arrangement did not exist in the cannabis industry; breeders have never received royalties for their work.
Right now, most breeders do cloning in-house—that is, they take a cutting from the “mother” plant and grow it out. (Cannabis cultivars, like apple varieties, do not grow “true to type,” so the only reliable way to grow an exact replica of a plant you love is to clone it.) But growing clones is expensive—and takes up a lot of space. If you’re a breeder with a proprietary cultivar, you could give the mother plant to Conception Nurseries, which would quarantine it and give you clones of it on demand—which it says would cost less than keeping a “mother room” at your own grow operation.
Traditionally there’s been an abiding communal spirit in the cannabis industry—what Reggie Gaudino at Steep Hill refers to as the kumbaya ethic. “You give cuttings to all your friends and then they put it in dispensaries,” he said.
Should breeders choose to sell their proprietary strains via Conception Nurseries (and not just keep them in reserve for their own use), Phylos and Conception are devising a way to credit breeders for their long-term R&D—and pay them royalties.
Phylos already has licensing agreements in place that give growers a lump sum up front for their germplasm; other agreements give growers a royalty every time one of their clones, which can be identified with their farm’s name on it, sells. Additionally, Phylos has formed a Small Farmers Network that entitles members to a 20 percent discount on all tests, as well as early access to scientific discoveries that come out of Phylos’ breeding work. (Membership to the Small Farmers Network is free.)
Another Phylos initiative, the Breeding Innovation Network, is a collaboration with breeders who want to advance R&D. Any useful discoveries that come out of the network, for instance, will be shared across the network. (The raw data itself will not be shared within the group, but any products or best practices that come out of the data will.)
“Because of the nature of illegality over the last 100 years, [cannabis research] is very decentralized,” said Phylos head plant breeder Brian Campbell. “When you work with corn, wheat, or rice, there are massive international repositories. You want some germplasm? You just make a request and they send them to you. That doesn’t exist with cannabis.”
As wholesale prices for flower continue to plummet in several states that have legalized cannabis, Phylos hopes to help craft growers differentiate themselves by getting them strains that are loaded with interesting terpenes or that have high levels of cannabinoids such as CBG, CBC, and THCV, which (unlike THC) looks like it may be an appetite suppressant.
Yes, these new strains will cost slightly more, but Holmes believes that discerning consumers will pay more for better quality product, just as they do for organic chicken or local microbrews. “We’re gonna make plants that have very high levels of limonene and pinene that make people alert and energetic,” Holmes said. “We’re going to make amazing, amazing new weed.”
The Open Cannabis Project, which Holmes formed in part to protect the richness and diversity of the cannabis plant, folded in early May. On May 6, after digesting what she saw in the pitch video, Open Cannabis Project executive director Beth Schechter and her board decided to dissolve the organization. In a public statement she posted to Medium, Schechter wrote: “Through it all, and despite our best efforts, we’ve been called a fraud, a scam, and a cover for some kind of secret plot. At first, we thought it was simply a technical misunderstanding of the subject matter. Now we know that there is truth to some of these fears … We sincerely believe in protecting small growers and breeders during this crucial transition to a legal market. We also feel we have been deceived.” Hence the decision to fold.
Holmes said the Open Cannabis Project knew that Phylos was doing breeding work and that Schechter and others on the board were shocked that Phylos would work with people from Big Ag businesses. “Progressives see those companies as truly evil, and [Schechter] didn’t have a framework for understanding how we could possibly be working with them,” he added. “The idea that you could have one foot in both worlds and still be committed to being an ethical company—that’s impossible for many people to wrap their heads around. It’s too bad, because that stance is a decision to leave all of this scientific power in the hands of people you don’t trust.”
When I spoke to Schechter at the end of May, she made it clear that the Open Cannabis Project had been struggling financially anyway and also had philosophical differences on its board about open source data versus patents. The Phylos situation, while not the only reason the project shuttered, was just the last straw. She sounded exhausted and relieved, but also more forgiving of Phylos than others in the cannabis community I’d spoken to. “Ultimately, their accountability and ability to make amends will be seen in the future,” she said. “I have faith in a lot of the people there. I really hope the top brass hears this, sees this, steers the ship a little bit back to the community-based, ethics-based origins that I truly believe were part of the origins of Phylos.”
Schechter wanted everyone to know that Mowgli Holmes is not a bad person. “He’s a human who tried to do right by everyone, but he made a big mistake. He was trying to please everyone and that just does not work.”
In the months and years to come, it will be telling to see if Phylos can deliver on all the promises it has made to small-scale breeders and growers. However, the clock is ticking. As soon as cannabis is federally legal, Big Ag will be free to enter the market, and much of the genetic diversity that Phylos has sought to preserve and nurture could be wiped out.
If Holmes and his team can quickly deliver a steady income stream for struggling breeders and give growers the tools they need to protect crops from diseases, they just might regain their reputation as a good ag science company—and be able to impact the evolution of the cannabis industry.