Like many other equities in the cannabis industry, Cronos Group (NASDAQ:CRON) stock has had its share of difficulties lately. Concerns over the current vaping crisis and some earnings misses and downgrades have put pressure on marijuana stocks. Over the past week, the price of CRON stock has dropped by almost 15%. It is currently testing a support level.
One of Cronos’ strengths, which could boost CRON stock, is the strategic partnership that it formed with Ginkgo Bioworks last year. The alliance will boost CRON’s competitiveness in the cannabinoids market.
Cronos Group’s Focus on Cannabinoid Production
Cannabinoids are chemical compounds that are found in cannabis plants. They are extracted from the plants and used to make cannabis-infused products, such as beverages and wellness products. Cannabinoids are less than 1% of the weight of the plant. They are extremely difficult to produce commercially, using traditional techniques. Ginkgo Bioworks is one of the leading companies in this field, leading Cronos to seek an alliance with it.
The companies believe that the partnership will allow them to significantly reduce the cost of cannabinoid production.
Cronos thinks that the production methodology developed by the partners will allow it to use its existing infrastructure to develop cannabinoids, instead of building expensive new cultivation and extraction facilities.
The plan is for Ginkgo to develop microorganisms that can produce eight different cannabinoids on an industrial scale. The production process will be much cheaper than conventional methods. That is why Cronos believes that this partnership makes a lot of sense. CRON stock will also have the exclusive right to the key patented intellectual property that the partners develop.
Cannabinoid extraction and production will be an important part of the cannabis industry as the sector continues to grow. There are many other companies that are involved in this area, but Cronos and Ginkgo Bioworks believe that their strategic partnership will give them significant advantages over the competition. If CRON stock does eventually turn around, this partnership will probably be one of the main reasons for its rejuvenation.
What Is Next for CRON Stock?
CRON stock has fallen below support at the $10.75 level. Earlier in the month, this level acted as support for Cronos Group stock. But the stock is now bumping around the $9.30 level, and there’s no sure sign that a bottom is in yet.
Now that CRON stock is below $10.75, that level will probably become resistance for Cronos Group stock. After stocks fall below their support levels, the prior support points tend to become resistance levels.
At the time of this writing Mark Putrino did not hold any positions in any of the aforementioned securities.