Surna Inc. is based in Boulder and has about 30 people working for the company. Courtesy: Surna Inc.

Surna growing its footprint as more cannabis growhouses come online

BOULDER — Surna Inc. (OTCQB: SRNA) has been in the business of helping growers with cannabis for years, ever since the company started by husband-and-wife team Stephen and Brandy Keen in their Austin garage.

Since those early days — when the Keens were actually growing palm trees — Surna has grown as one of the leaders for indoor growth equipment and solutions in the c

Inside Surna’s Boulder warehouse, fan coil units (foreground) and small chillers (background) are being worked on. Courtesy Surna Inc.

annabis industry.

As recreational and medical marijuana becomes increasingly legal in the United States and Canada — Surna is designing and equipping an $835,000 grow facility in Vancouver this year — Surna is benefitting from its long-time presence in the industry.

Surna doesn’t touch or deal in the cannabis plants it helps grow. Rather, it has developed a closed-loop indoor growing system that provides the climate control that marijuana needs to be sold commercially.

The closed loop works like a regular HVAC open loop, but it doesn’t have duct work outside of the building, meaning that contagions and bacteria can’t get into the facility through the duct work. Additionally, Surna provides consulting to the growers, with equipment that can manage light access to the plants as well as biosecurity to limit outside particles being brought in on workers.

Being on the equipment side of an early-stage industry such as cannabis means Surna is part of shaping best practices for the industry.

“Right now, regulations can be loose,” President and CEO Trent Doucet told BizWest. “But growers want to take steps to protecting their crops and maintaining quality control. They might have $10 million worth of product. If it gets contaminated, they lose everything.”

In addition to establishing indoor quality control, Surna is also helping shape standards of what comes out of the growhouses.

For example, when the city of Denver wanted odor control for growhouses in the area, growers approached Surna, unsure what to do.

“Our engineers thought, ‘well what needs the most odor control: wastewater,’” said Jamie English, marketing manager. “So they met with wastewater engineers and incorporated that technology to be on the cutting edge for growing.”

Since cannabis has become legalized in areas, Surna has grown.

“In 2015, that was a year of rapid growth for Surna, as the first recreational markets and major medicinal markets came online,” Doucet said. Revenue for Surna went from $1.8 million at the end of 2014 to $7.8 million by the end of 2015. According to its annual report filed with the U.S. Securities and Exchange Commission at the end of March, Surna reduced its loss in 2016 to $3.3 million and had a revenue of $7.6 million.

“The year 2016 was a year of operational strengthening,” he added. “In 2017, we plan to reposition again for rapid growth, exploring new geographic markets.”

One of those markets is California, which has a medicinal economy of $2 billion per year. It’s recreational economy is expected to dwarf that: $1.6 billion in its first year in 2018, $3 billion to $4 billion in 2019 and a cool $7 billion expected in its third year.

Surna manufactures equipment for cannabis growhouses, including chillers (foreground) and dry coolers (back). Courtesy: Surna Inc.

“And that doesn’t even include Canada,” English added.

To keep up with the needs of the new markets, Doucet said Surna is releasing two new products this year. One is a hybrid growing building that can switch between artificial lighting and natural lighting through its opaque roof.

“If there’s enough sunlight, it turns off the LED lighting,” Doucet said. “We had a third-party energy-efficiency company find its 60 percent more efficient than similar buildings. That can mean real savings, and the hybrid building has the benefit of a greenhouse with the control of the closed-loop environment.”

Surna is also releasing a new design for a water cooler that cools a room by pumping cold water next to lighting fixtures, rather than relying on air conditioning. That solution can also save a lot of money in energy costs, and is something that could be used by other large commercial buildings outside of growhouses.

“When it was getting started, there were a lot of ancillary benefits to NASA,” Doucet said. “Technology like GPS and satellite service came from the work being done there. I think the benefits of the cannabis industry are going to be similar. We’re going to see it translate to other markets, with others using these solutions.”