Scientists at the University of California at Berkeley have for the first time created cannabis compounds in a lab, instead of by harvesting them from a plant.

They detailed their work, which uses synthetic biology, in a study published Wednesday in the journal Nature.

If the technique can be scaled, it could transform the marijuana industry by allowing scientists to explore little-known cannabis compounds and manufacture those like THC and CBD for less money.

Several other startups have announced similar efforts, but none has demonstrated publicly that it has a technique that works.

Lab-made marijuana is coming.

In a move that's expected to transform the marijuana and pharmaceutical industries, scientists at the University of California at Berkeley announced on Wednesday that they had for the first time created cannabis compounds in a lab, instead of by harvesting them from a plant.

If the technique can scale, it could pave the way for making marijuana's therapeutic components more quickly and efficiently, for a fraction of the cost of traditional methods.

Using an increasingly popular approach known as synthetic biology, the researchers genetically engineered yeast to churn out a key component of marijuana that's a precursor to two of the best-known compounds in the plant: THC and CBD. Using those precursors, they made the compounds themselves — no farm or field required.

While THC is the part of marijuana that causes a high, CBD has an emerging reputation as a therapeutic and is the active ingredient in the first federally approved marijuana-based medication. Thanks to the health and wellness uses that CBD is tied to, the market for the compound could reach $16 billion by 2025, up from perhaps $1 billion or so now.

Marijuana plants contain a host of other, little-known compounds that scientists suspect also carry therapeutic properties. But it's been too difficult to produce them in large enough quantities to study.

That could now be set to change.

In a paper published in the journal Nature, the Berkeley researchers outlined how both types of marijuana compounds — the well-known ones like THC and the lesser-known ones like THCV — could be made in a lab. That's likely to have big implications for startups and pharmaceutical companies that want to make new marijuana-based drugs for everything from epilepsy to pain and arthritis.

Several companies are working on similar efforts. Wall Street has noticed as well, saying that lab-made marijuana is one on a growing list of factors helping to accelerate cannabis' entry into the pharmaceutical and consumer-wellness industries.

"There could be whole host of new products that could come from this," Jay Keasling, a UC Berkeley bioengineer who led the study, told Business Insider.

'A critical step in the pathway that no one's had until this point'

Lab-made marijuana compounds could help researchers find new medical treatments. Shutterstock

Before they could make marijuana compounds without a field or a greenhouse, Keasling and his team had to go hunting for the ingredients required to make it work in a laboratory — something of a holy grail for the cannabis industry.

Lab-made marijuana could have multiple advantages over traditionally grown marijuana, like a lower cost and a smaller environmental footprint.

Several companies are interested in becoming the first to prove that the method, also known as biosynthesis, works, including Ginkgo Bioworks, a synthetic-biology startup in Boston; Intrexon, a biotech in Maryland; and Hyasynth Bio, a Canadian startup.

Wall Street is keen to see it happen too.

"Compared to chemical methods, biosynthesis methods are more cost-effective, scalable, and environmentally friendly," analysts at the investment firm Cowen said in a note circulated this week.

Keasling and his team spent years figuring out how to do it.

They uncovered a clue in the patent literature about a way to tweak the genes of yeast using marijuana DNA that would result in it churning out a key precursor to CBD and THC.

The process of modifying the DNA of a basic organism like yeast or E. coli to coax it into producing another product is known as synthetic biology. In recent years, investors have been pouring money into companies in the area.

Put simply, synthetic biology involves harnessing the power of cells to make things like drugs, biodegradable building materials, and less toxic sweeteners for food.

Read more: A Silicon Valley startup with 26 patents under its belt just raised $400 million from SoftBank and Goldman Sachs to make materials from living things

So Keasling and his team took all the basic ingredients identified by previous researchers — components of yeast DNA and components of cannabis DNA — and tried to make the marijuana compounds in a lab. Several attempts failed.

"We tried all the tricks we had," Keasling said. "We just could not get it to work."

So they took another stab at it. After several years of work exploring hundreds of marijuana genes, they were able to home in on their target: an enzyme called CsPT4. It allowed them to make the ingredients they needed to then make compounds like CBD and THC.

"This is a critical step in the pathway that no one's had until this point," Keasling said.

A startup that wants to make new drugs and sign deals with pharma

Pharmaceutical companies and startups could be interested in the new approach to creating marijuana compounds. Shutterstock

The next step for Keasling is scaling up. To do that, he must prove in larger experiments that his technique works and at a lower cost than traditional manufacturing.

That could be of major interest to pharmaceutical companies like GW Pharma, which recently became the first company with a US-approved marijuana-based drug. (Called Epidiolex, the drug is designed to treat rare forms of epilepsy using high concentrations of CBD.)

It might also interest several startups that in recent years have pledged to turn marijuana compounds like CBD into federally approved drugs for diseases like Crohn's and multiple sclerosis.

Read more: A pair of high-profile Stanford scientists wants to use marijuana to treat an entire class of diseases where big pharma has fallen short

Keasling has already licensed the technology he described in the study to a startup he founded in 2015 called Demetrix. He said it would be open to working with a range of established companies in the pharmaceutical industry or the food industry.

Jeff Ubersax, Demetrix's CEO, told Business Insider that the startup had raised $11 million in venture capital led by Horizon Ventures, a VC firm in Hong Kong. Horizon has also backed Impossible Foods, the company behind a plant-based burger, and Siri, the developer of Apple's virtual assistant.

No stranger to startups, Keasling has founded several companies and is as an adviser to four. In 2003, he helped found Amyris, now a skincare company, and in 2010 he founded Lygos, a startup that wants to use microbes for renewable-energy purposes. He's no longer involved with Amyris but remains an adviser to Lygos.

Read more: After a kick-start from Bill Gates, a Silicon Valley company aims to be the 'Intel Inside' of the $200 billion sweetener and skincare market

With Demetrix, Keasling and Ubersax are focused on two goals, they told Business Insider.

They want to churn out lab-made versions of cannabis' well-known compounds. They also want to make a handful of understudied marijuana compounds, ingredients Keasling said are likely to have therapeutic properties; THCV, for example, could have appetite-staunching potential.

Other startups have similar goals. Ginkgo Bioworks recently signed a $122 million deal with the Canadian marijuana producer Cronos to make the well-known cannabis compounds and the lesser-known ingredients, using the same synthetic-biology principles.

Keasling said he thinks he can make marijuana compounds for a fraction of the cost of traditional cannabis production because his method wouldn't require greenhouse-building materials, large amounts of land or water, or manual labor.

"From a scientific perspective, with all the rare cannabinoids we're going to be able to produce, I think it's going to be really cool," Keasling said.