Cannabis Wheaton Income Corp. (TSXV:CBW) said it has signed a definitive licensing agreement with Dixie Brands
SmallCapPower | May 22, 2018: Cannabis Wheaton Income Corp. (TSXV:CBW) announced recently that it has signed a definitive licensing agreement with Colorado-based Dixie Brands, Inc., a firm specializing in developing intellectual property related to cannabinoid (CBD)-infused products. Pursuant to the agreement, Dixie granted Cannabis Wheaton exclusive license to Dixie’s intellectual property (IP) including formulation methodologies and associated branding related to over 100 CBD-infused products in Canada and Mexico. Valid for an initial term of 10 years, the agreement can be renewed by Cannabis Wheaton for up to two additional five-year periods.
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Although marijuana-infused edible products are not currently legal in Canada, the passing of Bill C-45 in April 2017 to legalize marijuana for recreational use in Canada on or before July 1, 2018 could present a potentially large opportunity for Cannabis Wheaton. As, and when, these products are permitted, Cannabis Wheaton will use the Dixie IP to develop, manufacture, distribute and sell Dixie-branded products in Canada and Mexico. Several third-party licensees have already used Dixie IP to produce a variety of CBD-infused products including drinks, mints, chocolate bars, tinctures, bath soaks, and balms.
Once legalized in mid-2018, CBD-infused products are expected to explode over the coming years. To cash in on this opportunity, key Canadian players have inked license agreements and partnerships to prepare for the expected demand surge. In July 2017, Canopy Growth Corporation (TSX:WEED) signed a licensing agreement with Isodiol International Inc. (CSE:ISOL) for the manufacture and distribution of Isodiol’s marijuana-infused “Pot-O-Coffee” and “Pot-O-Tea” branded products in Canada and internationally. In March 2018, WeedMD Inc. (TSXV:WMD) formed a JV with cannabinoid-infused beverages maker, Phivida Holdings Inc. (CSE:VIDA) to develop cannabis-infused beverages.
Hugo Alves, President of Cannabis Wheaton stated, “I have personally known the Dixie team for many years and have the utmost confidence in their people and the high-quality products that they produce. Over the past five years I have watched Dixie amass an impressive intellectual property library and we believe that their proprietary formulations and products continue to separate them from their competitors. We are eager to learn from one of the best producers of cannabis-derived products in the world and this long-term partnership cements a long-standing relationship and evidences our commitment to ensuring product diversity within our platform and mitigating margin compression through the acquisition and development of value-add IP.”
As the world’s first cannabis streaming company, Cannabis Wheaton has developed its streaming platform by funding numerous cannabis facilities/partners across Canada in exchange for minority equity interests and portions of the cultivated production. Cannabis Wheaton currently trades at a market cap of $701 million or 508x its TTM sales of $1.38 million.
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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