Vancouver-based Phivida Holdings Inc. (CSE:VIDA) (OTC:PHVAF), a maker of a premium brand of functional beverages and clinical health products infused with cannabidiol, said Thursday morning that it is teaming up with Toronto’s licensed medical cannabis producer and distributor WeedMD (TSX-V:WMD) (OTC:WDDMF) to leverage each company’s strength to develop and manufacture cannabis-infused beverages via a new JV company appropriately called Cannabis Beverages, or CanBev for short.
The plan, spelled out in a letter of intent between the companies, calls for CanBev to develop a production facility at WeedMD’s sprawling 610,000 square-foot greenhouse in Strathroy, Ontario, representing one of the first cannabis-infused beverage production facilities in the country. WeedMD intends to dedicate part of the 14 acres under glass to CanBev, as well as sharing state-of-the-art infrastructure, while leaving the door open to additional expansion in the future.
Further, WeedMD will be the exclusive cannabis supplier and distributor for CanBev. For its part, Phivida will be responsible for product innovation, research and development, formulation and branding. Phivida will also sublicense certain of its nanoencapsulation technologies related to bioavailability and solubility to CanBev, as well as devote resources towards developing new consumer brands pointing at the upcoming adult-use market.
Canadian Prime Minister Justin Trudeau made campaign promises vowing to legalize recreational marijuana country-wide, which is expected to come to fruition in July or shortly thereafter. As it stands currently, Uruguay is the only country in the world to legalize the consumption and sale of recreational marijuana.
With an established medical market for cannabis and a pending recreational use market on the horizon, the partners believe they can “control and dominate” the functional beverage market in Canada, according to WeedMD Chairman Michael Kraft in a video giving some background on the genesis of CanBev. There are no intentions to target the U.S. market, where pot remains illegal at the federal level.
With its world-class genetics, existing infrastructure, experience in garnering Canadian licenses and seasoned leadership, John-David Belfontaine, President and Chairman at Phivida, calls WeedMD an “ideal partner,” marrying robust skillsets to “bring federally legal cannabis-infused consumer packaged goods and brands to the Canadian market for the first time in the history of the industry.”
After gapping ahead to $1.78 at the from Wednesday’s close at $1.59 per share and touching as high as $1.85, VIDA stock has filled the gap and holding a gain of a penny at $1.60 early in the afternoon trading session. Meanwhile, shares of WMD have edged down 3.5% to $1.94.