Shares of Lexaria Bioscience Corp. (CSE: LXX)(OTCQX: LXRP), as the drug delivery platform company said it is partnering with GP Holdings LLC for cannabis infused beverages in California. Per the new pact, Lexaria is licensing its DehydraTECH delivery technology that brings with it a litany of benefits, including increased intestinal absorption rates, faster delivery to the bloodstream and improved taste for oral delivery of bioactive molecules.
GP, a company licensed to infuse CBD and THC extracts, is building a new, state-of-the-art bottling facility in California as the cornerstone of its business as a THC beverage contract manufacturer. Operations are expected to begin at the plant with the next two quarters. As of January 1, 2018, recreational adult-use of marijuana became legal in California, the U.S.’s most populous state with nearly 40 million people.
Analysts expect beverages to make up one of the largest segments in the edible product market.
The partnership isn’t out of the blue, as the two companies have been collaborating for months now on creating high-performance marijuana beverages. The companies are aiming to have the drinks be basically free of any cannabis smell, flavor or opacity.
The term of the licensing agreement is initially set for five years. Financial terms of the agreement weren’t disclosed, only that they were comprised of cash and a royalty on products sold using the DehydraTECH technology. GP also acquired the rights to use the technology to develop topical skin products.
Lexaria maintained the right to offer other licensee partners the option of combining their brands with GP’s formulation and DehydraTECH technology for new beverages for the California market. Lexaria CEO Chris Bunka called it a "race to the top" in the California THC beverage and topicals market now that this agreement is in place.
Investors liked the news, carrying shares of LXX up by 4.1% to close Wednesday at $2.05 in Toronto. It was the third straight day of gains for the stock and marks a more than 100% move since hitting a four-month low at $1.00 on April 4.
