Lexaria Solidifies Presence in Edibles Market with New Agreement
May 4th, 2018
Exclusive, News, Top Story
The cannabis industry is projected to reach $50 billion by 2026, according to Cowen & Co., driven by the legalization of adult-use cannabis across many states. With adult-use on the rise, consumer preferences are quickly shifting from smoking cannabis flower to consuming edible products that are better-tasting and faster-acting. Investors may want to consider building exposure to the edibles space to capitalize on these trends.
Lexaria Bioscience Corp.’s (OTCQX: LXRP) (CSE: LXX) DehydraTECH™ platform enables edibles manufacturers to increase bioavailability, improve flavor profiles, and expedite the onset of cannabinoid effects across a wide range of products. Investors may want to take note of the stock since the company’s growing number of licensees represents an attractive way to build exposure to edibles through royalty-based licensing agreements.
Innovative DehydraTECH™ Platform
Lexaria’s patented DehydraTECH™ technology is designed to increase the bioavailability, improve the flavors, and rapidity of onset of cannabinoids across a wide range of products, from capsules to edibles to beverages. Earlier this year, the company secured key patents on the technology covering these use cases, as well as other innovative areas of application, such as for the delivery of NSAIDS, nicotine, and vitamins.
The company is monetizing the DehydraTECH™ platform through partnerships across many different vertical markets. In exchange for the right to use the technology, the company often receives a lump sum payment and royalties on revenue generated from products developed using the technology platform. These agreements provide shareholders with near-term lump sum revenue and predictable revenue streams over the long-term.
Management has signed a number of licensing agreements since DehydraTECH™’s launch earlier this year. For example, the company has been working with Nuka Enterprises to develop chocolates and other edibles using the technology for the past two years, as well as GP Holdings LLC in developing cannabis-infused beverages. These represents multi-billion dollars markets that are rapidly growing throughout the world.
New License Agreement
Lexaria recently signed a new license agreement with Nuka Enterprises LLC, which makes 1906 brand cannabis chocolates and other edibles products. After utilizing the DehydraTECH™ platform for nearly two years, the company has risen to become one of Colorado’s top cannabis chocolate brands available in over 150 locations. The decision to renew its license to use DehydraTECH™ represents a strong vote of confidence in the technology.
“1906 products are a unique combination of nature and science, bringing together natural plant medicines delivered in delicious form factors, such as chocolate, with advanced technologies that make them safe, predictable, fast-acting, and efficacious,” said Nuke Enterprises CEO Peter Barsooom. “We’ve worked closely with Lexaria through 1906’s development and launch phases to create the best possible products that taste great, reduce onset times, and deliver amazing experiences. Fast-acting edibles are the wave of the future – it’s what consumers want – and we are at the forefront of bringing innovations to address customer needs.”
Under the new ten year semi-exclusive agreement, Nuka Enterprises will leverage DehydraTECH™ in its U.S.-based products with a focus on recreational states like Colorado, Nevada, California, New Jersey, and Massachusetts. The company also has acquired an option to expand its products and brand to Canada, including through the use of Lexaria’s existing chocolate and confections contract manufacturer licensee, Cannfections Group Inc.
Lexaria Bioscience Corp. (OTCQX: LXRP) (CSE: LXX) represents a compelling investment opportunity in the burgeoning cannabis industry. With its DehydraTECH™ platform gaining traction, the company is quickly building a steady stream of recurring revenue that could unlock significant value for shareholders over time. Investors may want to take a look at the stock sooner rather than later to capitalize on these dynamics.
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