Cannabis consumer packaged goods company Dixie Brands (USA) Inc DXBRF announced an agreement Wednesday with iced tea maker AriZona to explore the production of cannabis-infused products.
What Happened
Dixi Brands and AriZona said in a press release that they signed a binding letter of intent Aug. 2 to partner for the production, distribution and sale of cannabis-infused products containing tetrahydrocannabinol — THC.
As part of the agreement, Dixie Brands will develop, formulate, manufacture and distribute a portfolio of AriZona-branded THC products, the companies said.
AriZona, through its affiliated entity Herbal Enterprises, will handle branding and product conceptual design.
Why It's Important
AriZona is well-positioned to "lead and seize" a new "generation-defining" opportunity like cannabis-infused beverages, AriZona Chairman Don Vultaggio said in a statement.
Dixie Brands CEO Chuck Smith called the partnership a "watershed moment for the popularization and expansion of the cannabis sector overall, and is another large step forward for Dixie Brands' strategy to build a house of famous cannabis CPG brands."
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What's Next
Dixie Brands and AriZona have 45 days to strike a definitive agreement from the signing of the letter of intent. If finalized, AriZona could make a strategic investment in Dixie Brands worth up to $10 million, the companies said.
The initial term of the partnership is three years, with an option to renew for up to two additional terms of two years each.
Dixie Brands shares were down 2.04% at 75 cents at the time of publication Thursday.
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