Dotz Nano Limited (ASX:DTZ) an advanced technology company developing, manufacturing and commercialising tagging, tracing and verification solutions, has entered into a licensing agreement with a Canadian company to finalise development and sale of the BioDotz in-plant end-to-end anti-counterfeiting solution.
Slalom Capital, a Canadian private equity firm with extensive interests in the cannabis sector, will pay a non-refundable one-time payment to Dotz of A$296,000 within 60 days, to finalise the development of the BioDotz™ technology on cannabis plants over the nine months following the A$296,000 payment.
Dotz will then grant Slalom exclusive rights to sell BioDotz in Canada, assuming annual wholesale targets are reached. The first annual wholesales target is A$370,000 (as income for Dotz). The parties will then negotiate annual sales targets, consisting of at least the higher of: 125% of the prior year’s target; or 105% of the prior year’s actual sales.
Should Slalom undertake an initial public offering or assign their rights under the agreement, 20 per cent of the equity in Slalom or the assignee entity will transfer to Dotz. The agreement also contemplates the parties entering a more formal licence and supply agreement upon completion of the development phase.
Canada is the largest country in the world to have legalised medicinal and recreational cannabis (since 2001 and 2017 respectively). The Canada cannabis market is set to grow at a Compound Annual Growth Rate (CAGR) of 44.4 percent from US$569 million in 2018, the first year of adult-use sales, to nearly US$5.2 billion by 2024.
Commenting on the partnership agreement, Dotz CEO Uzi Breier said: “This is a logical next step in us commercialising our pending patent for the use of BioDotz™ as a direct taggant of cannabis and other high-value or restricted plants, and our work with Israeli medicinal cannabis producer Seàch.
“Slalom is very keen to ensure that finalisation of product is expedited, and to work with us as the exclusive distributor of our product in Canada.
“While regulation does vary from province to province in Canada, there are strict general rules regarding promotion, packaging, advertising and supply, which mean licenced producers in that country need to ensure they can track-and-trace cannabis to prevent illegal cannabis from being introduced into the legal market as well as legal cannabis from being diverted to the illegal market.
Slalom Capital’s Managing Partner Sukhmohan Athwal, said, “We are excited to be partnering with Dotz to help finalise BioDotz™ for cannabis and be their exclusive distributor in Canada. The Canadian cannabis market is due for prodigious growth as it increases the number of licenced growers of both medicinal and recreational products, improves the retail location network, addresses supply issues and provides a better selection of non-flower products as the legitimate growing market takes hold. To protect their market share growers will be very keen to ensure they can protect their brands throughout their supply chain.”