Shares of Valens GroWorks Corp (CSE:VGW) popped on Monday on the back of news that the cannabis company had signed an exclusive two-part, multiyear agreement with US beverage company, Tarukino Holdings Inc.
Shares of Valens were up 4.9% at C$1.92 midday but closed flat at C$1.83.
The agreement will give Valens the rights to a leading proprietary emulsion technology, known in the industry as SoRSE, while also securing rights to a range of cannabis-infused beverage brands.
Washington-state based Tarukino Holdings is a research and development company, that licenses its technologies and brands.
As part of the deal, Valens will grant Tarukino 4.3 million shares of the company on signing the agreement, one million warrants that vest based on certain future milestones, and a decreasing royalty on revenue related to the associated products and technologies over the term of the agreement.
The company said the warrants are exercisable at prices ranging from C$3.50 to C$4.00 per share for a five-year term from the date of issuance.
Under the terms, Tarukino will grant Valens the exclusive Canadian rights to the production and distribution of its proprietary emulsion technology that transforms cannabis oil and oil-based terpenes into water-soluble forms for use in beverages, edibles, topicals and other consumer products.
The technology is known as SoRSE, and allows cannabis-infused products to maintain potency when heated, chilled or frozen, while removing all cannabis taste and smell.
The deal will help enable Valens to develop its own self-branded products, while making SoRSE directly available to the Canadian market.
"One of the many key benefits of utilizing SoRSE technology in edibles and infused beverages includes being able to dramatically decrease the time for onset and how long it lasts after consumption. This will improve the experience for our consumers and ultimately paves the path for how we believe cannabis will be consumed in the future," said chief executive Tyler Robson.
Access to cannabis-infused beverage brands
The agreement will also grant Valens the Canadian rights to produce, sell and distribute (where permitted) Tarukino-branded cannabis-infused beverage brands.
These include: Happy Apple, a cannabis-infused sparkling cider and Pearl20, a cannabis-infused food and beverage mixer.
"In addition to holding the exclusive rights for Tarukino's beverage brands in the Canadian market, this partnership gives Valens access to the proprietary technology of SoRSE, which will enable Valens to expand on its offerings across numerous sectors of the cannabis space, particularly edibles and beverages which the company believes will be one of the next categories addressed by Health Canada in relation to the legalization of recreational cannabis in the Canadian market," said Robson.
The companies will work together in the coming months to manufacture SoRSE from Valens's Canada-based operations, which the company targets to be available for commercial use in 2019, subject to Health Canada permitting the sale of cannabis-infused edibles and beverages.
"SoRSE is the first and leading technology that produces near-perfect doses, entirely taste- and odour-free cannabis emulsions for infusion of medical and recreational products, and we are pleased to offer this technology, and our brands, to the Canadian market through our partnership with Valens," said Howard Lee, chief executive officer of Tarukino Holdings.