Canntab Therapeutics Ltd (CSE:PILL) is lining up its ducks ahead of the legalization of cannabis in Canada on October 17 this year - as it announced a profit sharing collaboration with medical pot producer FSD Pharma Inc.

Under the letter of intent (LOI) FSD Pharma will help Canntab to obtain a license to process and sell cannabis products under the new legislation.

It will also provide up to 10,000 sq ft of space at its 620,000  sq ft facility, which lies one hour east of Toronto in Cobourg, Ontario.

There, Canntab will build and install its own manufacturing facility to produce novel cannabis oral dose delivery platforms, including gel capsules and tablets.

"We are thrilled to announce our partnership with FSD Pharma, which not only provides us with space at their world class facility in Cobourg, but also gives us access to their deep knowledge base, which we believe will help us move our application through the Health Canada process as quickly and smoothly as possible," said Jeffrey Renwick, Canntab chief executive.

"With this partnership in place, we believe that Canntab is well-position to capitalize on the impending legalization of cannabis on October 17, 2018".

Under the plan, Canntab will hand FSD  50% of the profits that Canntab receives on any retail sales of Canntab products through channels that are established by FSD Pharma.

Meanwhile, FSD will be entitled to retain 50% of the profits on FSD Pharma's sales of the Canntab Products.

Canntab will also pay FSD a royalty of 3.5% of Canntab's sale price for all Canntab Products that are manufactured and sold from the Canntab Premises.

"This could be HUGE," said Thomas Fairfull, chief executive at FSD Pharma.

"Pills and tablets are the norm for most patients' method of consuming medicine and nutraceuticals.

"It's still difficult for doctors and other alternative health practitioners to prescribe smoking as a form of medicine. Jeff and his team have been in the pharma manufacturing industry for decades and have been doing research in cannabis for years collecting a wealth of experience and knowledge that even most big pharma companies don't have."

Canntab and FSD Pharma intend to execute a definitive agreement by July 15 this year.