WeedMD Inc. (CVE:WMD) and Phivida Holdings Inc. (CSE: VIDA) announced Wednesday they have signed a joint agreement to develop and operate Cannabis Beverages Inc. at WeedMD’s greenhouse facility in Strathroy, Ontario.

The joint venture will be focused on product development, manufacturing, marketing and distribution of cannabis-infused beverages for Canada and export to licensed international markets.

“We are thrilled to begin the development of this joint venture. With the launch of CanBev, WeedMD will be one of the first to introduce an innovative and popular consumption method with our cannabis-infused beverages – adding a new brand category for the medical and adult-use markets,” said Keith Merker, CEO of WeedMD.

“WeedMD is proud to collaborate with Phivida on this joint venture and to work alongside a world-class management team that includes former senior executives from beverage and other industry leaders who worked for Red Bull®, Seagram’s®, Proctor and Gamble®, and McKesson. Leveraging proven success, we will be well-positioned to execute on our growth plans for infused beverages.”

According to Consumer Health Products Canada, the CBD-infused products market is worth $5.6 billion in Canada alone. 

Under the terms of the agreement, both companies will be strategic partners in the development of CanBev. 

WeedMD will act as the exclusive supplier of cannabinoid extracts for use in innovative cannabis-infused consumer products to be made at the CanBev facility. In doing so, WeedMD will designate manufacturing space at its 610,000 sq. ft. state-of-the-art licensed cultivation and processing facility located in Strathroy, Ontario.

Phivida will be sublicensing its current and future trademarks, intellectual property, branding and packaging to CanBev. Phivida has also agreed to lead new product innovation, research and development, formulation, packaging and branding for CanBev.

“The Phivida team is excited to contribute our management, expertise and product knowledge to the CanBev joint venture,” said Jim Bailey, CEO and president of Phivida.

“WeedMD is an ideal partner for Phivida and we are thrilled to bring our cannabinoid-infused beverages and brands back home to Canada. WeedMD provides CanBev with solid infrastructure, strong management, world-class genetics and proven success in the Canadian healthcare market. We are very proud to partner with best in class among the Canadian licensed producers.”

In addition to supplying CanBev with cannabis, WeedMD will assist CanBev with obtaining all necessary federal licenses and permits and has also agreed to provide all current and future genetics.

The joint venture will be structured as a jointly-owned company with a dedicated board of directors and operational management team. Phivida and WeedMD will retain 50% each of the Class A shares.

The shares issued will correspond to CanBev’s appointment of nominees to a board of directors— to be made up of five individuals, two nominated by Phivida, two by WeedMD, and one independent director. 

Phivida and WeedMD have agreed to fund capital requirements of CanBev equally, and on a pro-rata basis, from their respective treasuries, beginning with initial shareholder advances of C$375,000 each.

Shares of WeedMD perked up 5.2% at $1.41 on Wednesday.