Next Investors logo grey

DTZ Signs Deal to Deliver Anti-Counterfeit Tech to Canadian Cannabis Market


Published 15-AUG-2019 10:02 A.M.


9 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

Dotz Nano (ASX:DTZ) is entering the North American cannabis market.

The technology company has struck a partnership with a Canadian private equity firm, Slalom Capital, which has extensive interests in the Canadian cannabis sector, to accelerate sales of its anti-counterfeit product in the blossoming Canadian cannabis market.

The Canada cannabis market is set to grow at a rate of 44.4% compounded annually (CAGR) from US$569 million in 2018 — the first year of adult-use sales, to nearly US$5.2 billion by 2024.

ArcView Market Research reports that the Canadian legal cannabis market for medical patients has grown from 359,292 to roughly 29 million adults – each of whom became a potential cannabis consumer.

This is a large prospective market and partnering with a local, well-entrenched well-respected cannabis player is a smart move.

Given this partnership and DTZ’s ambition to expand its cannabis footprint, it may not be long before we see its first cannabis revenues coming in – potentially just months away.

This agreement presents an opportune time for investors to look more closely at DTZ, before the market catches on and sales contracts are signed.

The catalyst

DTZ has partnered with Slalom Capital Inc., which focuses on commercialising cannabis-related solutions. Slalom will pay a non-refundable one-time payment of A$296,000 within 60 days, to finalise the development of DTZ’s BioDotzTM technology on cannabis plants over the next nine months.

BioDotzTM are carbon-based markers for supply chain monitoring of plants of value.

Once this development is finalised, DTZ will grant Slalom exclusive rights to sell BioDotz in Canada, assuming annual wholesale targets are reached.

This means revenues for DTZ.

The first annual wholesales target will consist of a minimum of A$370,000 income for DTZ. Annual sales targets will then be negotiated and consist of at least the higher of either: 125% of the prior year’s target; or 105% of the prior year’s actual sales.

DTZ sees this as a logical step to commercialising its pending patent for the use of BioDotzTM as a direct taggant of cannabis and other high-value or restricted plants.

It complements the work DTZ is already doing with Israeli medicinal cannabis producer Seàch.

“Our Canadian Partner 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.”

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.

This deal has the potential to accelerate not only the implementation of its technology in this market, but also DTZ’s revenue growth.

It is a good time to be in cannabis, particularly with a product that could revolutionise the industry by preventing legal products being counterfeited or sold illegally.

DTZ’s first cannabis entry

As briefly mentioned to above, DTZ has already entered the cannabis space when it partnered with licenced Israeli medicinal cannabis producer Seàch Medical Cannabis Group.

The news was covered by Computerworld ...

Next Investors Image

and by TechInvest ...

Next Investors Image

... showing just how big this reach could be.

Interestingly, Seàch is merging with Tel Aviv-listed Beyond Time (TLV:BNTM), which will give DTZ further reach.

Seàch produces a wide variety of cannabis strains and has a product range encompassing buds, rolls and oils. It will add Dotz’s non-toxic BioDotzTM markers to cannabis plants at its global growing facilities.

The plants will then be integrated with in-plant security identifiers that can’t be forged or removed.

Prior to this DTZ had conducted a successful in-house proof of concept (PoC), where BioDotzTM were successfully embedded in plants with a close biological structure to cannabis.

The initial PoC showed BioDotzTM did not affect the basic properties or appearance of the plants and were detectable days after being added.

BioDotzTM markers feature multiple layers of security and are designed to continue working in elevated temperatures over extended periods of time. The markers can be identified on-site and in real-time using Dotz’s secure app-based reader.

“Seàch is a very experienced medicinal cannabis producer with a reputation for developing new strains and adopting cutting-edge technology. Our partnership with them allows us to progress in-plant tag-and-trace with our unique anti-counterfeiting technology,” DTZ CEO Uzi Breier said.

“Our cooperation will examine the best ways to successfully insert our non-toxic security taggants directly into cannabis plants, enhancing product security throughout the cannabis supply chain. We see this as a significant opportunity for Dotz, particularly as existing track-and-trace cannabis security measures, such as RFID tags and barcodes, have been insufficient in preventing illegal cannabis from being introduced into the legal market as well as legal cannabis from being diverted to the illegal market.”

DTZ’s BioDotz solution could have a major impact on the cannabis industry, particularly in preventing illegal strains and products to be sold.

Looking at the broader market

The applications for nanotechnology are endless.

Nanotechnology can increase the capabilities of electronics devices, whilst reducing power consumption. Researchers are developing customised nanoparticles, the size of molecules that can deliver drugs directly to diseased cells. It is changing the way food is packaged and tastes and it is being used to address fuel shortages including diesel and gas.

That’s just the tip of the iceberg.

The global market for nanotechnologies in energy applications alone should grow from $5.7 billion in 2018 to reach $10.0 billion by 2023.

And according to MarketWatch, the global market for Healthcare Nanotechnology will reach US$255.5 billion, from US$160.8 billion this year.

You get the picture. It’s a big addressable market and if a company can find a niche — just a microscopic part of an industry where it can have a commercial influence — then the sky is the limit.

DTZ has found its nano-niche in the research, production and marketing of anti-counterfeiting, authentication and tracing solutions. It provides revolutionary nanotechnology solutions that fit the anti-counterfeiting, brand & reputation protection, oil & gas, liquids tagging, lubricants and DEF authentication, polymers tagging and bio-imaging sectors.

It is targeting large global markets:

Next Investors Image

DTZ is, in fact, hard at work product testing with prospective customers to build sales activity in new markets and have an impact against the $2.2 trillion of products being counterfeited.

The company is developing, manufacturing and commercialising tagging, tracing and verification solutions that include its ValiDotzTM, FluorensicTM, and BioDotzTM products. These products can be embedded into plastics, fuels, lubricants, chemicals, and even Cannabis and Tobacco plants to create product specific codes and trace for origin.

DTZ already has a global reach with sales offices in the USA, Japan and Switzerland and industrial manufacturing facilities in the USA and Germany. It announced its first customer sales contracts in January this year.

These contracts, coupled with impending revenues from its cannabis play, could improve DTZ’s bottom line quickly and dramatically — not to mention lift its $14 million market cap.

With all that in mind, how does DTZ’s solutions work?

The tech break down

Here’s a short video with regard to DTZ’s nanotechnology solutions work:

Without going into too much detail (see website for more information), DTZ offers in-product tagging solutions.

Known as ValiDotzTM, these security markers are directly embedded during the production process to impart a non-reversible, product-specific code, which can be then easily authenticated on-site and in real time, to provide a high confidence end-to-end authentication solution.

The company explains this state-of-the-art solution using the following graphic:

Next Investors Image

Here is the technology principle:

Next Investors Image

The overall benefits of embedding this technology include:

  • The inability to reverse engineer a product
  • Eco-friendly markers that are manufactured from carbon sources only
  • Markers that are simple to detect, in real time and on-site and they do not affect the properties of the materials

These markers also have a great many uses:

Next Investors Image

BioDotzTM are carbon-based markers that are the first in-plant security solution for supply chain monitoring of plants of value such as cannabis and tobacco. As BioDotzTM cannot be removed from the plant.

Breaking into the cannabis industry is a milestone in itself, but DTZ has a raft of prospective industries and clients on its books and it is only just getting started.

Further developments

DTZ is turning its attention to executing additional sales contracts.

It recently raised $1 million, which will go towards increasing its sales and marketing activity, as well as completing advanced engagements with potential customers in the fuel and fracking industries.

However, now DTZ has a taste for the global cannabis industry, it is expected more deals will flow in this space as well, as well as revenues.

The final word

A move into cannabis is smart one by DTZ. It is adding another multi-billion dollar industry to its repertoire in a region where the cannabis industry is rapidly expanding.

The global legal marijuana market size is expected to reach US$66.3 billion by the end of 2025. The overall cannabis market is expected to reach over $340 billion.

The new agreement with the Canadian cannabis company is a small step in penetrating this market, but nonetheless a significant one. Expect further deals to follow now in this space, to back up the sales agreements that are expected to come through in other industries.

Counterfeit is a $22 trillion dollar blight on society and DTZ can help.

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.