Tea maker AriZona announced it was teaming with Denver-based cannabis company Dixie Brands (DXBRF) to develop cannabis-infused products containing THC.

AriZona's subsidiary Herbal Enterprises will direct brand and product conceptual design while Dixie Brands will develop, manufacture and distribute the new lineup of AriZona-branded THC-infused products. 

The initial term for the partnership is three years, with options to renew for up to two additional terms of two years each. 

"AriZona has always led the way in product innovation," said AriZona Chairman Don Vultaggio. "The cannabis market is an important emerging category, and we've maintained our independence as a private business to be positioned to lead and seize generation-defining opportunities exactly like this one."

The companies agreed to complete definitive agreements within 45 days, or a date mutually agreed upon by the two companies.

As part of the deal, AriZona has the right to complete an investment in Dixie Brands of up to $10 million in subordinate voting shares of Dixie Brands at a price of 59 cents for a term of two years.