Medical cannabis developer Queensland Bauxite has bought a chunk of fellow pot stock Algae.Tec.

Medical Cannabis Ltd — a majority-owned subsidiary of Queensland Bauxite (ASX:QBL) — now owns 15 per cent of the former bio-energy business.

The shareholding is part of a deal announced in December giving Algae.Tec (ASX:AEB) an exclusive licence to Medical Cannabis Ltd’s “Low THC Delta 9 Cannabis” seeds.

Algae.Tec is to establish a breeding program to identify cultivars for use in product development for veterinary use.

Where or when that program might start is still waiting on the regulator in Australia.

While Algae.Tec has growing operations in Uruguay, it doesn’t have a cultivation licence in Australia yet.

And Medical Cannabis Ltd can’t yet export, as it’s now working on obtaining an export licence for its seed bank.

Algae.Tec must also give Medical Cannabis Ltd one free option for every share, and once it manages to extract oils from the seeds in question owes the new shareholder shares to bring its stake up to 19.9 per cent.

There is also a 5 per cent royalty on any human applications coming from the animal product R&D.

Queensland Bauxite shares were up 2.5 per cent on Wednesday morning to 4c, while Algae.Tec were flat on 2c.

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