Dynamax Candy is an item in the “Vitamins” category (Medicine).
In-game descriptions
| Sword / Shield | A candy that is packed with energy. When consumed, it will raise the Dynamax Level of a single Pokémon by one. A higher level means higher HP when Dynamaxed. |
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Where to find it
Not placed on the atlas maps (so far: Red/Blue and Generation 3).
Sources : PokeAPI (items, item_flavor_text, machines) · atlas · pokeemerald species_info.h