Armed with $4 million in fresh Canadian funding, Dixie Brands, a Denver, Colorado-based Edibles maker, is planning on expanding product distribution as part of a push over the next year to expand into a half-dozen or more new states.
The recently revealed investment, led by Canadian venture firm Hillcrest Merchant Partners, appears to be another clear signal of two emerging trends in the cannabis industry.
Edibles and infused products are growing in popularity and Canada is becoming a big international player in the marijuana sector.
The funding for Dixie follows a cash infusion of $6 million in April for Adelanto, California-based Plus Products. And Canadian firm INDIVA announced in April 2018 that it was taking 5 percent stake in edibles maker Bhang, based in Oakland, California.
Dixie CEO Chuck Smith, who filed the form for the funding with the US Securities and Exchange Commission on April 17, 2018, said he sees great growth potential in Edibles by a wider consumer population as the stigma of recreational cannabis use continues to burn away.
“It’s a movement as this industry becomes more normalized and grows in the United States,” Smith said from London in a phone interview with Marijuana.com on Thursday, April 26, 2018, where he was attending the one-day investor conference Cannabis Invest U.K. Smith spoke to a group of institutional and high-net-worth investors about opportunities within the current cannabis landscape.
Back in 2012, when recreational cannabis was getting its start in Washington and Colorado “the market was primarily Flower,” said Dave Rheins, founder and executive director of the Marijuana Business Association, a national business-to-business trade organization.
Edibles have since become an increasingly important part of the cannabis industry, bringing a whole new customer through the doors of retailers, he said.
“That’s really opening up and addressing a newer demographic, primarily a heavily female demographic, older, non-smokers,” Rheins said. “A non-traditional cannabis user.”
The perceived health risk of smoking anything, and the discrete nature of Edibles over smoking or vaping, makes edibles attractive to this demographic, he added.
“If you’re picking up the kids at soccer practice, it’s a lot easier to consume an edible,” Rheins said.
According to Smith, Dixie’s new funding will be used to support ongoing manufacturing and distribution in the four states in which the company currently operates: California, Colorado, Nevada and Washington; it will also be used to help continue raising brand awareness through the buildout of its brands Aceso, CDB-infused human wellness supplements, and Therabis, CDB-infused pet wellness supplements.
“I think like any industry, people are going to look for brands,” he said. “I think that people are looking to invest in high-quality brands that have appeal. As we get through this funding, we will be looking probably to a subsequent fundraising effort to help us expand. We’re looking to expand throughout the United States and expand our footprint.”
He added, “We are in discussions with licensing the brand in Canada.”
Smith didn’t offer further details on those talks, and he declined to give specifics on financials of the privately held company.
Smith also didn’t offer a timeline on the deal for licensing in Canada, but he had no problem expressing his excitement about it.
“Canadian markets are very liquid right now and there’s a lot of enthusiasm for cannabis,” Smith said.
The company reportedly employs between 75 and 100 people, and has announced plans to expand into another six to 10 states over the next 12 months.
Dixie has been selling its THC- and CBD-infused products since 2009, building out from what began is Dixie Elixir, a THC-infused soda, to selling more than 30 products today.
Edibles lend themselves well to branding efforts, and Dixie is well-positioned to take advantage of that, according to Rheins.
“Dixie built mostly a corporate brand and to a lesser degree a products brand strategy,” he said. “In that emerging category, what you’re seeing is edibles, unlike flower, historically really is a CPG play.”
CPG – consumer packaged goods – takes a commodity and creates a brand where there is likely to be high market saturation. One of the world’s largest CPG players, for example, is Proctor & Gamble, which is known for creating a marketplace around detergent with the perceived value differences between numerous brands.
“It’s category specific,” Rheins said of Dixie. “This is a natural play. Dixie’s done a great job of raising the awareness of its brands.”