One of the largest and most prominent infused products manufacturers in the cannabis industry is expanding beyond its home base of Colorado, becoming the latest marijuana company to serve multiple states.
Denver-based Dixie Brands will enter California – the biggest medical marijuana market in the country – on July 1, when its products will appear on dispensary shelves in the San Francisco area via a licensing deal with a local company. It plans to enter Los Angeles and San Diego several weeks later and expand to several additional states in the second half of the year, the company told Marijuana Business Daily.
“It’s going to be a massive market for us,” said Joe Hodas, chief marketing officer at Dixie, adding that California could surpass Colorado for the company in terms of sales.
Dixie is far from the first edibles company to spread across state lines: Several – including Bhang Chocolate, EdiPure, Mary’s Medicinals and G Farma Labs – have cemented partnerships and licensing deals in more than one state, bringing in added revenue and spread their brand names across the country. Bhang is even available in Holland.
But Dixie is one of the most well-known infused products companies to go this route, and its expansion further underscores how the industry is evolving and maturing.
“These types of groups that are (expanding aggressively) are the ones that are fartherhttp://saragullickson.com/wp-admin/edit.php?post_type=press ahead than others,” said Zeta Ceti, owner of Green Rush Consulting in Oakland, California. “Being able to expand across the country and being able to have your brand in multiple states across multiple platforms, when it does become legal on a federal level, this is huge for them. It’s massive for them.”
And it’s not just edibles companies setting their sights on multiple states.
Ancillary firms have been building national brands for years, as they aren’t hampered by the same legal issues facing cannabis-touching firms. Now, dispensaries are also finding ways to expand, with owners competing for licenses in new MMJ states or taking on ownership stakes in companies competing for permits.
Sara Gullickson, a consultant with MariMed Advisors in Arizona, said it’s a natural evolution of the industry. She predicted that in another five years, there won’t be many lone operators left in the major markets. Instead, most stores and brands will be part of larger companies.
“I don’t think it’ll all go away, but we’ll see a lot less ma-and-pa shops,” Gullickson said. “At the end of the day, it’s power in numbers.”
That’s one of the reasons Dixie has been planning on expanding for years. The company is finally taking the leap because it eventually found the right partners in a new startup called Indus Holdings, which also owns another California-based edibles company called Altai.
“California is not a market that we originally were aggressively looking at, but… the partner is often more important than the market,” Hodas said. “This is part and parcel of our overall expansion plan.”
Dixie’s expansion plans were delayed by several factors. Aside from contract negotiations, finding the right real estate, insurance, manufacturing facilities and equipment bogged down the process, Hodas said.
The licensing deal with Indus was finalized six months ago, and Dixie provided the California company with nearly everything it needed (minus the THC) to produce the same products Dixie markets in Colorado.
By the end of the year, Dixie hopes to add another two to four states to the list of markets where it has licensing partners. The company is looking specifically at Washington State and Arizona, Hodas said.
Indus has the same ambition: CEO Robert Weakley said the company plans on building up Altai’s brand of edibles alongside Dixie, and is open to similar distribution and manufacturing agreements with other marijuana businesses. That even includes other possible products outside of edibles, such as extracts or concentrates, he said.
“Our facility is state of the art, and definitely has the capacity to grow and build,” Weakley said.
With Indus’s sales team and distribution network, Weakley said the company will likely have Dixie products available in several hundred California dispensaries by the end of the year.