Newly Public Cannabis Manufacturer Dixie Brands Aims For National Footprint

Amid strong support for legalization among Americans and high consumer demand, more U.S. cannabis companies are feeling confident enough to list on public exchanges. In turn, investors also see growth opportunities in the space despite a recent sell-off. 

After one cannabis company, Dixie Brands, joined the ranks of publicly traded stocks in the sector, Benzinga chatted with CEO Chuck Smith about the company, its Canadian Securities Exchange listing, future plans and the outlook for the American cannabis space. 

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What You Need To Know About Dixie Brands

Dixie Brands was founded nine years ago. Headquartered in Colorado, Dixie covers four states: Colorado, California, Nevada and Maryland. In addition, the company has distribution and manufacturing partners in Australia and Canada.

Dixie’s strategy involves keeping away from the plant. Instead, the company owns a portfolio of brands and manufactures a huge range of THC products. Its offerings include more than 100 individual products across 14 product segments including beverages, chocolate, confection products and topicals. 

The company has a namesake brand, Dixie Elixirs and Edibles, as well as three other THC product brands: Synergy, Mindset and Dr. Stash. Its hemp-derived CBD brands: Aceso and Therabis.

In October, Dixie conducted a Series C capital raise. Due to high demand, the value of the offering was raised to from $20 million to $25 million. Following the fundraising round, Dixie listed its stock via a reverse takeover of a Canadian public company, a common practice among U.S. cannabis companies.

Building A National Footprint

Going public provides Dixie Brands with the possibility of being fully funded next year, CEO Smith told Benzinga. 

“Our target in 2019 is to open four to six new markets and, once we're in eight to 10 new markets, it'll really make us probably the largest [consumer-packaged-goods]-focused company in the industry,” he said.

Aside from expanding into new markets, Smith isn't ruling out the possibility of acquisitions. 

“We believe that at some point in time we will look opportunistically at additional fundraising for things that will really accelerate our growth through acquisitions and so forth, but right now, the company is in a really financially-stable position and fully funded for 2019.”

In terms of acquisitions, Dixie plans to first secure a foothold in every state where it operates. The company plans to develop manufacturing and distribution processes, and as it acquires new brands, it will be able to bring them “into this platform," Smith said. 

“That's our initial strategy: to lay down that infrastructure, to really be able to secure a national footprint. At that point in time we’ll become very valuable to a brand that's out there, that might not have national distribution or that is looking to roll up under the overall umbrella of Dixie Brands."

Providing Consumers With A Choice

The key to Dixie’s success is its broad selection of cannabis products. As the cannabis industry has evolved, so have consumer tastes.

Related Link: Thinking About Launching A Cannabis Consumer Product? Here's What You Should Know

" ... The future of cannabis is making this product accessible to a broad base of consumers in any method that they want to consume it,” Smith said.

That’s why Dixie has diversified into a large portfolio to satisfy a broad demographic.

“Our strategy isn't to be a fully integrated business in multiple states like many of the companies that are out there today. We are focused on being a commercial food manufacturer," Smith said.

"We just happen to have a weird ingredient called THC. We've built standard operating procedures and efficiencies and scalability for all these different product types. The reason we are not focused on just one category is because the consumer wants more than that. The consumer is now expanding to such a broad demographic."

Benefits From The 2018 Farm Bill

Last week, the 2018 Farm Bill cleared the Senate and the House and is now awaiting the signature of President Donald Trump. The bill would legalize hemp on a federal level. In turn, this opens many opportunities for hemp-derived CBD products.

Suggested Read: The 2018 Farm Bill Vote: What You Need To Know

Given that Dixie has two subsidiaries focused on hemp-derived CBD, the Farm Bill benefits the company. The legalization of hemp will allow Dixie to procure raw material domestically instead of importing it from Europe. This will result in lower costs and higher margins, Smith said.

In addition, large and more conservative retailers will feel comfortable carrying Dixie's products, the CEO said. 

“It's a big benefit for Dixie because we already have these products in distribution and generating revenue and this allows us to turbocharge that."