Company wants to take its edible marijuana national
The Denver-based firm specializes in the production and distribution of food, beverages and other products infused with the active ingredient of marijuana.
Led by its flagship line of THC-laced sparkling beverages, items also include chocolate truffles, crispy rice treats, fruit lozenges, capsules and droplets. The company's target market is registered medical-marijuana patients who prefer, for health or social reasons, to ingest their drug without smoking.
"If I needed to medicate, I would never consider lighting up in front of my 11-year-old daughter," said Dixie owner and managing director Tripp Keber. "A 70-year-old grandmother with glaucoma (might) never consider smoking but will put a couple of drops of elixir in her soup."
THC-infused edible products now constitute about 38 percent of total sales at dispensaries in Colorado, compared with 12 percent two years ago, according to estimates from Keber that are based on conversations with retailers.
Dixie sells products to 450 of Colorado's 593 medical-marijuana dispensaries.
Colorado law allows local manufacturers to distribute THC-infused items only within the state. But Dixie, already among the largest of Colorado's infused-product
makers, is staking out a share of the national medical-marijuana market through a licensing deal that will enable its branded products to be made and sold in other states.Publicly traded Medical Marijuana Inc. last month paid $1.45 million to acquire Dixie's intellectual property, formulas and recipes. The two companies have created a third, Red Dice Holdings, to license and market Dixie's brand and products in other states.
The firm expects to be selling in Arizona, California and Washington, D.C., before the end of the year.
Consulting firm See Change Strategy LLC said in a recent report that national medical-marijuana sales of $1.7 billion in 2011 could grow to $8.9 billion in five years. California and Colorado account for 92 percent of the current market. California leads the nation, with sales of $1.3 billion, according to the report.
Analysts say delivery of medical marijuana through edible and drinkable products is likely to increase in coming years, in part from a growing number of older patients who never have smoked marijuana recreationally.
"For a patient coming in who has never used marijuana before, they might be very open to that kind of (edible) delivery mechanism," said Robert Frichtel, managing partner of Medical Marijuana Business Exchange, a Teller County-based consulting firm. "There are a significant portion of people using marijuana for medical reasons where it's not desirable for them to smoke it."
Dixie employs 22 workers, where it makes edible products from THC kept in a secured vault.
The privately owned firm does not disclose financial information, but Keber said sales have increased 22 percent year-to-date in 2012 compared with last year.
Keber's business background includes a stint as chief operating officer of Bella Terra Realty Holdings, a firm that operates high-end recreational-vehicle parks.
In 2009 he made a loan to Dixie's original operators. A year later, he took control of the business and sought to expand its reach.
Dispensary owner Max Cohen said most of his customers buy smokable marijuana, but the edible segment is growing.
"The majority of our patients still prefer the (marijuana) flowers to smoke," said Cohen, owner of The Clinic, which operates six dispensaries in metro Denver. "But there are some people who don't like to smoke, and it's easier for them to consume edibles."
House Bill 1250, sponsored by Republican Cindy Acree, was originally aimed at banning the sale and manufacture of "medical marijuana-infused consumable food and beverage product[s]."
Acree, however, backed away from her original proposal in the wake of vehement opposition from medical marijuana advocates who, in testimony earlier this month, called HB 1250 "ridiculous," and a "slippery slope."
Acree, who says her concern has always been the marketing of edible medical marijuana products to children, is is now expected to propose new labeling requirements and other packaging safeguards instead of an outright ban on the sale of the products.
Nonetheless, the Cannabis Therapy Institute, a medical marijuana advocacy organization, remains skeptical of Tuesday's vote. "Amendments have been proposed to lessen the impact of this bill, but nothing is set in stone," the organization says on its website. "All options remain on the table, and new, unseen amendments have been promised by the sponsors."
The Colorado Department of Revenue is also expected to complete work this spring on regulations on marketing and packaging of medical marijuana products.
The medicinal use of marijuana has been legal in Colorado since the passage of a voter initiative in 2000.