Dixie Archives - Green Market Report

Debra BorchardtDebra BorchardtMarch 9, 2020
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7min11210

Luxury cannabis product company BR Brands LLC has joined forces with long time cannabis beverage company Dixie Brands Inc. (CSE: DIXI.U), (OTCQX: DXBRF). A statement about the merger said that BR Brands will combine operations with Dixie via a reverse takeover. The deal is expected to be completed by the third quarter of 2020.

Valuation

BR Brands will complete a reverse takeover of Dixie at an implied valuation of Dixie of a minimum of $43 million and will convert approximately $6 million of senior secured indebtedness owing by Dixie into subordinate voting shares of the entity resulting from the business combination, such that following completion of the transaction BR Brands and Dixie shareholders will own approximately 80% and 20%, respectively, of the Resulting Issuer.

The Board of Directors of the merged company will have three people from BR Brands and only two from Dixie. Chuck Smith, President and Chief Executive Officer of Dixie, will become President and Chief Executive Officer of the merged company and Andrew Schweibold will serve as chairman of the board of the merged company. Unrelated to the deal and for personal reasons, Dixie’s Chief Financial Officer, Greg Robbins has resigned effective immediately. Dixie’s current Controller, Jared Lanser, will assume the role of interim CFO of Dixie.

“The challenges of the current cannabis-related capital markets have guided Dixie to look for a strategic partner in order to solidify a platform we can leverage for long-term, stable growth for our shareholders. This strategic combination brings two of the most trusted and iconic brands together on one of the broadest manufacturing and distribution platforms in the industry,” said Chuck Smith, President, and CEO of Dixie. “We are very pleased with the fundamentals of the deal as they will strengthen our balance sheet by decreasing debt, improving our cash position, and providing opportunities to enhance revenue growth and capture greater margin.”

Dixie Brands has been a pioneer and leader in the infused-cannabis industry since the launch of its iconic THC-infused Elixir in 2010. Its portfolio includes established brands such as Dixie, Synergy, AcesoHempTherabis and a strategic partnership with Herbal Enterprises, LLC, an affiliate of the AriZona brand. BR Brands is the owner of Mary’s Brands including topical brand Mary’s Medicinals. BR Brands’ portfolio also includes three California based brands: DefonceBeezle, and Rebel Coast.

“BR Brands and its affiliates have had a long-standing relationship with Dixie, rooted in a deep respect for its platform and product portfolio,” said Andrew Schweibold, Chairman of BR Brands. “BR Brands was established to unite premium and emerging cannabis brands under one umbrella, offering unparalleled access to top-tier operating talent and capital expertise. With the consummation of this transaction, the resulting entity is poised to build upon our product portfolio, develop best-in-class IP and expand our geographic footprint, all while remaining laser-focused on continuing to meet the needs of our consumers.”


Video StaffVideo StaffJuly 22, 2019

9min28270

This interview was recorded on June 25, 2019, at the MJ Link Micro Investor conference in New York. 

Debra Borchardt, Editor-in-Chief, Green Market Report:

Dixie Brands Inc. (OTCPK:DXBRF) just got approved for Oklahoma, its sixth state. Joining me now is the CEO, Chuck Smith. So, very exciting, Oklahoma, your number six state and a pretty good patient population there, right?

Chuck Smith, CEO Dixie Brands:

It sure is, Debra. It’s about 130,000 patients, very broad qualifying conditions, so that makes it kind of perfect for a company like ours, has a very big product portfolio. We can really serve a lot of different patient needs with our existing product set.

Green Market Report

Your product, I have to say, it tastes good. That’s one of the issues that we have with beverages.

Chuck Smith

So, you could say it tastes great.

Green Market Report

Ok, it tastes great. So many of the cannabis beverages, they just make me cringe, and they taste awful, but your product doesn’t. It tastes good.

Chuck Smith

Well, thanks very much for that. I think all of our products taste really good, and that’s something we’re proud of, but that’s also why we’ve been around for nine years. Having nine years to actually perfect the formulations, understand how to work with the oil, understand how to bring the right kind of flavor profiles together in a great responsible way, but also attractive packaging, I think that’s a cornerstone of Dixie Brands. As we evolve, the consumer is demanding that too. We have to continue to evolve that technology to make sure that the products are consistent, reliable, and taste great in every single state that we market it to.

Green Market Report

You recently reported your earnings. Your revenue’s phenomenal. It was up 137%, so your sales are growing tremendously. I did want to ask you about your net losses, $6.6 million. Quite high. A lot of that was compensation, but to your point, you said the company’s been around for nine years. You just went public, so a lot of people put in a lot of hours to get this company to the point of going public, right?

Chuck Smith

Sure, but to be clear on the compensation, the number is a component of that, and this is the crazy thing, unfortunately, I guess, about being a public company. When we issue stock options to our employees, we actually have to capture the expense of those options. It doesn’t mean that the employees are out now driving Ferraris because they’re locked up for a three-year vesting schedule, but the company has to actually book that loss associated with those options that we gave. So, that’s really a non-cash expense, but it’s expense nonetheless that we’re going to do because we want to incent our employees through options to make them part of the company and owners and rowing the boat in the same direction that we all are towards success.

Green Market Report

I think that’s great that you’re able to explain that because for a lot of people, they see that, and they see that net loss number, and it’s frightening, but when you explain it like that, it’s like, “Oh, okay. All right,” so everybody’s getting like you said, an investment within the company, which creates a lot of stickiness with your employees.

Chuck Smith

We want the employees to share in the upside of the great growth this company is going to have and the great success. It’s been nine long years, and this hasn’t been an industry that’s easy for anyone. So, now that we’re in the public eye and have access to capital markets, I expect a great growth for the company and ultimately, a great success. Like any company that’s building, you’re going to have to make investments. Those investments sometimes drop to the bottom line as losses, but the reality is every investment we make now in infrastructure or people or our routes to market are all designed to generate revenue. We’re not spending a lot of time having to do things just to catch up to others in the market. I think our portfolio is broader and more established than anybody else in the industry.

Green Market Report

Beverages. It seems like everyone’s slapping CBD oil in their beverage, and that now, they’re a CBD drink. What are your thoughts on that?

Chuck Smith

We’ve been in the CBD business for three years ourselves. However, our focus has been on dietary supplement formatted products both for humans, Aceso Hemp, and in that case, we have a couple of different types of product formats including an effervescent powder, which is kind of like an Emergen-C if you’ve ever had one of those.

Green Market Report

Love Emergen-C.

Chuck Smith

It’s a great product, indication-specific, high efficacy. On the other side, we have a great company that we own called Therabis, which targets CBD wellness to pets, primarily dogs, and we just introduced our cat treat. We’re very comfortable with these products because we’ve built them, Debra, against FDA supplement standards. Even though the FDA, as of today, doesn’t allow CBD in food and hasn’t made a ruling on supplements, we’ve built them from day one against that stringent level of standards. Now, we don’t have a CBD water yet, and frankly, the FDA is not giving us much comfort that they’re going to allow mass-market distribution of CBD in water and food, and I think that’s yet to come. As we get more guidance and clarity on that, you could expect Dixie to be at the forefront of that.

Green Market Report

So you’ve gotten Oklahoma. Is your goal more state expansion?

Chuck Smith

Yes, so we had said at the beginning of the year that we were going to open up between four and six new states that would be adding to the four states that we already have. So, our goal is really in between eight and 10 new states. Oklahoma is our sixth. We expect to be releasing product there by September, so that’s a pretty fast turnaround. In Michigan, we announced that deal at the beginning of February and had the product on the shelf the end of March, so we know what we’re doing, we know how to get the product into the market. With Oklahoma as our sixth state, you could expect to see one or two more announcements here probably over the next 30 to 60 days. That’ll really bring us into that eighth state and growing territory.

Green Market Report

Fantastic. We will keep an eye on Dixie and Therabis for our good pets.


Debra BorchardtDebra BorchardtJanuary 7, 2019
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6min8940

It’s time for your daily hit of cannabis financial news for January 7, 2018.

On The Site

Jobs

As of 2018, there are more full-time cannabis workers than there are librarians, and the number is growing. These are not minimum wage positions either – retail managers, agriculture experts, and extraction technicians all earn attractive salaries and desirable compensation packages.

Patents

The number of global cannabis patent applications has doubled since 2008, Cannabis Law Report can reveal, as 2019 promises to be a landmark year for marijuana intellectual property. The World Intellectual Property Organization said approximately 10,246 cannabis-related applications have been filed since 1978 under the Patent Cooperation Treaty (PCT), with 6,137 applications coming after 2008. Experts say the number could potentially be even higher as firms exploit loopholes to snatch patents related to cannabis such as growing or treating addictions, without expressly referring to marijuana in their application.

In Other News

Green Thumb Industries Inc. (GTI) (CSE: GTII) (OTCQX: GTBIF) signed a definitive agreement to acquire Advanced Grow Labs LLC (AGL) and enter the Connecticut market. AGL is one of only four companies in Connecticut licensed to grow and process cannabis. The Connecticut-based cannabis company operates a 41,000 square foot manufacturing facility in West Haven with the potential to expand. In addition, AGL has a 46 percent ownership of a recently-awarded dispensary that will be located in Westport which makes it the only vertically licensed company in the state. Upon the close of AGL and the other recently announced acquisition, GTI will have 12 manufacturing facilities and licenses for 85 retail locations across 11 states.

Acreage Holdings, Inc. (CSE: ACRG.U) closed the acquisition of Florida-based Nature’s Way Nursery of Miami, Inc. (“Nature’s Way”). Nature’s Way was awarded a vertically integrated operating license last summer and will operate the business as Green Owl Pharms, the name under which it was awarded the operating license. The previously disclosed transaction paves the way for Acreage to bring cannabis products to Florida residents throughout the state. As of December 28, 2018, there were more than 209,000 total cannabis patients in Florida according to the Florida Department of Health Office of Medical Marijuana Use.

CannAmerica Brands Corp. (CSE: CANA) (OTCQB: CNNXF)  entered into a binding letter of intent to create a joint venture with Invictus MD Strategies Corp. (TSXV: GENE) (OTCQX: IVITF) and CBDistribution Company Ltd. with the intention of acquiring hemp biomass for extraction into CBD isolate using purpose-built facilities for large-scale CBD extraction.

iAnthus Capital Holdings, Inc. (CSE: IAN) (OTCQX: ITHUF) opened its first and flagship dispensary in New York on December 30, 2018. The dispensary, located at 202 Flatbush Avenue directly across from Barclays Center and Atlantic Terminal, is the first in Brooklyn, New York’s largest borough, with a population of roughly 2.6 million people.

CLS Holdings USA, Inc. will commence trading on the Canadian Securities Exchange, or CSE, at the opening of the market on January 7, 2019, under the ticker symbol “CLSH”. Cannabis Life Sciences is the developer of a patented extraction and conversion methodology that has the potential to increase both yield and quality of cannabinoid oils extracted from cannabis plants.

Harvest One Cannabis Inc. (TSX-V: HVT) (OTCQX: HRVOF) said that its shares of common stock were approved for trading on the OTCQX® Best Market operated by OTC Market Group.

Rubicon Organics Inc. (CSE:ROMJ) (OTCQX:ROMJF) said that its common shares are now trading on the OTCQX Best Market under the ticker symbol “ROMJF”.  Rubicon Organics’ common shares will continue to trade on the Canadian Securities Exchange under the ticker “ROMJ”.

Canopy Rivers Inc.  (TSXV: RIV) announced that its 49%-owned joint venture PharmHouse Inc. has entered into a syndicated credit facility with the Bank of Montreal, as agent and lead lender, and with Canadian Imperial Bank of Commerce and Concentra Bank as lenders. Under the terms of the Credit Facility, the Lenders will provide PharmHouse up to C$80 million of secured debt financing at a rate of interest that is expected to average in the mid-to-high 5% per annum range over its three-year term.

Dixie Brands Inc. (CSE: DIXI.U), one of the cannabis industry’s leading consumer packaged goods companies, has announced the hiring of two new marketing executives.  Andrew Floor joins as Vice President of Marketing, Dixie Brands, and Hilal Tabsh joins as Vice President of Marketing and Distribution, Aceso Wellness.


Debra BorchardtDebra BorchardtNovember 29, 2018
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3min12240

Dixie Brands, Inc. began trading on the Canadian Securities Exchange (CSE) on Thursday following the completion of a reverse takeover (RTO) of Canadian public company, Academy Explorations Limited. Dixie shares opened at C$1.05 and the shares traded as high as C$1.18 and as low as C$0.76.

Dixie History

Dixie was an early pioneer of cannabis branding beginning with a feature on 60 Minutes at a time when few cannabis product companies existed. It began with one product, the Dixie Elixir, a THC-infused soda, and the company has built up its portfolio to include more than 30 different categories across more than 100 individual products.

In 2018, Dixie entered into a Canadian license agreement with Auxly Cannabis Group Inc. (CBWTF), a vertically integrated global cannabis company. Under the agreement, Auxly will work with Dixie to create products for the adult-use recreational market in Canada. Those products will be developed and manufactured at Dosecann in the BioCommons Research Park in Charlottetown, PEI and Dosecann will serve as Dixie’s hub of cannabis research and innovation.

With regards to its domestic business, Dixie is currently operating in four states (ColoradoCaliforniaNevada, and Maryland) and plans to expand into four to six additional states in 2019 through partnerships with licensed and regulated producers in each state. The company has recently expanded its hemp-based offerings by introducing Aceso Wellness, a human dietary supplement line, and Therabis, a pet food supplement portfolio, at the end of 2016.

Past Management

Dixie has seen a change of management over the past couple of years as one of its original founders moved on to another company. Tripp Keber founded Dixie Holdings with Chuck Smith in 2010 in Colorado in the early stages of cannabis legalization with the THC-infused soda. In 2017, Co-founder Tripp Keber is resigned in order to take a new position that partnered Dixie with Rose Capital based in Miami, Florida. At the same time, Keber, also resigned from the board at MassRoots (MSRT) as that company’s founder Isaac Dietrich reclaimed his company.


Debra BorchardtDebra BorchardtJuly 27, 2018
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4min17882

Colorado-based Dixie Brands Inc. is engaging in a reverse takeover of Academy Explorations Limited and then will list on the Canadian Securities Exchange. Academy will change its business from mining to the cannabis industry and the former shareholders of Dixie will hold approximately 95% of the
common shares of the resulting company.

“We are delighted to take the iconic Dixie Elixir, as well as our other consumer-focused brands, to the public capital markets in order to bring these well
recognized and highly rated products to enthusiastic consumers across the U.S., as well as to Canada and other international markets, ” said Chuck Smith, President, and CEO of Dixie. “The Canadian capital markets have proved to be an important and critical source of growth funding for U.S. cannabis companies. We are preparing for and anticipate a Q4, 2018 public offering on the CSE which will fund revenue generating production, distribution, and consumer marketing
programs to support our global expansion.”

According to the company statement, “Dixie intends to complete a private placement prior to closing of Dixie shares and warrants for aggregate gross proceeds of between $12,000,000 and $20,000,000, including the conversion of approximately $2,000,000 of debt to be exchanged for Dixie common shares at the same deemed value of Dixie as the private placement, at a price equal to the fully diluted equity capitalization of Dixie prior to the Private Placement valued at
$80,000,000. Each Dixie warrant shall entitle the holder thereof to acquire one Dixie share for $13.95, at an approximate valuation of $150,000,000, exercisable for one year.”

Dixie has three portfolio companies under its umbrella: Dixie Elixirs & Edibles, Aceso Wellness (Hempderived CBD based human dietary supplement), and Therabis (Hemp-derived CBD based pet food supplement). The company currently operates in four U.S. states with an aggressive expansion plan for 2019. Dixie has also executed a license agreement with Auxly Cannabis in May of 2018. This agreement permits Auxly to exclusively produce and distribute Dixie branded products throughout Canada. Dixie’s expansion strategy will be to control manufacturing and distribution in all markets where it participates while simultaneously building a global brand known for its quality and efficacy.

Dixie shareholders will be issued roughly 10.45 Academy shares for every one Dixie share. All of Academy’s officers and directors will resign. The statement also said that pursuant to the terms of the LOI, the company will effect a consolidation of its issued and outstanding common shares prior to closing on a 4:1 basis
resulting in approximately 6,641,808 Academy Shares outstanding on a post-Share Consolidation basis. The 400,000 issued and stock options of Academy will be consolidated into 100,000 Academy Options. Each Academy Option will be exercisable for one Academy Share at an the exercise price of C$0.08 per share on a post-Share Consolidation basis until July 5, 2021.

 

 

 

 


StaffStaffMay 14, 2018
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7min9280

It’s time for your Daily Hit of cannabis financial news for May 14, 2018.

On The Site

Canopy Growth

Canadian-based medical marijuana company Canopy Growth (TWMJF) announced that it has applied to the New York Stock Exchange (ICE) to list its shares. The company said that it expects to begin trading at the exchange by the end of May using the ticker symbol CGC. The company currently trades in Canada on the Toronto Stock Exchange using the symbol WEED and also on the OTC Markets with the symbol TWMJF. The New York Stock Exchange has been reluctant to engage with cannabis companies citing the legality of marijuana in the United States, although a handful of entities like Innovative Industrial Properties (IIPR) and India Globalization Corp. (IGC) have squeaked in. It seems Canadian-based companies pass the smell test since marijuana is legal in that country.

In other news, Canopy said that it planned to acquire 33% of BC Tweed Joint Venture Inc., which are the shares that it didn’t already own. That deal is expected to close in July and as a result, Canopy said it will issue $374 million worth of its common stock.

Aurora Cannabis

After denying rumors last week about a potential acquisition, Aurora Cannabis (ACBFF) announced that it was entering an agreement to acquire MedReleaf (MEDFF) in a deal valued at C$3.2 billion. The acquisition brings together two leading producers in Canada’s medical marijuana community enabling them to deliver a capacity of over 570,000 kg of cannabis a year. MedReleaf is known for its ability to reduce the cash cost per gram while still delivering a premium product, Aurora is equally known for its automated greenhouses and low production costs.

According to a company statement, MedReleaf shareholders will get 3.575 common shares of Aurora for each share they own of MedReleaf. The statement read, “Upon completion of the transaction, existing Aurora and MedReleaf shareholders would own approximately 61% and 39% of the pro forma company, respectively, on a fully diluted basis. The Exchange Ratio implies a price of C$29.44 per MedReleaf common share and a premium of approximately 34%, based on the 20-day volume weighted average prices of Aurora and MedReleaf common shares on the Toronto Stock Exchange as of May 11, 2018 .”

In Other News

iAnthus Capital Holdings

After the market closed on Monday,  iAnthus Capital Holdings (ITHUF) announced that it received $50 million investment from Gotham Green Partners, which management believes to be the largest investment to date by a single investor in a publicly traded U.S. cannabis operating company. The company plans to allocate the proceeds of this financing by repaying $20 million of a one-year note and accrued interest to VCP Bridge LLC, continued cultivation and dispensary build-outs in New York and Florida markets and potential expansion activities consistent with iAnthus’ strategic objectives.

Gloucester Street Capital

Gloucester Street Capital, an owner of one of only 10 medical cannabis cultivation and dispensary licenses in New York State, has closed a $6.5 million growth capital round. Viridian Capital Advisors, through its broker-dealer Pickwick Capital Partners, LLC,  served as the placement agent for the Company.

General Cannabis

General Cannabis (CANN)  announced first quarter financial results with revenues of $942,482, a 31% increase over 2017 first quarter revenues of $719,105.  The stock fell over 2% as the net losses rose 70% year over year to $4.4 million versus last year’s net loss of $2.6 million.
“We continue our focus on organic growth and driving each business segment to profitability,” said Joe Hodas, Chief Operating Officer of General Cannabis.  “We have an aggressive, but achievable, plan to grow revenue in each of our existing business segments, while also evaluating opportunities for operational efficiencies. Hodas continued, “While California’s regulated market’s rollout has been slower than anticipated, we made great progress in the quarter developing several key relationships that we believe will generate revenue for both our Security and Operations segments in the second quarter and throughout 2018.”

Emblem Corp.

Emblem Corp.  (EMMBF) and Canntab Therapeutics Limited (CSE: PILL) announced the receipt of Health Canada approval for research and development activities on oral sustained release formulations of cannabinoids, which are the proprietary products conceived by Canntab representing significant progress in Emblem and Canntab’s partnership to develop long-acting cannabis formulations.

Cannabis Wheaton Income Corp. 

Cannabis Wheaton Income Corp. (CBWTF) announced that it entered into a definitive licensing agreement with Dixie Brands, Inc. pursuant to which Cannabis Wheaton will have the exclusive license to Dixie’s intellectual property, product branding and formulation methodologies related to over 100 cannabinoid-infused products in Canada and Mexico.



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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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