Founded in Colorado's 2009 'Green Rush,' Dixie Elixirs & Edibles is now mainstream. Among the challenges is managing growth.
Founder and CEO Tripp Keber started Dixie in a 400-square-foot space with two employees, making "pot soda" for the medical-marijuana dispensaries that had popped up all over the state during the state's "Green Rush" in 2009.
Today Dixie makes more than 100 marijuana-infused drinks and edibles, ranging from chocolate truffles to mint strips to sarsaparilla soda. There are pain-relief capsules, topical lotions, vaporizer pens, and "dew drops." "We want to give all patients, all consumers the chance to embrace cannabis in a healthy manner," says Keber.
Dixie currently has about 40 employees and making two new hires a week. "We're literally hiring temps as fast as we can," says Keber.
The company is currently expanding its integrated 30,000-square-foot cultivation/extraction/production facility in northeast Denver to 50,000 square feet. The buildout includes a mezzanine with an education center, a "state-of-the-art" laboratory, and exhibit hall and also investing $500,000 in equipment to extract active ingredients from marijuana.
Keber characterizes Dixie as having "hyper-growth or hockey-stick-graph growth" in the four years since its launch, with an uptick of 150 percent from 2011 to 2012 and a "tripling" forecast for 2013 to 2014. "It's up and to the right," says Keber. "We're quadrupling our sales [over 2013] right now."
"We run out every night," he adds. "But we show up the next day to make 10,000 more widgets."
Keber says couple of things have helped change the conversation and foster the growth. Sanjay Gupta's reversal on the medical benefits of marijuana, for one. And the Obama administration's hands-off approach in Colorado and Washington has been critical.
But that doesn't mean that good business sense and hard work had nothing to do with Dixie's success. "This is not a fool's business, this is not a poor man's business, and this is not a lazy man's business," says Keber.
He says Dixie has set a "higher bar" for the industry by employing chemists and chefs, focusing on high-quality packaging, branding, and marketing, and running Dixie like you would run any other manufacturing operation. "It's taking general business principles and applying them to the marijuana industry," says Keber.
His initial vision for the company? "I have a tendency to describe it as a fantasy because there were so many unknowns at that point," says Keber.
He knew "nothing" about growing pot and "found it confusing as to who the patient was. Is it the liftie in Breckenridge or your 73-year-old grandmother with glaucoma?"
Keber quickly learned it was both. "It's all points in between," he says. "Now a soccer mom who has traditionally consumed a half-bottle of wine has a choice of marijuana."
He says he's not surprised by the interest in recreational marijuana, but he's surprised by the demand for smoke-free pot. "I don't think what we could have predicted was the demand for infused products," says Keber, estimating it as 30 to 40 percent of the marijuana market.
Legalization is a great thing for the Colorado economy, he adds, noting that the marijuana industry has doubled its job base in the last 18 months in Colorado to more than 20,000 people.
Keber thinks Colorado's recreational marijuana and tourism will catalyze each other. "There are 60 million people who come to our state every year," he says, and estimates that 20 percent of them are potential Dixie customers.
The next big step for the company: licensing or franchising to other states, with a target list including Washington, Nevada, Illinois, Massachusetts, and Connecticut. "Without a doubt, we'll be in multiple markets in 2014," says Keber.
There is one big hitch, however. "There is no interstate transportation of marijuana for medical or adult use," says Keber, noting that Dixie is fully licensed and compliant in Colorado. "It is incredibly inefficient for me to spend $5 million in Denver and then have to do it all over again in Arizona."
But regardless of Dixie's expansion, Keber is keeping his profits in the state. "We take our profits and reinvest them in the marijuana industry in Colorado," he says. "I own 17 companies in the marijuana space."
Challenges: Federal laws. "I break I don't know how many laws each day doing what I do," says Keber. "The FDA has nothing to do with the marijuana industry, but in my humble opinion, someday they will."
Opportunities: Growth. "This is a $50 billion industry legally and illegally," says Keber. He estimates Colorado and Washington state to each have about a $500 million market for marijuana.
Needs: Access to traditional banking. "90 percent of the transactions are in the form of cash," says Keber. The recent Department of Justice decision to allow banks to legally work with marijuana businesses "is a massive win for us," he adds. But there could be a downside if policy winds shift, he adds. "Banking is the single biggest opportunity for us, but it's also the biggest threat."