This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Marijuana Brands Push Past Bans to Go National

NEW YORK (TheStreet) -- Marijuana may still be an illegal drug at the Federal level, but that isn't stopping some companies from building a national presence. "I think people are already positioning themselves for a national cannabis industry," said David Bienenstock, a marijuana consultant. "The people who make a smart move now will be rewarded later."

The opportunity for investors seems obvious. First, there is an established customer base. Granted, most of these consumers have been buying their product in the black market, but many probably prefer to do a legitimate transaction, assuming the price is right. Next, there are no entrenched players. The field is wide open to the budding entrepreneurs to be the first to market.

However, it isn't that simple. The industry is subject to many regulations and restrictions. For instance, the product can't be transported across state lines. This has caused many of these companies with national aspirations to become creative with their corporate structures. Also, the promotional efforts are challenging. It's difficult to build a national brand when your advertising is limited.

Dixie Elixirs is a maker of edibles and beverages using cannabis products. Joe Hodas, chief marketing officer at Dixie said the company can't just follow a mass media platform. "We have restrictions like making sure that 70% of the audience is over 21 and from the state," said Hodas. Instead Dixie prefers to sponsor events like the 420 celebration in Denver. "We knew people from out of town would be there," said Hodas.

Must Read: See How Compania De Minas Buenaventura Ranks Among Analysts' Top Metals Picks

The hope is that these marijuana tourists will remember the product and then when their home state is legal, they will be more likely to purchase a familiar product. "Public relations is our best channel from a national perspective," Hodas said.

Another challenge Dixie faces in its national brand quest is that it must make its product in each state where it is sold. In order to accomplish this, Dixie teams up with in state partners. "It's not too dissimilar to a licensing model," said Hodas. This creates a strong local presence and loyalty. Plus, it helps the company maintain standards. Dixie has relationships with many local growers from whom it gets raw materials and because of local ties, the company has been accepted by the marijuana community.

That hasn't been the case for Diego Pellicer. This Washington-based company said from the get go that it wanted to be a national brand. But its brash Wall Street approach didn't sit well with the established marijuana industry. "People didn't like their values," said Bienenstock, "Profit at any cost." Bienenstock said the community has no problem with a big cannabis business. He said many people took huge risks for years and should be rewarded for their hard work. They were just insulted that people assumed they had no idea how to run a big business.

Federal Government Needs More Marijuana for Research Studies
More videos from Debra Borchardt

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
FB $118.64 0.90%
GOOG $699.18 0.89%
TSLA $242.44 0.70%
YHOO $36.57 -0.08%
AAPL $93.78 0.04%


Chart of I:DJI
DOW 17,891.81 +118.17 0.66%
S&P 500 2,080.14 +14.84 0.72%
NASDAQ 4,814.1070 +38.7490 0.81%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs