This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

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.

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.

>>Read More: Marijuana Poster Child Diego Pellicer Chills Out 


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

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs