Does Medical Marijuana, Inc. (MJNA) own Dixie Elixirs?

Posted on Sept. 22, 2013, 8:54 p.m.
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One of the biggest misconceptions in the cannabis investing sector is the belief that Medical Marijuana, Inc. (MJNA) acquired the Colorado-based Dixie Elixirs & Edibles in 2012.  Nothing could be further from the truth.  If you already know this, then there is no need to continue.  But, if you have any question about the relationship between MJNA and Dixie, read on.

First, don't blame yourself if you were confused.  I don't want to accuse MJNA of fooling people on purpose, but there were many times when they blew smoke to obfuscate the reality.  I described this earlier this year in a Seeking Alpha post.   So what's the real deal?

MJNA created a subsidiary called "Red Dice Holdings",  which is 60% owned by MJNA and 40% by Left Bank LLC (dba Dixie Elixirs & Edibles).  MJNA kicked in $1.45mm, while Left Bank contributed the brand (Dixie) and intellectual property.  The deal was described in an OTC Markets disclosure for Q2-2012: 

Sorry that this is crooked, but this is the lame way MJNA was doing its disclosures.  Thankfully, they progressed from using a scan!  

So, Red Dice Holdings licenses the brand.  The big question, and this Cannabis Financial Analyst doesn't know the answer, is this:  Will MJNA benefit from Colorado THC sales ever?  This is very important, as Dixie Elixirs is obviously doing very well in Colorado, but MJNA shareholders don't benefit at all.  My guess is that they never will, as the deal was struck to take advantage of new markets.  Even there, Dixie has been pretty clear that it isn't benefiting at all from THC yet.  Why not?  A year and a half after the deal, despite the fact that 20 states have adopted medical marijuana, Red Dice hasn't recognized a single penny in THC revenues.

So, the bottom-line:  MJNA does NOT own Dixie Elixirs & Edibles.  Instead, it is a partner through Red Dice Holdings, which allowed them to realize all of $156K in sales in Q2, which included only the web-based sales of Dixie Botanicals CBD products.  The $64K question is when and to what extent MJNA can recognize THC sales. The other interesting angle is that MJNA subsidiary HempMedsPx will be launching competing products (manufactured by CannaVest) shortly, as I explained in this post .

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About the Maven

Alan Brochstein

Before I became the leading “Cannabis Financial Analyst” in the marijuana industry, I spent numerous years on the inside of the investment industry as a portfolio manager.

Prior to earning my CFA charter in 1997, I worked in NYC for Kidder, Peabody, & Co. in bonds from 1986 to 1992. Later in 1992, I joined First Boston’s investment management subsidiary before becoming a portfolio manager with Criterion Investment Management in 1994 —co-managing $10 billion in fixed-income investments. In 2000, I made the move to stocks, joining a small firm in Houston as an analyst and portfolio manager. I remained at the firm until 2006, when I left to form my own business, AB Analytical Services—working as a research consultant for several investment advisors.

In 2008, I began offering a model portfolio service to individual investors (www.InvestByModel.com). And in 2009, I had the pleasure of working with an independent research firm that focused on evaluating the management teams of publicly-traded companies. I created The Analytical Trader in 2013—a service focused on providing swing trading ideas which offered a 4:1 reward/risk ratio over a two-week timeframe.

After seeing a strong need for more investor transparency among cannabis companies in early 2014, I launched the 420 Investor— a service committed to providing real-time, objective information about the top marijuana companies in the market.

In the process of launching the 420 Investor, I became a much-needed ally to marijuana investors, being hailed as one of the top “Cannabis Financial Analysts” in the industry.

My philosophy is simple: I believe that when people have access to ideas based on sound processes and backed by decades of experience, they can manage their own money and still have a market-beating performance. It’s my goal to provide exactly this type of know-how to investors everywhere.

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