Dixie Brands Inc (CNSX:DIXI.U) CEO on Dixie Khiron JV Corp with Khiron Life Sciences Corp (CVE:KHRN)

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Dixie Brands Inc (CNSX:DIXI.U) (FRA:0QV) CEO Chuck Smith is excited about the company’s recently announced joint venture with Khiron Life Sciences Corp (CVE:KHRN) (OTCMKTS:KHRNF) (FRA:4KH). The companies have formally launched Dixie Khiron JV Corp, a 50/50 joint venture which will bring Dixie’s portfolio of more than 100 market-proven products to Latin America. The deal also enables Dixie to manufacture and distribute Khiron’s Kuida-branded products in the US. Smith anticipates that Dixie products will be in Mexico and Colombia shortly. Smith notes that as regulations change and new products are legalized in different Latin American markets, Dixie’s extensive product catalogue allows the company to move swiftly to capitalize on those changes.

Transcript:

James West:   Chuck, welcome!

Chuck Smith:  Thank you very much, so happy to be here.

James West:   Excellent. I’m so happy to have you here and be able to hear you, too! Chuck, just for the listeners who don’t know, give us an overview: what is Dixie Brands all about?

Chuck Smith:  Thanks very much, and I really do appreciate the opportunity to be here with you and your viewers. Dixie Brands is a multi-state operator focusing on manufacturing and distribution of consumer brands for the cannabis industry. We have a portfolio of over 150 products across 15 different delivery categories, as well as two other companies that focus on CBD wellness. One is called Aceso for human supplement, and the other is Therabis for our pet supplementary treatments.

James West:   Okay, so how big a segment is the pet segment? I’m just curious about that.

Chuck Smith:  Well, Therabis is a really exciting of our portfolio. We’re really thrilled about the future of it. The pet category in the United States for supplements is about a $5 billion market, and we actually have two very large portfolio product offerings for dogs: a food topper as well as a soft chew. These are all indication-specific products for joint mobility, skin irritation or anxiety, and we just announced recently that we’ll be launching a feline treat, the first of its kind, targeting again, anxiety in cats – which I didn’t realize, but is a really big problem for the feline population.

James West:   That’s fascinating. I’m more of a dog person myself, but I’m curious: you recently announced a deal with Khiron Life Sciences to bring more than 100 market-proven products to the Latin American cannabis market, and that’s got to be a major increase in your global footprint.

Chuck Smith:  We are so excited to be partnering up with the Khiron team. Alvaro and Chris Naprawa, the President, we’ve just created a great relationship and our teams are working really, really well together.

As you mentioned, we just announced the definitive agreement yesterday, and really this is a 50/50 partnership. This is both companies coming together to form Dixie-Khiron Corporation, a joint venture that we’ll both invest in, as well as both share in the revenues and profits. And Khiron brings an extensive, as you well know, an extensive infrastructure and country by country experience, and distribution.

We, in turn, bring this broad portfolio of products that I mentioned, that both serve the medical as well as the adult-use marketplace currently. So this synergy is really going to give us first mover advantage.

James West:   You bet. So is this a case where you’re going to roll out all of the different brands – you’ve got over 100 brands. Are all of those going to be available throughout Latin America in a Spanish-language branded sort of format?

Chuck Smith:  Yes. Just to be clear, we have over 100 products; they are spread across a number of brands. The most iconic brand, of course, is Dixie. We also have Aceso and Therabis, and we have other sub-brands, and we’ll continue to curate brands.

More importantly, we’re able to bring these already-formulated products and delivery vehicles – so, a pressed pill, for example, or a topical product, or effervescent powder that you mix in to make a drink – and all of those things allow us to deliver a product immediately once each of the countries determines which format of the products and which distribution methodology is going to be allowed.

Mexico, for example, is going to have a different set of rules and regulations than Colombia, initially. But frankly, there isn’t a product that any of those countries could approve that Dixie doesn’t already have somewhere in commercial availability.

James West:   Sure. And so what, exactly, right now, the status of approval for these things in all of Latin America and Mexico?

Chuck Smith:  Well, they are country by country specific, as you can imagine, and we’re working with the Khiron team, who already has approvals for certain formats of product in Mexico as well as getting approvals for certain formats of product and distribution in Colombia. And so, as the teams come together, we’ll figure out, based on their regulatory expertise, which products we can launch first.

I think we’re very encouraged about being able to move into Mexico very soon, and I believe the teams are very excited about Colombia. I also want to say that part of our joint venture deal is that we actually bring their highly formulated and incredible product Kuida back to the United States, and so we can start manufacturing and distributing that product here this year, as well. So I’m excited to get that into our distribution network.

James West:   Right. That’s interesting. So then, you source your cannabis in North American markets from your partnership with Choice? Choice Labs?

Chuck Smith:  Well, that’s in Michigan, so the company Dixie, as a company right now, as I mentioned, we’re kind of a multi-state operator; we operate in five states today: that would be Colorado, California, Nevada, Maryland, and we’re just opening up Michigan with our partner there, Choice Labs. Our stated goal for the company is to add four to six additional states this year, and that’ll give us the biggest footprint of controlled manufacturing and then direct to dispensary distribution in the branded/infused products space.

In each state, we work with partners that are cultivators to secure the cannabis, either in raw form – we then extract in our lab – or in an oil form. In a state like Colorado, for example, there are many really high-quality oil providers, so we can buy it at a cost per milligram cheaper than we can extract it on our own.

So it really depends on the state that we’re in operating in, since as you well know, we can’t ship across state lines.

James West:   Right. So is the joint venture, then, where will it source its cannabis for inputs? Is that what Khiron will be in charge of providing that aspect?

Chuck Smith:  Yes. Khiron will be in charge of the cultivation side, both with their installed facilities they’re building, as well as the companies they’re working with and potential acquisitions; I think MediGrow is one that is widely known that they’re getting, hopefully, close to closing that transaction.

So they’ll be producing the cannabis, bringing it into facilities where we’ll manufacture it together based on our SOPs and our different formulations and form factors. It may be a Dixie-branded product, but frankly, the team will work, and maybe the brand is more specific to the region or the country that it’s in. So those are things that we know, that we’ve been doing for nine years, so we’re very comfortable in building the brands and then getting them out into distribution.

James West:   Right. Okay, so that’s a big market in Latin America, it’s a huge market in the United States. In Latin America, you’re going to be able to more – I mean, it’s country to country, but you can still ship cannabis products across borders there, can you not?

Chuck Smith:  Yes, there are more liberal import/export rules in Latin America and Mexico than there would be in the United States. We can’t even ship across state lines less ship out of the country or into the country. So, you know, clearly we’ll be working closely with Khiron and their team on the best sourcing of material and the most cost-effective way to produce products and get them into these individual markets.

James West:   Yeah. Wow, that’s great, Chuck. I’m excited about your company and excited about your deal with Khiron, who I’m invested in; they’re also a client. I’m going to look forward to following this company closely. We’d like to visit you with a camera crew and shoot your operations – is that something we could do?

Chuck Smith:  Oh, we’d love to have you come out and do that. We always love to have people come in a tour. Most folks don’t understand, when they think about the cannabis industry and, you know, making some infused products, really what it takes. I’m sitting here in our Colorado facility, it’s a 30,000 square foot commercial food manufacturing facility. I mean, the way I call us, we’re a food manufacturer – we just have a funny ingredient called THC.

James West:   Right. Interesting. Okay, well that’s a great introduction, Chuck. We’ll be following the story with interest; we’ll have you back soon. Thanks for joining me today.

Chuck Smith:  Thank you so much, I really appreciate it.

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

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