Marijuana Business Magazine - February 2018

and November. Stores nationwide were forced to shutter while the system was repaired, costing business owners thousands of dollars in lost sales. Dixie Brands: Founder and CEO Tripp Keber announced in December he was stepping down from his role as the head of the Denver infused- products powerhouse. This occurred a few months after Dixie announced it was pulling out of the Arizona med- ical marijuana market. Keber empha- sized his departure was his own deci- sion. But the company’s future now is in the hands of an upstart private equity company that is assembling a portfolio of infused products compa- nies. New York-based Rose Capital will provide the companies in its port- folio – including Dixie – with funding to expand their operations. Success Not Guaranteed What do all these stories illus- trate? Being an early mover or legacy business does not guarantee long- term success. If anything, these companies are reminders of the need for businesses to adapt to change, especially in an industry as full of uncertainties and pitfalls as cannabis. It’s also not as though 2017 marked a death knell for these businesses. All of them – except Tradiv – could be turned around into thriving enterprises. But taken together, these compa- nies provide a cautionary tale, espe- cially given how a number quickly rose to prominence amid the buzz over Colorado’s historic recreational MJ market. Sweet Leaf’s woes, in particular, could have ramifications for oth- ers in the industry – if, for instance, U.S. Attorney General Jeff Sessions decides to use the company as a justification to launch a crackdown on MJ businesses. Even if he doesn't directly attack, U.S. attorneys could now use Sweet Leaf's case as a rea- son to justify more intense scrutiny now that the Cole Memo has been rescinded. Lessons Learned But there are also lessons to be learned from each of these companies. From MassRoots, for instance, the obvious takeaway is likely for inves- tors, given that the company burned through millions of dollars in cash while racking up financial losses. That simple fact points to a flawed busi- ness plan propped up by marketing hype, without a substantial revenue stream to show for it. For MJ Freeway, the lesson is most likely that cannabis software compa- nies in general still have a long way to go and that those in the space currently may get crushed by the entrance of larger tech firms. For Tradiv and Dixie, the moral of the story seems to be the dangers of overexpansion versus controlled growth. Dixie is currently in four states, after leaving Arizona, and said when it pulled out of that state that it had mis- calculated the necessary investments to make an operation there work. And Tradiv, according to an Inc.com feature, began having troubles mainly because it tried to expand into California while neglecting its core customer base in Colorado. In terms of Sweet Leaf, the lesson is probably the simplest of all: When in doubt, err on the side of caution. Profits from questionable sales aren’t worth what could become a pro- tracted legal battle. Overall, these companies’ stories illustrate that there’s more turbulence ahead for the cannabis industry. The road ahead is neither clear nor easy. But as long as marijuana business executives are thoughtful and stra- tegic in their planning, it’s not a road that will be impossible to navigate. ◆ Being an early mover or legacy business does not guarantee long-term success. ¬f anything, these companies are reminders of the need for businesses to adapt to change, especially in an industry as full of uncertain- ties and pitfalls as cannabis. February 2018 • Marijuana Business Magazine • 35