After a few trials and errors we came up with this solution. As with most GIS processing there are multiple ways to do things so although I am sure there are other, maybe better, ways this worked efficiently enough for us with the tools we had on hand and are most familiar with.
We took the raster.tiff and opened it in Global Mapper. We exported the raster to GeoTiff format, ensuring 24 bit and toggle on the "Make Background (Void) pixels transparent" option under TIFF Format Options.
When we used LizardTech to compress the file we toggled on lossless. This time when we loaded the MrSid image back into Global Mapper and ArcGIS 10.4 the image looked as we wanted. Now we can load it into our tablet software and the transition layers show up nicely.