From Wall Street To Green Street: Terra Tech CEO Derek Peterson
Terra Tech (OTC: TRTC), and its subsidiary GrowOp, were started with the intention to develop and manufacture growth tools for in-home cannabis cultivation for medical marijuana users, but has quickly grown into big-time player in the hydroponic growth space.
Terra Tech is currently only growing produce for retail sales, but CEO Derek Peterson told Benzinga that he is “happy to slow down growing thyme and oregano,” if the policy world tilts towards marijuana legalization.
TRTC has strategically placed Dutch System Hydroponic Farm infrastructure in key marijuana legalization battleground states.
Marijuana legalization is a big "if" in states like New Jersey, Florida and Indiana (where TRTC has investment millions in grow center development), but that does not bother Peterson. He reassured the company’s commitment to innovative agriculture, affirming that he “loves the produce side of the business," noting that "an acre of produce yields up $1.5 to $2 million with 18 percent EBITDA margin.”
Though Peterson is content with the produce side of the business, he added that he is ready for states like New Jersey to go from “0 to 100 MPH” in regards to marijuana legalization. Peterson called New Jersey a “sleeping giant,” noting that Jersey’s legislative bodies are “extremely, extremely supportive” of marijuana bills, but while Governor Chris Christie is in office, there is not much hope for progress.
Even though Christie has spoken out against the War on Drugs, he has done everything in his power to restrict New Jersey’s current medical marijuana law, and has vetoed all marijuana legislation that has come across his desk. Though this is currently a setback for the cannabis industry, Peterson recognizes that “eventually [Christie] will be gone, and [New Jersey] will still have a supportive legislative body.”
Peterson, formerly a Senior Vice President at Morgan Stanley, left Wall Street for the marijuana industry, seeing a huge financial opportunity in medical marijuana. When asked why, he spoke on the financial upside to legal cannabis, stating “the average Starbucks is doing $200 to $300 profit per square foot, while medical marijuana dispensaries are doing anywhere from $1,000 to $4,000 per square foot.”
In 2010, Peterson privately opened Blum, a medical marijuana dispensary in Oakland, California. It was opened privately because Peterson did not feel that opening it within the company was worth the risk for shareholders, but it has proven to be quite the beneficial tool in helping to grow TRTC.
“[Blum] gives us an umbrella to do a lot of things privately in California, while sheltering the company, but positioning it to participate at arms length…a While it [the medical marijuana permit] is not in the public company, it can be and will be in the future.”
Since the emergence of the cannabis industry, an obstacle many “green” companies have faced is funding. Due to the fact that any marijuana-oriented businesses are illegal on a federal level, institutional investors were initially hesitant to fund ambitious 'cannabusiness'-people.
Peterson says that he has seen a large paradigm shift in the last year, and that capital pools have opened up to marijuana businesses.
“Groups like Arcview (a venture capital firm) are looking for seed stage or development stage companies,” which is large step forward from just two or three years ago.
Peterson mentioned that coming from Wall Street, it was not as difficult for him to do a private round of fundraising to get the $1.2 million TRTC needed to get off the ground, but that was due to his established contacts.
When it comes to fundraising in the cannabis space, "it has gotten a lot easier."
*This is part one of a two-part interview with Terra Tech Corp CEO Derek Peterson. Check back soon to learn about TRTC's new research facility and the company's future.*
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