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Marijuana Business Rewards Creative Strains

NEW YORK (MainStreet) — Diversify, diversify, diversify. For urban agriculture company Terra Tech Corp. (TRTC), which has a prominent marijuana bent, that mantra of versatility is of the essence as the uncertain future of weed legalization plays out.

Terra Tech CEO Derek Peterson happened upon that strategic arrangement in an unorthodox manner, backing into the public marijuana business as he did. The former Morgan Stanley investment banker launched GrowOp Technology in May 2010 as a side dalliance focused on developing large scale portable hydroponic chambers well-suited to growing cannabis. Morgan Stanley canned Peterson for his pot shenanigans seven months later, but he got his GrowOp investors together in February 2012 for a reverse merger with Terra Tech Corp., an agricultural research and technology company that was also ridding itself of a brief VOIP period.

The same principles that worked in cannabis hydro cultivators applied to traditional agriculture, and commercial hydroponic farmers and greenhouse farmers wanted a piece of the pie in terms of the easy-to-use GrowOp equipment and its expansion potential.

"They had a desire to expand that brand throughout the U.S., and we had an appetite to pick up a business that bifurcated our company a bit," Petersen told MainStreet. "We were a little bit worried that cannabis legalization was going to slow down, and I didn't want our public company shareholders to have all their eggs in one basket."

Moving beyond pot was a prudent business play for Peterson and his company.

"So we essentially diversified -- just in case this imploded on itself, we still had sort of a sound structured business that's symbiotic in nature," he said. "We collectively have all these green houses across the U.S., so if legalization takes hold and spills the other way, we can plant a seed and become large-scale commercial growers over night."

Marijuana Business Rewards Creative Strains

Garnishings and greens sold at Fairway supermarkets in New York City, for instance, can easily be exchanged for their narcotic cousin.

"We're just growing basil right now, and we can change that at a moment's notice," he said. "That's the longer term vision. We want to hedge on the negative side, but if things roll positive for us, we want to be able to have first mover advantage into the market place."

As marijuana grows in popularity and looks to expand in legal acceptance, Petersen thinks that the horticultural foundation of Terra Tech will serve the company well.

"Our kind of long-term mentality is, 'Who do you want growing your weed?'" he said. "Do you want a food-grade facility that has experience growing food in a GAP-certified environment, or do you want the guy who's potentially growing in his basement, or warehouse or whatnot with no standards?"

That agricultural basis will allow for a certain prestige as the company decides to grow marijuana and market it in particular ways -- for use as edibles, tinctures, concentrates and raw product for pharmaceutical companies.

And that last category may be most lucrative in the near term with medical marijuana approved in 20 states and Washington, D.C. Terra Tech has a main facility in Belvedere, New Jersey where it cultivates hydroponic produce (along with an acre in Lincoln Park, a facility in Indianapolis and a hub in Florida), but earlier this month through its subsidiary GrowOp Technology, Terra Tech announced its strategic partnership with nutritional supplement developer Inergetics, Inc. (NRTI) to create a line of natural cannibidiol-based nutritional supplements.

Terra Tech, however, does not want to limit its focus in terms of the eventual purpose of its cannabis crop.

"We'd be open to growing whatever," he said. "We just want to farm the commodity."

That's clearly a lucrative diversification proposition, as shown through the Oakland-based dispensary Blüm Oakland, of which Peterson is a co-owner apart from Terra Tech. This venture allows him further perspicacity into the industry. Salwa Ibrahim, a partner at Blüm and formerly involved in political fundraising, touted the business as booming, even recession-proof.

"Basically, it was something that sprung and started specifically in Oakland and right in our backyard," Ibrahim said. "It was just easy to make that shift, especially in 2008 when the economy started tanking and everybody was losing their jobs. All of a sudden, we had this company in our backyard that was flourishing and hiring more and more people."

--Written by Ross Kenneth Urken for MainStreet

http://www.mainstreet.com/node/30970?page=1