Terra Tech Shaping the Future?

Terra Tech Corp. is not the only marijuana business with publicly traded stock, but it may be the only grower. For some time, marijuana investors have focused on ancillary businesses: grow lights, vaporizers and childproof containers, but nothing that gets to the aromatic agricultural center of things.

The Securities and Exchange Commission recently greenlighted Terra Tech’s plan to use the $6.8 million it raised through the sale of its stock to grow and sell medical marijuana in Nevada. The stock was sold to Dominion Capital, a New York-based private equity firm.

Other cannabusinesses with their eyes on initial public offerings may take this as an encouraging sign of a federal hands-off attitude. Could 2015 be the year when marijuana stocks are more widely publicly traded? Might these trades eventually move out of the world of private equity and onto exchanges like the American Stock Exchange or the Nasdaq?

Terra Tech has a diversified approach to marijuana agriculture. Through its subsidiary, GrowOp Technology, it sells hydroponic growing equipment, and has built cultivation facilities for marijuana companies in Colorado, Michigan, Washington and Massachusetts. Another subsidiary, Edible Garden, grows hydroponic produce which is distributed through major grocery store chains, including Walmart.

The company’s MediFarm subsidiaries have now received provisional approval for four dispensaries, two cultivation centers and two production facilities in Nevada, where construction is expected to begin in the second half of 2015. CEO Derek Peterson and a partner independently own a dispensary in California, which they reportedly plan to fold into Terra Tech.

Terra Tech’s stock has been publicly traded over the counter since 2012. After its 2014 financing of $6.8 million, it expects to return to the market in 2015 for an amount variously reported as $7 million or $13 million. However, penny stocks are nothing if not volatile, and Terra Tech’s has taken a beating lately. Selling stock in a private placement for a company that builds greenhouses and produces hydroponic lettuce is also very different than selling stock on a public exchange for a company that grows and distributes marijuana.

Other cannabusinesses are clearly watching to see what happens next. Being able to sell shares publicly is a relatively inexpensive way to raise funds and several companies are reportedly looking into the possibility, either through initial share offerings or through reverse mergers. In the latter case, a private company buys a company (often failing) that is already public. This has been used before in the world of marijuana business, as when Tweed Marijuana Inc. went public, for example.

Initial public offerings of shares would be new and different and are reportedly being eyed by companies including WeedMaps Media Inc., PotBotics and GrowBox USA. It would be a step still further, if these shares could be sold on a public exchange rather than through private placement with equity firms. That might take a sustained period of benign neglect on the part of federal regulators. The promise, though, is not only financing for entrepreneurs; it might also provide an avenue for the small investor to get in on the green rush, which so far has been the province of professionals.

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