Terra Tech CEO Derek Peterson is hoping to raise $2 million with the goal of serving the exploding U.S. medical marijuana business.
Wally Skalij , Los Angeles Times
Wall Street sniffs out opportunity in marijuana
- Article by: Andrew Tangel
- Los Angeles Times
- April 1, 2013 - 9:42 PM
BELVIDERE, N.J. – Amid the whir of fans and the glow of soft white light, workers tended to bright green seedlings sprouting in a giant greenhouse.
Located about an hour’s drive from New York City in the hills of northwestern New Jersey, the facility produces basil, chives, oregano and other herbs that are sold in grocery stores around the Big Apple.
But if Ken VandeVrede has his way, the facility will one day be growing a much more valuable plant: marijuana.
VandeVrede is chief operating officer at Terra Tech, a hydroponic equipment maker based in Irvine. The small company wants to double the 5-acre New Jersey greenhouse operation. The aim is one day to supply the exploding U.S. medical marijuana trade and to prepare in the event that recreational marijuana ever becomes legal nationwide.
“We can scale this thing very, very quickly,” said VandeVrede. “When hemp and cannabis become legal, we’re ready to rock and roll.”
To do it, Terra Tech needs to raise $2 million. And like a number of small businesses in the burgeoning U.S. cannabis industry, it’s trying to enlist Wall Street’s help. Business owners have been pitching their ideas to potential investors.
Wall Street has good reason to smell potential profits. Washington, D.C., and 18 states have already legalized medical marijuana; there are formal measures pending in 10 additional states, according to the National Cannabis Industry Association.
Although pot remains contraband under federal law, some entrepreneurs see marijuana heading down the same path as Prohibition, to an eventual repeal. “More and more people see the inevitability,” said Brendan Kennedy, chief executive of the Seattle private equity firm Privateer Holdings, which targets cannabis-focused startups. “They see that the Berlin Wall of cannabis prohibition is going to come down.”
Privateer is raising $7 million to acquire small companies that have a hand in the trade but don’t grow or distribute marijuana. Its first acquisition: Leafly, a Yelp-style online rating site in Seattle for dispensaries and strains of marijuana.
In California, MedBox, a maker of automated dispensing machines for doctors’ offices, pharmacies and pot dispensaries, is on the hunt for funding.
“Everybody’s loosening up a lot because they realize the momentum has shifted and the financial world is going to have to make room for this industry,” said Vincent Mehdizadeh, its founder. “Wall Street and investment banks are going to have to come along for the ride, eventually.”
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