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Pot Products Maker Grows Like a Weed

Terra Tech Corp.’s crops of basil, oregano, thyme, parsley and lettuce are a steady line of business, but the Newport Beach-based company’s newer line of products derived from another leafy green is the big growth driver.

Its suite of cannabis concentrates under the brand IVXX—that’s 420, a slang term for marijuana usage—are sold at approximately 150 California retailers from San Diego to San Francisco.

“Cannabis by far has been the largest accelerant in our business, specifically the IVXX brand, and its penetration throughout the state,” said Chief Executive Derek Peterson. “And with the upcoming regulatory changes in the state, we feel as though that growth is going to expand significantly.”

The company, which sells cannabis oils, “shatters” and wax, posted revenue of $8.6 million in the 12 months through June, up 754% from two years earlier. The percentage jump claims the top spot among companies with less than $100 million in sales on the Business Journal’s fastest-growing public companies lists this week.

The cannabis concentrates are extremely potent, some containing about 80% Tetrahydrocannabinol, or THC, the primary psychoactive ingredient in marijuana, which is legal in various forms for medicinal purposes in 23 states and Washington, D.C., and for recreational use in Washington, Oregon, Colorado, Alaska and the nation’s capital, where voters approved the measure last year but the House of Representatives in a budget bill prohibited outright sales until 2017 at the earliest.

The list of states that could expand legal recreational marijuana use this year through ballot measures include Pennsylvania, Florida and Ohio, potentially opening new paths for Terra Tech and an emerging investor base.

“Politics and economics go hand in hand in this industry,” Peterson said. “Investment is always a function of risk versus reward, and as the political climate shifts in favor the risk begins to mitigate and the reward strengthens.”  

Terra Tech, traded under the symbol TRTC on the Over The Counter exchange, had a recent market value of about $28.9 million.

A referendum to legalize recreational marijuana in California, which narrowly failed in 2010 after little organization and funding, is likely to be on the ballot next year in what could generate another seismic shift in the evolving sector, not to mention a windfall of new business in the largest cannabis market in the nation and possibly the world, with estimated sales of $1.3 billion, according to Oakland-based researcher The ArcView Group.

“We have a very strong chance for it to

pass,” Peterson said. “Voters want it, municipalities need the tax revenue, and communities need the job creation.”

The state industry—like others that operate in a hazy regulatory environment where marijuana is still prohibited under federal law—got some guidance in September with the passing of the Marijuana Regulation and Safety Act, which aims to provide a regulated market in California with a licensing and financial system, and tracking, testing and manufacturing requirements, among other measures.

Non-Cannabis Line

Terra Tech’s Edible Garden brand of non-cannabis greens—lettuce, basil and the like—accounts for about 80% of the company’s total product offerings and is distributed through Walmart, Kroger, Marsh, Stop & Shop and other grocery chains.

The company’s 5-acre farm in Belvidere, N.J., billed as a high-tech Dutch-style hydroponic greenhouse, could begin cultivating cannabis if regulations ease in the Garden State.

Cannabis-related concentrates comprise about 20% of Terra’s offerings, but that percentage mix is expected to swap with that of the balance of its product lines by 2017 with the new California regulations and a major expansion under way in Nevada.

Terra Tech is building out three retail dispensaries off the Las Vegas strip and one in Reno under its BLUM banner, in addition to a large-scale cannabis grow house in Reno and Clark counties. The Nevada expansion will add about 100 workers.

Nevada

“Nevada will be a significant growth driver for us in 2016 and 2017, especially if recreational passes there, as well,” Peterson said. 

The company, established in early 2010, employs about a dozen in OC, 15 in Northern California, and nearly 30 in New Jersey.

A recent deal with an OC-based distributor has helped boost sales in San Bernardino County and OC, the latter of which has become a hub for entrepreneurs and startups in the booming medical marijuana industry, despite the small number of dispensaries operating within county lines. Most brick-and-mortar locations were closed in the past four years by individual municipalities trying to crack down on largely unregulated businesses. Coastal OC is void of dispensaries altogether, but that hasn’t hindered delivery services.

Terra Tech has taken its national lobbying effort to the state and county levels, where it aims to expand the industry.

“We are really hoping Orange County political leaders support the new regulations and allow for these businesses in a greater capacity throughout the county,” Peterson said. “Orange County is another primary focus for us in 2016 and 2017.”

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