Terra Tech Corp.’s game plan in the budding recreational and medicinal marijuana industry aims to bring seed to sale under one roof.
And the Irvine company is well under way with hybrid operations in Oakland, Nevada and perhaps Orange County.
Its downtown Oakland dispensary, established in 2012, welcomes more than 1,000 customers a day and brings in about $12 million in annual revenue. The retail outlet sits on a one-acre campus that also houses a cultivation operation for plants and an extraction lab that produces high-potency concentrates, such as oils, edibles and beverages.
In the Reno area, Terra Tech is nearing completion of a 45,000-square-foot grow and extraction lab that will produce 1.5 metric tons of flower a year, a crop that could translate into $25 million to $30 million in wholesale product.
The facility is scheduled to open in the next few months, according to Peterson.
It also operates a nearby dispensary, one of four in Nevada, which recently legalized recreational marijuana use and retail sales.
The other three are near the Las Vegas strip. Its 6,800-square-foot flagship outlet at 1130 East Desert Inn Road was a former bank featured in the mobster hit “Casino.”
Retail, Wholesale Focus
The company’s premier marijuana products brand, IVXX—Roman numerals for 420, slang for pot use—has been a hot seller for years and is available in about 70 California and Nevada dispensaries.
“We’re putting the most emphasis in retail and our wholesale footprint,” Chief Executive Derek Peterson told the Business Journal last week.
The mix drove revenue to $28.7 million in the 12 months through June, up nearly 234% from two years earlier. The percentage jump was the highest among companies with less than $100 million in sales on the Business Journal’s fastest-growing public companies list this week.
It’s the second time in three years that Terra Tech has claimed the top spot in the small companies category, and it appears the company and its products have plenty of room to grow.
Terra Tech plans to open a 13,000-sqaure-foot facility in San Leandro in the first quarter that will house an extraction lab, production facility, retail space and offices.
It plans to follow up that opening with a large-scale cultivation center in Oakland capable of producing a metric ton of marijuana annually. The facility is scheduled to open in the second quarter.
The company acquired Santa Ana dispensary The Reserve OC last month in its first local foray.
The $7 million transaction included $4 million in cash and $3 million in Terra Tech common shares, according to filings with the Securities and Exchange Commission.
The shop was renamed Blüm, its cannabis retail brand in Northern California and Nevada.
Shifting Attitudes
Santa Ana has been one of the most liberal in OC in permitting dispensaries. Others, including Irvine and Laguna Beach, prohibit them, and go a step further, outlawing delivery—a newer distribution system that has proliferated much of the state in the past year.
“I think Santa Ana has a first-mover advantage in the marketplace to become the central location for cannabis operations in Southern California,” Peterson said, “until other cities decide to embrace it.”
That sentiment could change come Jan. 1, when California becomes the fifth state in the country to open up recreational marijuana sales, joining Colorado, Washington, Oregon and Nevada. Hawaii, Alaska, Massachusetts, Maine, and Washington, D.C. have passed recreational marijuana use laws and are in various stages of establishing public retail shops.
Twenty-nine states, D.C., Guam and Puerto Rico allow medicinal cannabis, though that’s still in violation of federal law, which prohibits all marijuna use.
Public opinion on the legalization of marijuana has never been stronger, with 64% of Americans in favor, according to a Gallup poll released last week.
Advocates, like Peterson, are quick to highlight the industry’s job growth, tax generation and lack of crime spikes in active recreational markets in Nevada and Colorado.
Terra Tech has more than 250 employees and plans to add about 50 by the end of next year. Its dispensaries have 15 to 20 workers each.
The company also operates a five-acre traditional farm in New Jersey that produces leafy greens and herbs of another sort, such as lettuce, tarragon, oregano and basil. The products are sold under its Edible Garden brand at several grocers, including Kroger, Walmart, Aldi and Marsh Supermarket, which is in Chapter 11 bankruptcy.
It’s establishing a network of contract farmers along the California coast in Monterey and other regions as it expands distribution.
“I would say in Q1 of next year, we’re making a major push into the West Coast,” Peterson said.
Wall Street Snub
Despite Terra Tech’s strong revenue gains over the past few years—growing the top line from $2.1 million in 2013 to $25.3 million last year, a 1,100% jump—the company is getting no love on Wall Street.
Its shares, traded under the symbol TRTC on the Over-the-Counter exchange, are down 65% this year to about 18 cents. Its tracking slightly worse than the U.S. Marijuana Index, which is down about 40% in the same period. The index tracks the leading 17 cannabis stocks, and despite the stumbling performance of Terra Tech’s stock this year, it remains the fourth-most valuable company on the index, with a market cap of $116 million.
Peterson cited a hazy regulatory environment that varies by municipality, the lack of institutional, commercial and investment banks, and other financial service providers for the industry, and a frosty perception of the booming sector by U.S. Attorney General Jeff Sessions, who’s said good people don’t smoke marijuana. He also equated the herb’s societal and biological affects as nearly as dangerous as heroin, a highly addictive opioid that along with other opioids, including prescription painkillers, has been destructive across the nation. So much so that it helped prompt President Donald Trump to declare the opioid epidemic a national emergency last week.
“There’s definitely a systematic overhang of the stock,” Peterson said. “We can get to $400 million [in sales] in the next few years.”
GreenGro Technologies Inc. is No. 2 on the list, growing revenue 198.3% over the two-year period to $1.7 million. The Anaheim-based company designs and sells hydroponic and aquaponic systems and extractions labs, among other products, for a customer base that includes restaurants, community gardens, and cultivators and collectives in the medical and recreational marijuana sectors.
