Publicly traded plant-touching marijuana companies: Q&A with Terra Tech CEO Derek Peterson

One arena in which the cannabis industry has struggled to make serious gains is the stock market.

Most plant-touching companies that are also publicly traded still live on the over-the-counter markets, dreaming of the day when they’ll graduate to the Nasdaq or the New York Stock Exchange.

Derek Peterson is no exception.

As the founder and CEO of California-based Terra Tech Corp. – one of the largest and most stable publicly traded plant-touching cannabis companies in the United States – Peterson’s ambitions for his business include getting to $100 million in revenue and then upgrading from over-the-counter markets to a major stock exchange.

Terra Tech has acquired 10 marijuana retail and cultivation permits in both California and neighboring Nevada since its founding in 2008, along with a burgeoning traditional produce business to help diversify its portfolio.

Over the past decade, Peterson has built the company into a solid force that went from roughly $7 million in revenue in 2014 to more than $25 million in 2016.

Though Terra Tech’s financials for 2017 haven’t been fully released yet, the company stands to do even better, with revenue of nearly $25 million for just the first three quarters of last year.

Marijuana Business Daily caught up with Peterson to talk about marijuana banking issues, Terra Tech’s growth and how U.S. cannabis companies can compete with their Canadian counterparts.

What are the biggest challenges in running a publicly traded plant-touching company?

Banking. Because we’re publicly traded, we have quarterly reviews and annual audits.

And because we have to deal in cash at almost all of our locations in some capacity …  we have no long-term banking solution generally in any market.

That adds a ton of time and complexity to the audit.

When you add time to the audit, it raises the risk of not meeting your filing deadline. When you add complexity to the audit, it raises the cost.

The cash handling – besides the security of it, the expense of it, the irritation of it – creates a very challenging and expensive environment to audit a public company.

Literally everything – every transaction that we make on the cultivation side or the retail side, every piece of product that passes through distribution to retail, every product movement – needs some sort of journal entry in our accounting.

Any one of those journal entries in the accounting could be subject to our audit review at the end of the year.

We have to do monthly cash counts, where auditors come out to our facilities and reconcile our cash on a monthly basis at our different locations.

It just ties into so many little nuanced areas of the company, from the reporting, from the 10-K filings, to the Q filings to different 8-K filings.

Terra Tech’s revenue more than tripled from $7 million to $25 million between 2014 and 2016, and you were at nearly $25 million during the first nine months of 2017. What do you attribute that solid growth to?

The main driver over the last year was the implementation of adult use in Nevada.

We hold the most permits in Nevada. We have four retail stores, large-scale cultivation, large-scale extraction, two additional stores that we have in partnership with NuLeaf by sharing a cultivation facility.

We also had some other acquisitions and some organic growth within California, and some growth on the (traditional) produce side.

This year, we’re spending more time on pushing our wholesale brand throughout California.

We’re lighting up a lot more cultivation and extraction space in the California marketplace.

We’re bringing online our large-scale cultivation and extraction facility in Nevada.

So, this year, we’re hoping that a lot of the organic growth will come from M&A on the retail side and from organic growth of our manufacturing and wholesale brands.

Which states or countries are you targeting for expansion?

We were heavily focused on Nevada.

Being in Nevada was not only to take care of the tourism aspect, but you get macrobranding there because you get to expose your brand to people from Asia and Europe and everywhere.

That’s a really interesting byproduct of doing business in Nevada.

California, the sixth-largest economy in the world, biggest cannabis market – it’s a no-brainer to be here.

We were really avoiding all the other states.

In New Jersey, we have a farm where we grow Edible Gardens produce.

And new Gov. (Phil) Murphy is now expanding medical and fast-tracking adult use at some point this year, so by default we’re going to go to Jersey.

We want to execute in those three states and grab as much market share as we can with our brands.

What do you think Terra Tech may have to do to compete long term on an international scale, given that Canadian companies are expanding their footprints so quickly and taking the lead globally?

It’s access to capital. Real institutional support will change that paradigm drastically.

True access to Wall Street capital markets, not just the smaller hedge funds and the family offices, but real institutional access will change the paradigm for a lot of players in the United States.

That’s where the industry really grows.

Is Congress going to have to act in some way before that happens?

I think so, but I don’t think we need to see federal legalization.

What it may be is just some fixed piece of law that looks a lot like the Rohrabacher-Blumenauer Amendment, which is, hands-off, states’ rights and so on.

That is probably enough to open up access to the capital markets, the institutional capital, the large broker dealers and the investment banks.

I don’t think we need sweeping federal legalization, but we need something codified in law that says, “Hands-off the states when it pertains to this.”

This interview has been edited for length and clarity.

John Schroyer can be reached at [email protected]

5 comments on “Publicly traded plant-touching marijuana companies: Q&A with Terra Tech CEO Derek Peterson
  1. Jennifer A on

    Great article!! I am a harvest manager for a grow in Boulder so I am living in the trenches one would say! I have been investing in Terra Tech as much as I feel comfortable investing. I know first hand what this plant can do along with the medical properties related to CBD heavy strains. Getting the public to realise that some strains don’t give a “high” and work as anti-inflammatory better than Tylenol, Advil, or Ibuprofen. I personally cannot have NSAIDs and try to not use Tylenol if I can help it. Cannabis does not destroy the liver like OTC drugs and even causes internal bleeding. Cannabis does not do that. This plant will help change lives for the good. Alcohol and Opioids destroy lives and cause death. The fact it has not been decriminalized everywhere shows how much more education to the public is needed.

    I look forward to watching this company grow and expand. We are on the verge of a new industry like the .com era but much larger.

    I do not work or have any ties to Terra Tech. They are simply one of a few I believe will stand longer than some of the smaller startups. It also helps I am a California native and I want to support local as well as my home state!

    Reply
  2. jim on

    The problem now is the issue with the plant being a schedule 1 on the controlled substance act. If cannabis using states want to address their problem they should approve the Convention of States petition in their state house and senate. This is subject matter that can be addressed with a constitutional amendment which will limit federal interference in state issues.

    Reply
  3. Tony Brewer on

    Why is it that TRTC cannot get their SP up and out of the .20’s ? I’ve been investing in this company now for 18 months and still in the red . Is it a penny flippers dream stock or what ? I’m very disappointed in the share price hanging in the .20’s for this long > What about us long term shareholders ?

    Reply
  4. Mike B. on

    I own stock also with TRTC and live near there store in Reno, I have purchased at every weed store in Reno and discovered TRTC has the best location for selling which is why I invested in them. The big issue with TRTC is the store is poorly managed, it has the lowest user ratings of all stores in Reno, when you walk in the waiting area it is messy from all the food they leave in the lobby. Most importantly when you go in to buy weed, the attendants just kind of look at you like they are zombies, they don’t try to help you purchase what you need, you kind of have to know exactly what you want.
    I asked one of the attendants what the best indica cartridge they had, he told me just look for something expensive and that should do.

    They need managers who are about business and run the store like they own it.. I was a CEO for 10 years and this is one of the most poorly run stores I have seen.

    Reply
  5. Steve A. on

    I wanted to invest in your company but after reading the statement below !!! About how bad your management is in RENO!!! I am hoping after Mike B. C.E.O for ten years, wrote this on March 29th, 2018 @ 8:35am. SEE BELOW I will be investing hoping this issue has seen some improvement by now ????

    Mike B. on March 29th, 2018 – 8:35am
    I own stock also with TRTC and live near there store in Reno, I have purchased at every weed store in Reno and discovered TRTC has the best location for selling which is why I invested in them. The big issue with TRTC is the store is poorly managed, it has the lowest user ratings of all stores in Reno, when you walk in the waiting area it is messy from all the food they leave in the lobby. Most importantly when you go in to buy weed, the attendants just kind of look at you like they are zombies, they don’t try to help you purchase what you need, you kind of have to know exactly what you want.
    I asked one of the attendants what the best indica cartridge they had, he told me just look for something expensive and that should do.

    They need managers who are about business and run the store like they own it.. I was a CEO for 10 years and this is one of the most poorly run stores I have seen.

    Reply

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