Terra Tech Corp.
Medical marijuana has for long been a subject matter of intense debate and there have been arguments and counter arguments whether cannabis has any medical benefits or not. Things however took a curious turn this month when a resident CNN doctor apologized and reversed his previous stand “against medical marijuana.” Another reversal of sorts came from higher quarters when Attorney General Eric Holder told the governors of Washington and Colorado in a conference call that the Department of Justice will take a “trust but verify approach” to state laws on legalized use of marijuana for adults.
The two developments plus a CNBC story in which it was featured as one of the medical marijuana companies and excellent quarterly earnings brought a small but upcoming company Terra Tech Corp. (OTCBB: TRTC) in focus. The stock gained more than 100% in one month.
Medical marijuana is advancing and is legalized in 20 states plus D.C. with a couple of states pushing it up for recreational use as well.
The recent developments of the issue of medical marijuana – its benefits and how the government intends to treat marijuana businesses going forward – are being seen, as CEO of Terra Tech, Derek Peterson, puts it, as “an additional domino” beginning to be tipped over in the pursuit of removing prohibition all together.
It started in early August with Dr. Sanjay Gupta acknowledging that when he wrote the article (published in Times magazine in 2009) totally rejecting the medical benefits of cannabis, he had not adequately reviewed studies that had been done across the globe and also denied the claims of legitimate patients who had benefitted after using cannabis. Dr. Gupta’s opinion carries a lot of weight by virtue of his being a renowned doctor and also because of his position at CNN. More so as he has put his reputation at stake by reversing his earlier opinion on medical benefits of marijuana.
And now, the Deputy Attorney General has issued guidance to U.S. Attorneys across the country that indicates that the government is ready to reexamine and perhaps ease back the ways in which it treats and incarcerates businesses involved in production and distribution of marijuana. However, the Attorney General has made it clear that the Department of Justice reserves the right to prosecute individuals or businesses that do not adhere to the guidelines.
Among other things, the eight-point guidance prohibits selling marijuana to minors, use of revenue from marijuana for criminal activities, transporting marijuana from states where it is legal to states where it is not and using authorized marijuana activity as a cover for trafficking of other illegal drugs.
Terra Tech Corp
While the medical cannabis side of the company is most talked about, according to Mr. Peterson, it is its agricultural division that is and will be the principal driver for growth for the next couple of years.
The company specializes in controlled environment agricultural technologies. It provides equipment and proprietary software and hardware to indoor agriculture businesses and hobbyists through its wholly-owned subsidiary GrowOp Technology.
Earlier this year, the company made two acquisitions – GroRite Garden Center and NB Plants/ Edible Garden brand. While GroRite is a gardening superstore in Lincoln Park, NJ, Edible Garden cultivates hydroponic produce. Edible Garden is a well recognized brand of superior quality agricultural produce in the North East and can be found at major grocery stores such as Shoprite and Food Emporium and approximately 400 stores in New York, New Jersey, Maryland, Delaware, Connecticut, and Pennsylvania.
The company reported revenue of $665, 365 for Q2 2013, a 700% increase over the same quarter prior year. With $169,000 in cash and a net loss of $1 million the numbers do not look very impressive but compare very favorably with previous quarters. While assets and revenues have grown, so have current liabilities, which is explainable considering the two acquisitions that required $825,000 financing.
Mr. Peterson attributes the revenue growth as a validation of the recent acquisitions, particularly Edible Garden. He now plans to launch Edible Garden as a national brand, all the while ensuring that the present local grower-based business model is retained. Even when going national he wants to the image of the company to be that of a supplier that provides high-quality sustainable agriculture produce sourced from local farmers who are just a couple of hours drive away.
Terra Tech expects its wholly owned subsidiary, Palm Creek Produce Inc., a state of the art closed environment agricultural facility capable of producing 10,000 plants a week, to start contributing revenue by the third quarter or latest by the fourth quarter 2013.
In addition, construction is well on its way at the company’s new 5-acre greenhouse facility in Belvidere, New Jersey. The new facility is also the venue of the event that the company is holding to showcase its production and packing procedures and above all to introduce the Edible Garden brand to its investors.
On one side medical marijuana is becoming more acceptable and government is rethinking on how and whom to prosecute for marijuana activity. On the other side Terra Tech’s agricultural division/s are potential growth factors. Both are good news for Terra Tech.