Building the Nevada cannabis industry: An interview with Terra Tech Corp
RENO, Nev. — If legislation for recreational use in Nevada moves forward, the cannabis industry in Nevada could see a huge boom.
“I actually think Nevada has the potential to be the third largest market in the country,” Derek Peterson, CEO of Terra Tech Corp, said in a phone interview. “California, obviously, is going to be the largest with the history, population density and economy, that’s a no brainer. I think Florida ends up being number two. I think Nevada because, with 50 million people in tourism coming, with recreational use it is going to be a gargantuan piece of economic stimulation.
“The beauty of Nevada is they have figured how to make people come from all areas of the country to the middle of the desert, drop their money off and go home.”
Terra Tech opened its first Nevada medical marijuana dispensary in April, in Las Vegas, with others to follow, including Blüm in Reno’s Midtown district.
In addition to medical dispensaries in Nevada and California, the company also operates Edible Garden, a national brand grown by a co-op of local growers of fresh, hydroponic produce. It sells IVXX branded products throughout Nevada and California.
“Good population density, great tourism, strong legislation and a supportive government. That met all three of our standards and that is why we moved into the (Nevada) marketplace,” Peterson said.
Nevada legislation allows for a broad cross section of patients, multi-state reciprocity, the potential for tourism to have an effect on the cannabis industry and, from a capital standpoint and risk return standpoint, this made Nevada a viable option for Terra Tech.
He explained how economic stimulation catapults in Nevada because money doesn’t leave the state as easily as it leaves other areas around the country.
“Nevada is kind of an island to a certain degree so, with the multiplier economic effect, that dollar gets recycled a lot more than it would where the money could leave quickly,” Peterson added.
Terra Tech (TRTC) became a publicly traded company in 2012.
“Terra Tech was the first company in history to get an S-1 registration effective for the issuance of shares doing something that is federally illegal,” Peterson explained. “The stance the security and exchange commission takes is basically protecting the integrity of the market, making sure the company discloses things like risk … but their job is not to pontificate on what we are doing and whether or not we are in performance of other laws.”
So, while the security and exchange commission was forward thinking in a company like Terra Tech going public, they were also, ultimately, staying in their lane.
“Once you’re public you have quarterly reviews, financial audits by a third party and file reports,” Peterson highlighted regarding some of the standards a public company adheres to.
However, the steps for getting to the point to be publicly traded were much more cumbersome than other types of companies may have experienced. Peterson mentioned additional burdens regarding regulation, among others.
“Operationally, it is no different than anyone else that operates in this space (cannabis), but as a public company because we are disclosure based, we are public; we have had a higher benchmark in terms of disclosure and accounting,” he said. “For us it is an advantage, from a couple perspectives. The most important one is the race going on nationally to grab permits in different markets and as legislatures are putting together competitive bidding processes and application processes, I think it (being public) sets us apart pretty drastically.
“Our competitive advantage is, we are a public company, we are the epitome of transparency and accountability.”
One area Nevada currently struggles with in the cannabis industry is getting patients signed up, but that is changing too.
“Nevada has a history of doing a great job with regulation, look at gaming,” Peterson said. “For us it (Nevada) made a lot of sense.”
Terra Tech also thought Nevada to be responsive in legislation and working with entrepreneurs.
“They want industry, jobs are dependent on it, economic stimulation is dependent on it, so we knew it was going to be a favorable government not a restrictive government as we went through this process,” Peterson said.
They first started looking at Nevada when the permitting began to take place.
“We competed for eight permits, they (Terra Tech) were thinking we would win two … We knew how competitive it would be and we walked out winning all eight permits,” Peterson explained.
Simultaneously, they were developing a brand of cannabis in California called IVXX, the Roman numerals for 420.
“Fast forward to today, we have the agricultural division, Edible Gardens, still manufacturing some of the equipment called GrowOp Technology, we have the Las Vegas property as a retail cannabis operation called Blüm and one other retail shop in Oakland, and then in addition we have IVXX, which is the brand of cannabis that we distribute in Nevada and also throughout California,” Peterson said.
“Basically, seed to sale and everything in between,” he added.
Currently Terra Tech is building out permits in Nevada, both in Las Vegas and Reno.
“Our business model is such that we need to put our capital towards building out our business, building out our facilities and paying our employees, but we are kind of a unique industry, like gaming and alcohol, that are highly regulated, and in a highly regulated industry, you need to get involved in legislation and politics,” Peterson explained.
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With the economy in California opened back up, businesses throughout the region are finding it difficult to attract employees.