For the first time, investors can buy shares of a publicly traded marijuana company that handles cannabis from seed to store.
TerraTech is an agricultural firm that focuses on the marijuana industry, and has recently acquired Blüm Oakland, a medical dispensary in Oakland. Blüm Oakland boasts more than 42,000 registered patients, and serves about 1,000 of them per day.
Debra Borchardt, writing for Forbes, notes that “TerraTech paid 1.5 x the 12 month forward revenue, which is expected to be over $14 million, making the purchase price approximately $21 million. However, 80 percent of the equity will be held in escrow subject to performance adjustments at the end of that 12 months. So, the price could rise.”
Derek Peterson, CEO of TerraTech, highlighted the move:
“Today, we can proudly claim the title of the only US-based, publicly-traded company that touches every aspect of the cannabis life cycle — from cultivation, to extraction, to branding, and now, with the acquisition of Blüm, to retail sale.”
“In addition to enhancing our cash-flow, this merger positions us to capitalize on the new regulatory landscape in California, which will change significantly with the implementation of the Marijuana Regulation and Safety Act in 2016,” noted Peterson in reference to new California legislation that will further regulate the marijuana market there, and which may force many businesses to close if they cannot comply with the new laws.
Currently a penny stock, TerraTech is traded on the Over-The-Counter market. Borchardt writes: “The stock has tumbled 65 percent over the past year from a high of 28 cents to a recent 9 cents. It has a market value as of January 8, 2016 of $25 million according to the OTC profile page. 2015 was not a very good year for marijuana stocks in general.“