|
| Marijuana IPOs provide investors gateway to US cannabis boom |
| Bloomberg / San Francisco Mar 11, 2011, 00:55 IST |
|
In an industrial section of Oakland, California, former Morgan Stanley investment banker Derek Peterson hops into a trailer being outfitted with shower drains, lights and humidifiers, all used for growing marijuana.
“This is one we’re finishing up, what we call our bloom room,” he said. Peterson, 36, sells the trailers for $30,000 to $80,000 as “plug-and-play” facilities for cultivating pot. Customers don’t need to buy hydroponic equipment or even stay on-site -- lighting, temperature, nutrients, water and humidity can be operated remotely via an iPhone app.
The legalisation of medical marijuana -- permitted in at least 15 states -- has kicked off a booming economy in ancillary goods. Startups such as Peterson’s GrowOp Technology Ltd and General Cannabis Inc compare the phenomenon to the California gold rush, when the people making the real money were the ones selling pick axes and shovels. Both companies are planning initial public offerings, part of an effort to remove the stigma from what’s seen as a multi-billion-dollar industry.
“We’re better off by being in the public arena and showing a face of professionalism,” said Jim Pakulis, chief executive officer of General Cannabis, who says medical marijuana could be a $60 billion industry nationwide. “The market will just continue to expand.”
Growing marijuana violates federal law, and recreational use of the drug remains illegal at the state level. That puts related businesses at risk of getting shut down by law enforcement. By focusing on equipment, services and technology, Pakulis and Peterson aim to sidestep the legal pitfalls of the trade while reaping the benefits of its expansion.
Dispensary map
General Cannabis operates several businesses, including WeedMaps.com, which directs users to more than 800 pot dispensaries nationally; a company that handles administrative tasks for more than a dozen medical marijuana clinics in California; and a payment-processing service for dispensaries.
“We are a technology company with an affinity toward medicinal cannabis,” Pakulis said in an interview. General Cannabis, based in Costa Mesa, California, seeks to raise $10.5 million in an IPO, according to documents filed with the Securities and Exchange Commission on Mar 1. The company posted net income of $1.2 million in 2010 on revenue of $7.7 million, according to the filing.
Pakulis, 47, has been involved with managing and consulting startups in various industries for more than 15 years. The company also brought on a former Silicon Valley Bank executive in January to lead General Cannabis’s strategic efforts.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
