Photo: Lee Suzuki for The Chronicle
Derek Peterson always dreamt of taking a company public, but he was missing a good idea and a company until he found marijuana.Then when medical marijuana became legal in California, a few marijuana entreprenuers serendipitously opened pot dispensaries in Peterson’s neighbourhood. And Peterson wisely realised that these “ganjaprenuers” are some guys he should know. And boom, months later, he quit his job at Morgan Stanley and founded a business to help more people grow and sell weed.
He explains how he came to the revelation to Bloomberg like this:
“The few dispensaries in my neighbourhood… I started talking to them and found out they were doing $10 million to $14 million in business a year.”
“I just started to see the economics.”
The economic thought process started at Wachovia and later Morgan Stanley, where he managed a $100 million fund.
Then Peterson spoke to the guys at his neighbourhood dispensaries, who complained to him about the prices their suppliers were charging for the lightbulbs, which were insane. Those guys were marking products up 100%, according to Peterson.
So he only marks his up 60-70%, saves his buddies money, and still makes a killing.
Even better, one thing he sells is a weed-growing trailer, which does all the work for the people who just want to grow weed, and not worry about any of the business set-up. He sells trailers outfitted with everything you need for growing marijuana right now for $30,000 to $80,000. He calls them “plug-and-play” facilities for cultivating pot.
Here are the details on the business from Bloomberg:
GrowOp sold its first trailer in May, and by the end of the year posted $800,000 in revenue, Peterson said. It made $250,000 more in January alone, he said.The business has mainly grown through word of mouth. Peterson is producing a catalogue, which he expects will generate 90 per cent of sales.
His goal is sales of $2.5 million this year, then $5 million to $8 million next year. While GrowOp hasn’t filed paperwork to go public – and its revenue is smaller than General Cannabis’ – it plans to have an IPO this year. GrowOp is in the audit stage of its offering plan and working with Network 1 Financial Securities Inc., Peterson said.
Peterson still manages a small portfolio of $48 million for a few clients that came with him when he left Morgan, but “GrowOp,” the name of his company that sells products for cultivating pot – everything from light bulbs and nutrients to something called “hydroponic grow medium,” he says – is his baby.
He can’t wait to take it public later this year.