Terra Tech Corp.
In March the vertically integrated marijuana producer announced plans to double down on California after overhauling its strategy in the wake of a challenging year. Last week it agreed to sell one of its Blüm dispensaries, located just off the Las Vegas strip in Nevada, to Picksy LLC for $10 million.
That leaves it with three dispensaries in California – one in Santa Ana, Orange County, another in San Leandro and a third in Oakland – plus two in Nevada. It has now purchased a fleet of delivery vans and they will serve customers within a 20-mile radius of its Santa Ana store.
Orange County has a population of 3 million people and it includes some of the wealthiest areas in the country. Terra Tech claims it suffers from a scarcity of dispensaries and it sees a golden opportunity to capitalize.
The firm, which also has two cultivation facilities and two extraction labs, is targeting cities like Irvine, Laguna Beach, and Newport Beach. “Once we finish perfecting operations in Orange County, we have our sights on expanding delivery services out of our Blüm Oakland and Blüm San Leandro locations as well,” said chief executive Derek Peterson.
Shaking Off a Tough Year
The stock turned bullish earlier this year after agreeing to acquire the remainder of interest in the Blüm dispensary in Reno, Nevada, from former partner Heidi Loeb Hegerich. She was suing Terra Tech, having accused it of stock manipulation and false accounting, and that had kicked TRTC stock over a cliff.
It had decreased from a high of $3.15 in April 2018 to just $0.56 by December, but it was back up to $1.46 by Mar. 11, 2019. At the time, Peterson admitted it had been a tough year for the firm, buffeted by regulatory headwinds in California that forced it to shut down wholesale operations and rebuild its cultivation and manufacturing facilities to comply with the state’s new rules, resulting in limited wholesale revenue throughout the year. Yet he predicted a strong future for Terra Tech, claiming “the good news is the worst is behind us and the best is ahead”.
However, since then TRTC has steadily decreased and it opened at $0.80 today.
Last week the firm delivered its Q1 2019 results, highlighting declining revenue compared to the same period last year. It brought in $7.4 million for the first three months of 2019, compared to $8.6 million last year, blaming an increase in taxes in California.
Yet it is seemingly undeterred by this situation and it is forging ahead with plans to focus more heavily on the Golden State.
Peterson said the sale of its Blüm Desert Inn site in Vegas – which leaves it with just one store in Sin City and another in Reno – is part of a restructuring strategy focused on leveraging its balance sheet to drive growth, rather than accessing capital markets on a regular basis.
The capital it raised from the sale, $7.2 million in cash payments and $2.8 million in the form of a 12-month promissory note bearing 5% interest, will be funnelled into its California operations. It plans to boost its sales and marketing footprint in the state in order to drive growth there. The transaction should close within 90 days from May 9, 2019.
This month it began sales of adult-use cannabis at its store in San Leandro, the first dispensary to open in the city. It has been selling medicinal marijuana there since Jan. 2019.
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