January 23, 2015
In my quest to dig up some of the hottest minds in the developing cannabis-tech space I recently came across Terra Tech, a company that focuses on controlled agricultural production design, development, and construction. It doesn’t take a rocket scientist to see how the CEO, Derek Peterson, could adapt that business model to fit the cannabis industry as more states decriminalize and legalize cannabis.
In fact, he’s already begun cultivating cannabis in greenhouses, partnering with both large and small entities to bring to market the IVXX (420) locally grown cannabis brand. There’s a ton of technology already being developed in the cannabis industry thanks to the foundation WeedMaps built, but Peterson is more focused on brand than anything.
Any startup company is going to have to tackle this beast at one point or another, so I thought it would be great to hear how Peterson is building his own brand on both a national and grassroots scale. Entrepreneurs in any field take note: this is how it’s done.
Tech Cocktail: What’s your current business model?
Derek Peterson: We currently operate commercial greenhouses that we grow produce out of that we’ll ultimately adapt to grow cannabis. The tech in a situation like that, around automation and all the other aspects, will blow your mind. What you can control from your iPad is crazy – I get an alert that the carbon dioxide (CO2) level is off and I can fix it in my warehouse in New Jersey from California.
We partner with Dutch Greenhouse Farms because they have a ton of expertise setting these systems up. We built a full 5 acre greenhouse that has everything automated from a software system. We’re talking CO2 levels and water filtration: the whole works. That is the future of cannabis production. It’s not warehouses and indoor settings; it’s a large commercial agricultural process.
Tech Cocktail: What are you doing to help the industry?
Peterson: One of the things we’re working on heavily is the legislative side of things. We want permits in Nevada because they only allow for indoor cultivation and not greenhouse cultivation like we currently have. We’re trying to change legislation area by area to cultivate these greenhouses.
Think about the benefits of greenhouse cultivation: when you can avoid turning on high intensity lights, you save on energy costs. But to tap the sunlight you need greenhouses. Our really high-end product comes from highly technologized indoor facilities, and it’s kind of the backbone of our IVXX (420) brand.
What we did was get a handful of really good growers that have been in the cannabis business for a long time. The product they’re putting out shouldn’t be in plastic baggies, it deserves a brand.
Tech Cocktail: And Terra Tech is building that brand?
Peterson: Absolutely. We took a concept that you’d see in regular food like with Organic Valley. It’s a national brand made up of local producers. You can see where Farmer Joe and his cows are where you got your milk, and they happen to be three towns away.
What we want to do on the cannabis side is similar by having a national brand made up of local growers that have expert care in their craft. That way consumers have something they can ultimately trust, which is a huge deficit in the industry – specifically in California. People want to know that they’re getting something that’s been tested and approved for their consumption.
Tech Cocktail: How have you guys been building that brand?
Peterson: For us it’s the Starbucks model. We want to own the retail and we want to distribute through our own storefront as well as others. That way we won’t wake up one morning and worry about losing an account. That’s why we’re competing for all these permits, so we can have a broad stroke of distribution.
It’s a lot like the surf industry, it’s fickle. And it’s been traditionally tough for big companies to establish surf brands. Cannabis is fickle as well, and having a national approach won’t be well-received. So, we’re methodically building in quarantined markets. You have to win people over, you can never assume people will naturally gravitate to your idea.
Tech Cocktail: Can you offer any words of advice to entrepreneurs looking to get involved in the cannabis-tech space?
Peterson: All entrepreneurs see all the same headache and business risks. But cannabis entrepreneurs have the additional political and legal risk. Three years ago we were all waking up to the thought that maybe the DEA or FBI was going to kick in our doors.
But I will say this: if you’re a tech person in any way, shape, or form, look at this space. The team down the street from us does about $30 million a year as a quasi-Yelp for cannabis because there’s a huge base using then. You may not want to be involved with cannabis, smoke it, or sell it, but you may have an app that can help other people do this.
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