Derek Peterson spent nearly a decade working as an investment banker, most recently at Morgan Stanely. Peterson "always wanted to take a company public" but never found the right one. Then one day it hit him, like the sort of epiphany one gets when they're really, really stoned-- he would get into the business of getting people high. “The few dispensaries in my neighborhood -- I started talking to them and found out they were doing $10 million to $14 million in business a year,” Peterson said. “I just started to see the economics.”
Peterson's not the guy Jimmy Cayne's going to call up when a craving strikes but it doesn't make his work any less important or profitable or something you're gonna want a piece of. He's the guy behind the guy growing the weed and he's making it easier to do so by the day, particularly if you've got an iPhone.
In an industrial section of Oakland, California, 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. GrowOp 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 company sold its first trailer six months ago and by the end of 2010 earned $800,000 in revenue, with January clocking in at $250,000. According to Peterson, who is irked by distributors of pot-growing equipment who mark their goods up 100 percent, "We can operate a thriving business and do so with 60 to 70 percent margins." He projects $2.5 million this year, $5 million in 2012 and $8 million in 2013, with a plan for an IPO at some point in the next 9 months. In the meantime, who wants a piece of this? You don't just have to be a stoner to get involved.
Peterson says customers are interested in his trailers and products for various reasons. One buyer in Colorado uses his to grow mushrooms for culinary use. Another wanted to get into the business because making a profit in his other profession as a porn-film director was getting difficult. “They see the green rush -- and like the gold rush back in the day -- are getting picks and shovels,” Peterson said.
In the meantime, he'll leave you with at tip.
“It’s pillow stuffing,” Peterson said, as he digs his hand through a box of chunky blocks of white foam material. “But apparently plants grow phenomenal in it.”
Come back when you're ready for more.