Terra Tech Corp (OTCMKTS:TRTC) surviving the shakeout

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Terra Tech Corp (OTCMKTS: TRTC) appears to be one company that might survive the cannabis industry shakeout. 2016 was a stellar year for companies in the fast-growing cannabis industry, but 2017 has turned out to be much tougher than originally expected. Take the case of Terra Tech Corp (OTCMKTS: TRTC), which was a microcap darling in 2016, but has fallen on harder times in 2017.

Terra Tech Corp (OTCMKTS:TRTC) started the year trading at $0.33 but is currently mired at a price of $0.188, giving the company a market cap of $112.01 million. Over the most recent 52-week period, shares have traded as low as $0.14 and as high as $0.56. The greatest activity in shares of TRTC happened around the November 2016 elections, when states like Nevada were going to the polls to vote on marijuana legalization.

In the case of TRTC, Nevada is an important state. That’s because the centerpiece of the company’s future growth strategy is based around Nevada. The company has been developing medical marijuana facilities in the state, including several Blüm medical marijuana dispensaries. For the first half of 2017, the plan was to ramp up activity at these Blüm dispensaries, in the expectation that they could eventually be converted into so-called “dual-use” facilities, serving both medical patients and everyday consumers looking for a marijuana fix.

And, on June 29, that’s exactly what happened. Terra Tech announced that its dual-use marijuana business licenses had been approved by the state of Nevada. Effective July 1 – just in time for the big July 4th holiday celebration – the company could begin sales of recreational cannabis. Moreover, all 4 Blüm dispensaries were granted approval to enter the adult-use market, so this really opens up the doors of opportunity for TRTC. The former medical dispensaries will now be free to sell products like the company’s IVXX premium cannabis cigarettes.

According to initial estimates, this new market opportunity could be huge for TRTC. The company projects that the 40 million tourists visiting Las Vegas every year, in addition to the 5 million tourists visiting Reno every year, could become potential consumers of premium IVXX cannabis products (which include flowers, oils and waxes in addition to cigarettes).

The big cloud that has been hanging over the company, of course, has been concern about the future direction of the U.S. marijuana market. The hype and buzz surrounding the industry in 2016 almost made it inevitable that 2017 would be a year of retrenchment. In short, investors are re-thinking the valuation models for the industry, and trying to determine which companies will be the winners and losers in any industry shakeout.

That’s where Terra Tech would appear to have an advantage on its rivals. It touts itself as being a “vertically-integrated cannabis-focused agriculture company.” In other words, the company is more than a bunch of dispensaries and retail locations – there’s an entire cultivation and extraction business that gives the company a much more stable base.

For example, one subsidiary of the company (GrowOp Technology Ltd.) designs, markets and sells hydroponic equipment. Another subsidiary (Edible Garden Corp.) is a retail seller of locally grown hydroponic produce, herbs and floral products. Its products are sold in places like Walmart, Kroger, and ShopRite.

The cultivation and extraction side of the business has become a renewed area of strategic emphasis for TRTC. On May 24, the company announced a new “Craft Cultivation” business model for growers, and promptly signed up its first craft cultivation client in Northern California. On an annual basis, this facility will produce 1 metric ton of high-grade IVXX cannabis.

It’s easy to see how the legalization of marijuana in California is going to dramatically increase the demand for craft cultivation facilities around the state. Based on its success in the state of Nevada, it’s possible that TRTC will now turn its attention to California.

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