From Morgan Stanley to Marijuana

Derek Peterson left Wall Street after the financial collapse of 2008 and started Terra Tech, a cannabis cultivation company.

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The 2008 financial crisis was probably the most significant cultural and market disruptor since 9/11. The effects of reckless banking and the sub-prime mortgage debacle led to a worldwide financial collapse that was felt across the world.

Millions were forced to find new jobs as layoffs were rampant. Of course, when the worst financial meltdown since the Great Depression occurs, lots of people consider going in a new direction. But Derek Peterson noticed an emerging market that many were slow to embrace. Cannabis.

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Peterson saw firsthand how many of his co-workers lost their jobs and life savings during 2008 and 2009. Disenfranchised with his experiences working at Wachovia and Morgan Stanley, Peterson sought something new. He started to analyze the finances of San Francisco based cannabis dispensaries.

“I started looking at this through a finance guy’s eyes and saw that maybe there was something going on here,” Peterson told MSN.

Peterson viewed the cannabis industry through a different lens than growers or consumers. He could not believe how much potential profit there was per square foot.

“You had places the size of Starbucks bringing in $15 million a year, which is absurd,” Peterson said.

He left Morgan Stanley in 2010 and by 2012 he was the CEO of Terra Tech Corp, a cannabis cultivator now worth $247million.

Entering the cannabis industry seems like a solid plan in 2018, but the industry was not always operating with full support from the public. In 2009, while Americans were still reeling from the financial collapse, support for cannabis was on the rise, but less than half of the country (44 percent) was ready to support legalization. That number has risen past 60 percent in 2018.

While impressive at the time, the legal cannabis market was valued at $1 billion in 2011, the time when Peterson had committed to the cannabis industry. The industry today dwarfs those numbers and was valued at $6 billion in 2017.

The market is flourishing despite the fact that cannabis still remains a federally banned Schedule I narcotic. Most banks will not do business with cannabis companies as they fear federal prosecution. The fears have not subsided as Attorney General Jeff Sessions elected to rescind the Cole Memo in January, a policy that protected cannabis businesses and consumers from federal prosecution.

“People have really been scared away from investing and to a large extent that same mentality is keeping the talent away,”  Ruth Epstein, a partner at San Francisco-based BGP Advisors, a cannabis business advisory firm said. But these investment fears have “created a massive opportunity for someone who understands finance and is willing to be out on the vanguard,” Epstein continued.

Peterson’s willingness to take the plunge into the unknown has granted him considerable financial success-but his transition from the financial sector to legal cannabis was not easy. “When I first started out, the fact that I had worked on Wall Street made me seem like a real outsider, to the point where people would ask, “Are you a narc?'” he said.

That mentality is starting to change.

“It’s in the last two years that we’ve seen a tremendous influx of people from traditional business backgrounds.”

Cannabis looks like it may be a much safer bet than volatile stock markets. Estimates suggest a rapid increase in the cannabis market’s value by 2025, with some analysts predicting it will exceed $50 billion annually in the United States. This could attract many more weary Wall Street investors.

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