2016 is starting off on a strong note for us at Insider Financial and our subscribers. We alerted subscribers at the beginning of the week to expect big things in 2016 from Terra Tech Corp (OTCMKTS:TRTC). We stated unequivocally:
“The good news is that shares are trading near their 52 week lows and there’s not much lower they can go. Matter of fact, we at Insider Financial think the low is in and that 2016 is going to be a much better year for TRTC and its shareholders.”
Shares were at $.09 when we told Insider Financial subscribers and now we’re trading at just under $.18 for gains of 100% in less than a week!
Driving shares higher is the game changing acquisition of Black Oak Gallery, DBA: Blum Oakland, an established, retail medical cannabis dispensary in Oakland, CA. Blum Oakland, which holds over 42,000 registered patients, has been operating since November 2012 and services close to 1,000 patients each day. The acquisition includes Blum’s fully integrated supply chain, which consists of a sophisticated onsite cultivation facility, its portfolio of proprietary strains, as well as its high volume retail storefront. Trailing 12-month non-GAAP revenue for Blum Oakland is over $14 million, which tracks the revenue reported by Blum Oakland in its associated sales tax and marijuana tax reporting and payments.
Upon completion of the deal, TRTC shareholders will own 100% of the combined company. The purchase price of Blum Oakland is 1.5 times forward-looking revenue for the 12 months following the closing of the merger. To protect stockholders, 80% of the equity will be held in escrow subject to performance adjustments at the end of the 12-month term. The anticipated closing date for the merger is not later than March 31, 2016. Blum Oakland and all of its shareholders are obligated to close the merger by that date, while Terra Tech retains the option to cancel the merger through March 1, 2016, pending further due diligence.
As CEO Derek Peterson said of the deal:
“Today, we can proudly claim the title of the only US-based, publicly-traded company that touches every aspect of the cannabis lifecycle—from cultivation, to extraction, to branding, and now, with the acquisition of Blum, to retail sale. In addition to enhancing our cash-flow, this merger positions us to capitalize on the new regulatory landscape in California, which will change significantly with the implementation of the Marijuana Regulation and Safety Act in 2016. The new legislation, which more strictly regulates the medical marijuana industry, should both reduce our competition and increase our total addressable market. In addition, the new legislation allows companies to operate on a for-profit basis. Also, California’s pursuit to legalize adult use cannabis is gaining significant traction and support by major stakeholders in the state. This merger with Blum strategically enables us to take advantage of the regulatory changes and to maximize value for Terra Tech stockholders.”
The bottom line is that this is indeed a game changer for TRTC and its shareholders. No other company in the marijuana industry is as primed to benefit from the coming tide of legislative changes that will transform the industry. We think 2016 will be a great year for the marijuana industry. The reason being is that the marijuana industry has a lot of tailwinds heading into 2016. Roughly 14 states could legalize marijuana this year, adult-use cannabis or possibly both, either at the ballot box or through state legislatures. While it’s doubtful all those states will be successful, there’s a good chance at least a handful will legalize in 2016. No other single year has offered such incredible promise in terms of the sheer volume of states that could legalize, thanks to other pioneering marijuana markets and growing support for cannabis in general.
As we said in our prior article, “If all goes according to plan, TRTC will be one of the first to benefit from these changes.” The deal with Blum only reinforces our view. Here’s why, typically retail outlets can pay up to $2,500 per pound of cannabis from cultivators and sell it for about $5,000 per pound. Peterson estimates that on-site cultivation reduces that cost to about $600-$800 per pound, while the company’s retail price will remain at industry levels and can be as high as $7,000 per pound, depending on the strain. We’re talking big profits here and if the company can pull off the same in Nevada, we’re talking TRTC becoming a huge company with a running stock price.
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TRTC is one of the most exciting names on the entire OTC markets. In the short term, if the stock can break through $.20, we’ll most likely see a run driven by short covering and new buyers getting in the stock. On any dips, we feel it’s worthwhile to add to positions. All in all, we see TRTC as having turned the corner and big things set to happen in 2016. We’ll most likely see updates soon on IVXX expansion and its Edible Garden line of products. Don’t miss out on any TRTC updates by signing up to Insider Financial below!
Disclosure: We have no position in TRTC either long or short. We have a policy at Insider Financial to not take positions in any stocks that we cover so that we can remain objective on how we view the company. We have not been compensated for this article.