Upcoming IPO will cater to expanding medical marijuana industry Print E-mail
By M.E.Garza   
Thursday, 21 April 2011 01:16
An upcoming medical-marijuana related IPO has some on Wall Street "buzzing" about the potential for big profits, especially given Wedensday's report that the Food & Drug Administration may be preparing to give Big Pharma the clearance to take control of the medical marijuana market.

On Monday, we told readers that Novocure and their first-of-a-kind, FDA approved, non-invasive technology for treating cancerous brain tumors using electrical energy fields might become more visible in our sector despite the fact that the company is not yet publicly trading. Rumors of a new IPO involving the company have been spreading around Wall Street and CNBC featured a segment about about it.

Today we focus our sights on the horizon and see another company we've been hearing some buzz (no pun intended) about. This Bay Area company is contemplating their own medical marijuana related IPO and it's headed by former Morgan Stanley investment banker Derek Peterson. He's hoping his high tech gizmos used for growing marijuana will get investors excited about sharing in some potentially high (sorry) profit margins. 

According to a recent article from Bloomberg, the legalization of medical marijuana - permitted in at least 15 states - has kicked off a booming economy in ancillary goods. Startups in the field compare the phenomenon to the California Gold Rush, when the people making the real money were the ones selling pickaxes and shovels.

Peterson's Grow-Op Technology Ltd. is planning an initial public offering and given the growing attention the company has already been getting in the media, it's easy to imagine that this will see another home-run valuation right out of the gate.  It will help that the company is already generating profits selling lights, humidifiers and some specially equipped trailers that use an array of advanced gadgets to create a self-contained, fully mobile, hydroponic farm used to grow medical marijuana. It along with another company called General Cannabis Inc from Costa Mesa, California are planning to go public in the not-to-distant future.

No, Grow-Op has not yet finished the mountains of paperwork related to going public, but Peterson has confirmed to us that they are working on it and that the IPO will happen soon. When it does, we will definitely follow the story- just as MSNBC has already begun to with this newly published feature about the company.

Peterson told Bloomberg that he wants to undercut distributors of these products to the retail hydroponic shops, where growers buy materials for cultivating plants. Distributors typically mark up their goods 100 percent. "We can operate a thriving business and do so with 60 to 70 percent margins," Peterson said.

As soon as we hear more details we'll let you know.




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