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As Terra Tech And Other Corporations Benefit From Legalized Cannabis, Local Farmers Struggle To Survive

Terra Tech Corp. (OTCQX:TRTC) celebrated the new year with the announcement that the state of California granted the cannabis agriculture company Temporary Authorization to distribute and sell cannabis across the state. The company saw immediate gains in share prices from the news, as their stock soared 18 percent on Tuesday, closing at $0.458. It was a new 52 week high for Terra Tech, as they became just the latest example of how big business is cashing in on the new recreational marijuana market in California. However, news of their gain also highlights how local marijuana companies are losing out in the new economy.

According to a statement released on Monday, Terra Tech hopes to receive additional authorizations to cultivate and manufacture cannabis in the state as well. With their license in hand, the company plans to begin selling cannabis immediately in the Oakland and Santa Ana markets through their Blüm-branded retail dispensaries. An additional location in San Leandro is under construction and expects to open sometime in 2018.

"This adult-use license allows us to significantly expand our potential customer base in California beyond the medical market," remarked Derek Peterson, Chief Executive Officer of Terra Tech in a statement.

"Terra Tech is one of only a handful of companies that has been issued this adult-use license in time for the Jan 1st start date,” he continued.

Terra Tech and other big corporations like them who are taking advantage of the new cannabis economy in California are part of what is known as “Walmart Weed.” According to The Washington Post, venture capitalists can now take advantage of regulations that allow for unlimited licenses, creating what many small farmers refer to as “mega-cannabis corporations.” To compete, some farmers have formed collectives to help protect their rights.

“As operations director, I field texts all day from anxious growers,” writes Chiah Rodriques in an Op-Ed for The Post. “They are already using credit cards to cover the costs of a bad harvest, wildfire damage and compliance with local and state cannabis regulations.”

Looking at the available data from states with a history of legal cannabis, the numbers do not bode well for Rodriques and other small farmers in the state. According to fivethirtyeight.com, the legalized market in Washington state has seen a consistent drop in prices, combined with grow operations backed by deep pockets that all adds up to a market skewed towards big business.

When Washington’s recreational market opened in 2014, the average price per gram was around $32, according to data from TopShelfData.com as presented on FiveThirtyEight. By the six-month mark prices dropped to an average of $21 per gram, and after a year they fell to $12. Today, consumers can purchase a gram of marijuana in Washington state for less than $8.

“A lot of people (in Washington) are surprised, and a lot of people are in denial about the price dropping,” Steven Davenport, a researcher with the RAND Corporation told FiveThirtyEight

Meanwhile, companies like Terra Tech are thriving in the new economy, as young as it is. In their statement, they showed an adept understanding of California’s regulations and how to navigate them to the company’s benefit. According to the statement, the Temporary Authorization is valid for 120 days with an option for an additional 90 days. Calling it a “transition period,” the state is allowing companies to sell off old stock held on their shelves as of December 31, 2017. Terra Tech will use the time to fulfill the requirements for full licensure with the state.

“Over the past several months we have worked diligently to expand both our retail presence and our cultivation facilities to prepare us for this exciting opportunity and we look forward to capitalizing on our progress to grow sales and build value for shareholders," continued Terra Tech CEO Derek Peterson.

As Terra Tech and other large companies take advantage, small farmers are left to hope that legislators in the state will not forget about them as the recreational market continues to grow.

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