BELVIDERE, N.J. — Amid the whir of fans and the glow of soft white light, workers tended to bright green seedlings sprouting in a giant greenhouse.
About an hour’s drive from Manhattan in northwestern New Jersey, the facility produces basil, chives, oregano and other herbs for sale in groceries around New York City.
But if Ken VandeVrede has his way, it will one day grow a much more valuable plant: marijuana.
VandeVrede is chief operating officer at Terra Tech, a hydroponic equipment maker based in Irvine. The small company wants to double the five-acre New Jersey greenhouse operation. The aim is one day to supply the exploding U.S. medical marijuana trade and to be ready in the event that recreational marijuana becomes legal nationwide.
“We can scale this thing very, very quickly,” he said. “When hemp and cannabis become legal, we’re ready to rock and roll.”
To do it, Terra Tech needs to raise $2 million. And like a number of small businesses in the burgeoning U.S. cannabis industry, it’s trying to enlist Wall Street’s help. Business owners have been pitching their ideas to potential investors, coming to New York in some cases to meet with would-be financiers.
Wall Street has good reason to smell potential.
Washington, D.C., and 18 states have legalized medical marijuana; measures are pending in 10 additional states, according to the National Cannabis Industry Association. Colorado and Washington legalized recreational marijuana use in November.
While pot remains contraband under federal law, some entrepreneurs see it heading down the same path as Prohibition, which banned the manufacture, transportation and sale of alcohol from 1920 until it was repealed in 1933.
“More and more people see the inevitability,” said Brendan Kennedy, chief executive of Seattle private equity firm Privateer Holdings, which targets cannabis-focused startups, “… that the Berlin Wall of cannabis prohibition is going to come down.”
Privateer is raising $7 million to acquire small companies that have a hand in the trade but don’t grow or distribute marijuana. Its first acquisition: Leafly, a Seattle online rating site for dispensaries and various strains of marijuana.
With pot still federally outlawed, others are making similar bets — funding firms that supply equipment or ancillary services while steering clear of marijuana farming and sales.
Take Lazarus Investment Partners, a $60 million hedge fund in Denver, for example. Lazarus owns 15 percent of AeroGrow International Inc., a maker of hydroponic kitchen appliances for growing herbs, lettuce and tomatoes, and has suggested that the company tweak its products to accommodate taller plants, including marijuana, said Justin Borus, the fund’s managing partner.
“We want to be selling the bluejeans to the gold miners,” Borus said.