Companies Hope to Profit From Marijuana Laws

As marijuana becomes legal in a growing number of states, for medical or recreational use, businesses are hoping to profit from the trend, the Los Angeles Times reports.

One company located in New Jersey, which produces herbs sold in grocery stores, wants to branch out into marijuana growing, the article notes. Ken VandeVrede, owner of Terra Tech, a hydroponic equipment maker, would like to double the five-acre greenhouse operation, the article notes. “We can scale this thing very, very quickly,” he told the newspaper. “When hemp and cannabis become legal, we’re ready to rock and roll.”

His company is looking to Wall Street to raise $2 million to expand. It is one of a number of small businesses looking for investors. Because marijuana is still illegal under federal law, many investors are avoiding marijuana farming and sales, instead focusing on companies that supply equipment or other marijuana-related services.

The Seattle private equity firm Privateer Holdings is raising $7 million to buy small companies that are marijuana-related, but do not grow or distribute it. Its first acquisition was Leafly, a website that rates Seattle dispensaries and strains of marijuana.

Denver-based Lazarus Investment Partners, a $60-million hedge fund, has invested in AeroGrow International Inc., which makes hydroponic kitchen appliances geared toward growing herbs, lettuce and tomatoes. Lazarus has suggested AeroGrow adjust its products so they accommodate taller plants, such as marijuana.

MedBox hopes to sell marijuana in vending machines in Colorado and Washington, which have legalized recreational use of the drug. Marijuana is already sold through vending machines in some states where medical marijuana is legal. The company, Medbox, says it wants to adapt the machines to comply with the new recreational marijuana laws in Colorado and Washington.

The company’s founder, Vincent Mehdizadeh, said the company is exploring raising $20 million in equity to increase staffing and fund research and development, acquisitions and marketing.