STARTUPS PUSH GROW-OPS FOR MEDICAL POT

In an industrial district here, former Morgan Stanley investment
banker Derek Peterson hops into a trailer being outfitted with shower
drains, lights and humidifiers, all used for growing marijuana.

"This is one we're finishing up, what we call our bloom room," he
said. Peterson, 36, sells the trailers for $30,000 to $80,000 US as
"plug-and-play" facilities for cultivating pot.

The legalization of medical marijuana, permitted in at least 15
states, has kicked off a booming economy in ancillary goods.

Startups such as Peterson's GrowOp Technology Ltd. and General
Cannabis Inc. compare the phenomenon to the California gold rush, when
those making the real money were the ones selling pickaxes and
shovels. Both companies plan initial public offerings, part of an
effort to remove the stigma from what's seen as a multibillion-dollar
industry.

"We're better off by being in the public arena and showing a face of
professionalism," said Jim Pakulis, CEO of General Cannabis, who says
medical marijuana could be a $60-billion industry nationwide. "The
market will just continue to expand."

Recreational marijuana use remains illegal at the state level. But by
focusing on equipment, services and technology, Pakulis and Peterson
aim to sidestep the trade's legal pitfalls while reaping the benefits
of its expansion.

General Cannabis, based in Costa Mesa, seeks to raise $10.5 million in
an IPO, according to documents filed with the Securities and Exchange
Commission. The company posted net income of $1.2 million in 2010 on
revenue of $7.7 million, according to the filing.

While law enforcement has taken a hands-off approach to General
Cannabis and GrowOp, the federal marijuana ban could mean the
companies are targeted for aiding and abetting a crime.