Is the cannabis industry the next gold rush for investors? Former Morgan Stanley investment banker Derek Peterson thinks so. He gave up the financial arena two years ago and moved to Northern California seeing a boom in medical marijuana cultivation.

Peterson, who lived in Laguna for 17 years and now has moved back to Orange County, started a hydroponics manufacturing business in Oakland called GrowOp.

GrowOp is now a subsidiary of the Irvine-based, publicly traded Terra Tech (stock symbol otc:trtc).

As an investment banker, Peterson’s business was to keep a watchful eye on financial market trends for his clients. He started noticing upward trends for urban farming in the hydroponics and aeroponics industries.

For those unfamiliar with these soilless ways of growing crops, hydroponics uses water while aeroponics uses air and mists water at the roots. Both systems reduce pollution and can be done in a relatively small area.

With the world’s growing demand for food, decreasing farmland and climate changes, mainstream farming can benefit from these types of controlled indoor growing techniques, not only marijuana growers, Peterson said.

As he spoke at agricultural conferences and science technology symposiums over the last few years, Peterson saw companies like Bayer Crops Sciences and other fortune 500 companies showing interest in the shift to indoor growing.

“The science wouldn’t exist today but if not for cannabis,” he said. “Cannabis cultivation has basically financed and been the leader in this industry. We’re shunned from a federal standpoint, but we have all the science because of the medical marijuana industry.”

However, mainstream America’s views on marijuana could be changing.

In this month’s Costco Connection publication, and on their website, the company posts both sides of the legalization of marijuana argument and asks shoppers to participate in an online poll. When I checked, more than 93 percent of people responding were in favor of legalization.

And it’s not only Peterson who’s noticing the upward trend here, so is the investment world.

In January, the online site 247wallst.com listed the most important IPO’s to watch this year. Among the names was GrowOp technology LTD, Peterson’s company.

Peterson headed down the IPO trail knowing it could be a long road. Turns out he was right, so the former investment banker opted for what’s called a reverse merger to take his company public.

Basically a reverse merger is finding an already public company no longer doing business but publically traded, and merging with them. Peterson says this is the same path Ted Turner used when he took Turner Broadcasting public.

This strategy is a much faster way for businesses to go public and with a lot lower risk methodology, he said. He merged his company into one called Private Secretary – a defunct Internet phone company.

“Like any company we spent money to go public – thus we showed a loss for last year,” Peterson said. “This year we will be showing a positive. The core business has great margins 30 to 35 percent.”

“We should start trading in two to three weeks,” he added. “We’ve raised a million and a half dollars and we’ll fund the company with 5 to 10 million in the next 12 months – 18 months.”

But what about the recent federal crackdowns on dispensaries in Orange County and throughout the state; is this affecting his business?

“This market exists regardless whether it’s a black market or gray market,” he says and goes on to explain, “the industry continues to grow and higher regulations are just pushing it under the radar.”

Peterson said he feels the state needs to get smart about the cannabis industry and is missing the mark by not taxing it and working with the lucrative revenue stream it could produce.

“It’s sad to see local government getting so aggressive – it effectively is wiping out taxes and jobs, and that’s sad,” he said.

But Peterson is looking on the bright side, as there are several marijuana initiatives trying to make their way on to the ballot this year – former Superior Court Judge Jim Gray’s Regulate Marijuana Like Wine Act of 2012 being one of them.

If voters legalize marijuana, then Peterson could be on to something here and will have positioned himself and his investors at the front of the line for the next California Gold Rush.

Barbara’s Bits: Barbara visits 55 Hydroponics with GrowOp founder Derek Peterson.