Derek Peterson may soon become the first CEO of a public company that cultivates, distributes and sells marijuana.

Terra Tech Corp., based in Irvine, California, won approval last week from the Securities and Exchange Commission to raise $6.8 million to build and operate medical marijuana operations in Nevada, where the company secured preliminary approvals.

The company will seek to raise about $7 million more later in the year, Peterson said.

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The company’s MediFarm division, which plans to grow, distribute and sell marijuana in Reno, Las Vegas and other parts of the state, has blazed new ground in the on-going debate over marijuana legalization by gaining acceptance from a federal agency, the SEC, which is tasked with safeguarding public markets and investors. The federal government, after all, still considers marijuana to be as dangerous as heroin or LSD.

“We were nervous, not knowing if they would run us around in circles or just say `No, find other sources of financing,’” Peterson said in an interview. “In the end they kind of told us that, statutorily, they can’t tell us what to do in the space we’re in, their job is to make sure investors are aware of every risk.”

A medical marijuana lab in Oakland, California, operated by Terra Tech CEO Derek Peterson.

Peterson is betting the federal government will drop its opposition to marijuana after voters in California and Nevada approve ballot measures in 2016 that will legalize recreational use. Along with already on-going recreational sales in Colorado, Oregon, Washington and Alaska, that may force the federal government to revisit its prohibition, he said.

“I firmly believe this industry will be regulated like alcohol,” Peterson said. “If all goes well, I’m optimistic the federal government could end its prohibition in five to 10 years.”

Peterson and a partner already operate an Oakland, California, medical marijuana lab and a dispensary that averages 900 customers a day. That operation could be folded into Terra Tech now that the company has received SEC approvals, he said.

Legal marijuana sales in the U.S. this year will total about $2.3 billion, according to a report by ArcView Group, a venture capital firm in San Francisco specializing in the marijuana industry. By 2018, ArcView expects sales to exceed $10 billion.

A dispensary operated by Terra Tech CEO Derek Peterson averages 900 customers a day.

More marijuana growers are close behind Terra Tech in seeking approval from the SEC to sell shares to the public, either through initial share offerings or through so-called reverse mergers, where a private company buys a failed business that is already public. Several marijuana companies, including WeedMaps Media Inc., PotBotics and GrowBox USA, are in various stages of IPO-planning.

Medical Marijuana Inc. and a few other medical companies make oils and other products laced with THC, the ingredient in pot causes a high, are already public, however they aren’t growing the plants themselves. There are also Canadian marijuana growers trading in Toronto that are seeking U.S. listings.

Public markets provide an easy and inexpensive source of financing, Peterson said, especially compared with institutional banks and other lenders that aren’t willing risk loaning money to companies engaged in a business that the federal government still considers illegal.

Terra Tech CEO Derek Peterson's dispensary in Oakland, California.

On a public exchange, investors seeking higher-risk, possibly higher-reward, investments can more easily place money.

Terra Tech reached an agreement with Dominion Capital, a New York-based private equity firm, to buy almost all of the stock issued by the company.

Dominion profits by gradually selling those shares on the open market. The arrangement was brokered by Aegis Capital Corp., a New York-based investment advisor.

Terra Tech’s shares are sold over-the-counter, meaning they aren’t on an exchange like the American Stock Exchange or Nasdaq.

However, there are precedents for exchanges to permit companies that comply with local state laws to list shares, even while those business might violate federal laws. There was a time when it was controversial that casinos, which legally operated in Las Vegas and Atlantic City, would be able to list shares while gambling was frowned upon by federal regulators.

“I’m not sure if the exchanges are ready for companies like ours yet,” Peterson said. “We’ve had some back-channel conversations but we get the sense they first want to see some broader shifts with the federal government’s position on marijuana.”

Terra Tech also operates a division called GrowOp Technology that manufactures hydroponic agriculture equipment helpful for growing plants indoors as most marijuana is currently. The company also operates Edible Garden, which uses hydroponic technology to provide locally grown produce to 1,000 retailers in the northwest, Midwest and Florida, including Wal-Mart Stores Inc.

Those operations serve two purposes, Peterson said. If the federal government legalizes marijuana, the divisions give Terra Tech a nationwide infrastructure to distribute pot.

Or if the government cracks down on pot growers, “that’s Plan B,” Peterson said.