For years, investing in marijuana has seemed like a dangerous proposition, for obvious reasons. It’s tough to rationalize taking a big stake on something that’s not entirely legal in many places.
And sure, things are changing quickly; but while the apparent global permissibility of weed is growing fast, it doesn’t even compare to what Privateer Holdings, a company focused on the legal production and distribution of marijuana, just managed to raise in their latest funding round.
The astonishing $75m yielded in this second round firmly establishes Privateer Holdings as the world’s leading private equity firm investing in legal cannabis, bringing the company’s fundraising totals to $82m.
Privateer’s business is solely focused on creating and acquiring companies related to the marijuana industry, and it currently has three main holdings: Leafly, the world’s largest cannabis information resource (essentially, the Yelp of weed, and a site that registers more than five million monthly visitors); Tilray, a Canada-based mail order company that grows, processes, packages and ships medical marijuana from their federally-licensed facilities; and Marley Natural, a brand associated with Bob Marley’s family that sells cannabis strains to the U.S. market under the iconic musician’s image.
With all the new money raised, the future plans of expanding their brand and acquiring more holdings have never looked brighter. The hefty sum has given the business a legitimacy that didn’t seem as clear back in 2010, when Privateer started, but now it appears to be expanding with ease and helping them build a portfolio that could eventually rival any big standard conglomerate out there.
A key multi-million dollar backing from Founders Fund, a firm created by PayPal co-founder Peter Thiel, allowed Privateer to get the attention of several serious investors.
“Since we announced that Founders Fund made the first institutional investment in the cannabis industry in January, we’ve seen the profile of our investor base change in ways that would have been unthinkable five years ago when we set out to transform this industry,” Privateer Holdings co-founder and Chief Financial Officer Michael Blue told CNBC. “We closed the Series B round with a group of sophisticated family offices and institutional investors who made seven and eight figure investments. That’s a vote of confidence for the entire industry and an important step forward in finally ending cannabis prohibition.”
The consumption of marijuana has been steadily becoming more normal in society. Five years ago, when Privateer was founded, only 29 percent of the American population lived in areas where marijuana was legal in some form. That number is up to 72 by now, and it’s on the rise; the market for weed keeps growing every year. The CARERS Act, a bill that Congress is currently considering, could remove federal restrictions in over 20 states where marijuana’s legal.
Some researchers expect the cannabis industry to be worth over $10 billion by 2018, and that’s just in the United States! Privateer also has plans to invest internationally as different countries’ marijuana laws are changing.
This is a big life lesson for anyone who thought an avid interest in weed would only lead to a lethargic unsuccessful future. Take that, guidance counselors of the world!