In another sign of the marijuana industry’s legitimization,
a holding company for cannabis-related businesses has attracted an investment
from early Facebook Inc. backer Founders Fund, whose co-founder Peter
Thiel once blasted Twitter Inc. for what he characterized as its
“pot-smoking” management. Privateer
Chief Executive Brendan Kennedy declined to disclose the size of the latest
round of funding, but he said a contribution from Founders Fund puts
Privateer’s fundraising effort close to its $75 million goal. The company said
its existing investors include family offices and high-net-worth individuals.
Despite local and state legalization efforts, the federal
government still classifies pot as a Schedule 1 controlled substance alongside
heroin, LSD, ecstasy, methaqualone and peyote. As a result, banks are often
unwilling to provide services to marijuana producers for fear of prosecution,
making capital hard to come by.
Privateer’s operations include a facility run by Tilray that
spans more than 70,000 square feet in British Columbia and produces cannabis
for delivery to medical patients there. The company says it is the largest
“federally legal” cannabis-growing business in the world.
In November, Privateer unveiled its Marley Natural business,
a planned line of branded marijuana products including cannabis strains and
cannabis- and hemp-infused skin creams and lotions, all with the approval of
the late reggae singer Bob Marley’s estate.
With Marley Natural, Privateer likely will look toward
consumers interested in both recreational and therapeutic use wherever legal. Tilray
is on a short list of five companies for government-licensed growing operations
in Uruguay, which in 2014 became the first country in the world to establish a
system regulating the production, sale and consumption of recreational
Founders Fund, which raised a $1 billion investment vehicle
in early 2014, is the biggest venture-capital player to step into the marijuana
space, according to data from Dow Jones VentureSource. The marijuana industry
generally hasn’t found favor with established venture capitalists.
Groups of individual “angel” investors have previously
contributed to the likes of Greenway University Inc., a Denver marijuana
occupational training school that closed down in 2011 amid accusations of
falsified applications. The smaller Dutchess Capital LLC backs
cannabis-enthusiast social network MassRoots Inc. and American Cannabis Co., an
advisory and consulting firm for the industry. In addition, High Times magazine
has been raising a growth fund with aims of securing $200 million to $300
million, but the fund has yet to announce any investments.
By contrast, Founders Fund’s name has been connected with
much bigger startups, as its portfolio includes home-rental service Airbnb
Inc., online music service Spotify AB, and Space Exploration Technologies
Corp., the space transport company launched by Elon Musk.
Talks were also continuing with Privateer when Mr. Thiel
told CNBC in September that Twitter was “a horribly mismanaged company—probably
a lot of pot-smoking going on there.” His remarks drew wide attention online
and in the media.
here to access the full article on The Wall Street Journal.