Billion-dollar Investment Fund Bets Big On Cannabis

The cannabis industry has received a lot of hype since Colorado and Washington legalized marijuana’s recreational use in 2012. Oregon, Alaska, and Washington D.C. followed suit in 2014, and a swath of medical marijuana legislation continues to sweep the nation in the meantime. Despite countless ganjapreneurs and pot-enthusiast investors stepping forward to stake claim in this exciting new industry, mainstream investors have pointedly refrained from the potentially volatile industry, which is still a federally-illegal pursuit.

However, last week marked a major change for legal marijuana. Founders Fund, the San Francisco-based venture capitalist firm headed by PayPal co-founder Peter Thiel, has announced a multi-million dollar investment in Privateer Holdings, an emerging leader in the cannabis sector.

Historically, Founders Fund have thrown their weight behind major players in the technology sector. For example, the investment firm’s impressive portfolio boasts partnerships with Facebook, Spotify, Airbnb, and Elon Musk’s SpaceX — a company that’s working to commercialize space travel for private citizens.

According to the Founders Fund manifesto, “The best companies create their own sectors.” The manifesto describes in detail the downfall of venture capitalism in recent decades, and explains that Founders Fund strives to break the boring investment formulas that defined the end of the 20th century. “Investing in companies doing things that are breathtakingly new and ambitious is provocative…. Simply doing what everyone else does is not enough,” they advise.

Founders Fund have clearly taken a good look at the cannabis industry and recognized the wealth of entrepreneurial talent that’s brewing here. The latest addition to the Founders Fund portfolio, Privateer Holdings, has already established itself as an industry leader via Leafly, a popular dispensary and cannabis strain index for medical and recreational consumers; Tilray, a Canada-based provider of premium medical marijuana products; and Marley Natural, a product line launching later in 2015 which is destined to be the world’s first international marijuana brand.

“Founders Fund is known for making some of the most lucrative and radically transformational investments of the past decade,” said Privateer Holdings CEO Brendan Kennedy in last week’s press release regarding the deal. “With this investment they are signaling that they, like us, believe that the end of prohibition and the social harms it causes is inevitable.”

While some investors may see Founders Fund’s decision as risky, many would argue that the timing is more perfect now than it has been since prohibition began. With public support for drug policy reform at an all-time-high and a majority of Americans in favor of decriminalizing cannabis, the political momentum is clear. Elected officials from both liberal and conservative camps can openly discuss cannabis policy reform without being ridiculed. When coupled with the likely impact that legalized cannabis and hemp will have on the pharmaceutical, textile, plastics, and energy industries, the potential for growth is truly mind-blowing. And with a prominent example to follow, now the question becomes: which high-profile mainstream investment firm will be the next to bet big on the cannabis boom?

Sources:

http://blog.sfgate.com/smellthetruth/2015/01/09/peter-thiels-founders-fund-invests-millions-into-marijuana-industry/

http://dailycaller.com/2015/01/11/marijuana-is-still-illegal-by-federal-law-but-this-venture-capital-firm-doesnt-care/

http://www.foundersfund.com/the-future/

http://www.privateerholdings.com/portfolio/

Photo Credit: photosteve101

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