January 8, 2015

Marijuana Industry Receives Possibly Most Significant Investment To Date

January 8, 2015
peter thiel marijuana founders fund
peter thiel marijuana founders fund
(Peter Thiel via Wikipedia)

Today might go down as one of the most significant days in the history of the marijuana industry. A very high profile investment firm announced today that it is investing in the marijuana industry. The investment firm is Founders Fund, and the company they invested in is Privateer Holdings. Per Fortune:

Founders Fund, the investment firm created by Peter Thiel, has joined a Series B round of funding worth $75 million for Privateer Holdings. More than $50 million of the round has closed so far, including a $15 million convertible note from February of last year. The entire round will officially close in a few weeks, Kennedy says. Founder’s Fund has not disclosed the exact amount of its investment beyond “multi-millions” of dollars.

The funding from Founder’s Fund is a significant milestone for Privateer, which, in addition to Marley Natural, operates Tilray, a mail-order service for medical marijuana in Canada, and Leafly, a sort of Yelp for dispensaries. Large investment firms have been wary to do business with marijuana companies, even in states like Colorado where the drug is legal, because it remains illegal in the eyes of the federal government.

The significance of the investment by Founders Fund can not be understated. Up until now, most of the investments that have been made in the marijuana industry have come from private investors that were far less high profile and far less established than Founders Fund. Founders Fund, and Peter Thiel, are a large reason why Facebook and Paypal are as popular as they are today. Whether or not the same level of success will be achieved in the marijuana industry is yet to be seen, but Founders Fund entering the marijuana industry is huge, not just for Privateer Holdings, but for the rest of the industry as well. If the marijuana industry wasn’t getting attention from big time investors before today, it most certainly is now.

The announcement of the investment didn’t come without criticism. Many industry members and especially activists were quick to point out that Peter Thiel has made some disparaging complaints about marijuana use by members of the company Twitter. The criticisms by marijuana industry and activism members about Mr. Thiel also came with criticisms about Privateer’s leader, Brendan Kennedy, who also has made numerous disparaging comments about marijuana users. Those criticisms are obviously well founded. However, the investment in Privateer Holdings by Founders Fund is still very significant, and I’m very curious to see if it opens the floodgates to investments by other well established investment firms into the industry.

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