Private equity partakes in the marijuana industry

A pot investment firm dreams of green

By Alex Halperin
Published July 17, 2013 6:02PM (EDT)
  (<a href=''>Jeremy Brinn</a> via <a href=''>Shutterstock</a>)
(Jeremy Brinn via Shutterstock)

This week a private equity firm played a role in the return of the Twinkie. Now an investment outfit called Privateer Holdings wants to spark cravings. The private equity firm has raised $7 million which it plans to invest in 6 to 10 companies positioning themselves in America's nascent legal pot economy.

Pot is now legal in Colorado and Washington state, while 18 states and Washington D.C. allow the use of medical marijuana. Even so, the pot industry is still enough of a grey area that most banks and existing companies don't want to touch it. According to federal law, pot remains illegal and a schedule I controlled substance with no acknowledged medical uses. For Privateer, and several other pot investors, that looks like an extraordinary opportunity.

CEO Brendan Kennedy told the Wall Street Journal (subscription required) that legalized pot, including production and distribution, could be a $40 to $50 billion industry. The feds can still make life very unpleasant for those involved in the pot industry, but if the law breaks their way, investing in pot looks like a wildly attractive opportunity. Demand for the product isn't in question.


The firm’s first [investment] is, which Privateer describes as “a Yelp for medical cannabis.” allows users to “search cannabis strain types by health users and effects, and find nearby dispensaries that carry them.” Under the Leafly brand, Privateer plans to foster two other business — an online cannabis industry news site and an online store that provides supplies needed by dispensaries.


Alex Halperin

Alex Halperin is news editor at Salon. You can follow him on Twitter @alexhalperin.

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Capitalism Finance Marijuana Medical Marijuana Mitt Romney Private Equity Twinkies