The cannabis industry fascinates and frustrates investors as it continues its journey from the black market to the equities markets. Privateer Holdings is taking a large stake as the industry’s first private equity firm focused on investments in cannabis. It has helped some of the top names to grow in the industry and it now holds some of the biggest and most influential names in its portfolio. Founded in 2010 by Brendan Kennedy, Christian Groh and Michael Blue, its portfolio now includes Tilray, Leafly, Marley Natural and Goodship.
Strategy to Bring Respectability
The Seattle-based private equity firm is gaining plenty of attention due to its mission of managing a number of cannabis-related businesses. The Newsroom page of Privateer’s website contains links to a number of favorable articles concerning this firm, published by several prominent news sources. Much of the attention is focused on Privateer’s strategy of bringing more respectability to what the firm calls the “cannabis space.” A key tactic in Privateer’s approach involves the use of the term “cannabis” rather than marijuana or the many nicknames associated with the product.
The Marijuana Industry
Numerous state and federal legislative initiatives benefit from the fact that a number of prominent, newly launched cannabis businesses are surprisingly “clean” operations. Marijuana is approved for medical use in 30 states in the U.S. and recreational use in nine, plus the District of Columbia. As explained by the White House Office of Drug Control Policy, these states allow for the medical use of marijuana. Under federal law, marijuana is still classified as a Schedule I Controlled Substance, along with heroin, pursuant to the Controlled Substances Act (CSA) (21 U.S.C. § 811). As of October 17, recreational cannabis use also became legal in Canada.
Meanwhile, Privateer Holdings continues to build on the industry’s growth with some of the most influential names. Tilray, was one of the first American companies to become a federally licensed commercial cannabis production company in Canada. The introduction of Marley Natural, is a partnership between Privateer and the family of Bob Marley.
The Bottom Line
Privateer Holdings’ website is full of news on Tilray and the success of its other portfolio companies. In January 2018 the firm secured a $100 million funding round which brought its total funding to $200 million. The firm’s capital is invested through acquisitions, investments and incubation. The January 2018 funding round helped the company to secure an even stronger position in the industry with the opportunity to invest in more profitable companies. As the industry continues to grow Privateer appears to be anchoring as one of the most prominent private equity firms supporting the cannabis industry’s growth.