According to the latest Pitchbook report Privateer Holdings — the Seattle-based company behind marijuana-oriented brands such as Leafly, Tilray and Marley Natural — raised its last round of capital at a whopping $415 million pre-money valuation.
Capital flowing to cannabis has increased rapidly in the past year, especially since Founders Fund, an influential Silicon Valley venture-capital firm, invested in Privateer Holdings, which has a stake in companies such as the one developing the Marley brand.
Marijuana Business Daily sat down with Privateer CEO Brendan Kennedy at the Marijuana Business Conference and Expo in Chicago in May to talk about the fundraising round and to get an idea of what investors are looking for in cannabis companies.
In January, the PayPal co-founder's Founders Fund took a minority stake in Seattle's Privateer Holdings. The company runs a medical marijuana growing operation in Canada and a pot review site called Leafly.com, among other marijuana-related businesses.
Funded by Privateer Holdings who are working with the Marley family, Marley Naturals will sell “heirloom marijuana strains” from Jamaica that the company says Marley himself enjoyed. Hemp-based lotions and balms that have no psychoactive effect, and accessories inspired by the singer are also among the brand’s first offerings.
The window cracked open earlier this year when billionaire Peter Thiel’s investment firm Founders Fund made a multimillion-dollar investment in Privateer Holdings, which raised $82 million for its cannabis businesses, including Marley Natural (in partnership with the family of the late reggae singer Bob).
Bob Marley and cannabis are almost synonymous — in some places, "Bob Marley" is the street name for pot. So, it was almost an inevitability these two would one day be formally united. That day came in November 2014 when Marley's family and private equity firm Privateer Holdings announced the creation of Marley Natural, the world's first international cannabis brand.
The current market heavyweight is Privateer Holdings, which received financing from a Silicon Valley investment fund in January. Privateer owns Nanaimo-based medical marijuana producer Tilray, and marijuana information service Leafly.
[Privateer Holdings] made headlines recently when it secured an $75 million investment from the Founders Fund, a San Francisco based venture capital firm. Founders Fund has picked some winners in the past including Facebook, Airbnb, Spotify and SpaceX. Getting an investment from this group is like receiving the investing seal of approval. This brings Privateer’s total funding to $82 million, which isn’t bad considering the company was just founded in 2010.
The collective investor interest was piqued this year when the Founders Fund, an investment firm started by PayPal co-founder Peter Thiel, joined a $75 million round for Privateer Holdings, which invests in several marijuana companies.
I was interested to hear Founders Fund partner Geoff Lewis and Privateer Holdings CEO Brendan Kennedy discuss cannabis startups including Leafly, an information site which focuses on particular strains to aid specific cancers; Tilray, a pharmaceutical grade cannabis grower in Canada; and Marley Natural, a retail brand based on a Jamaican strained, produced under license from Bob Marley's estate. He said he thought it was only a matter of time before legalization spreads in more places.
To get what's arguably the biggest name in marijuana — Bob Marley — in his private equity firm's portfolio, Brendan Kennedy and his Privateer Holdings partners set off on a two-year journey that involved more than 1,000 conversations with the late reggae singer's family.
Brendan Kennedy, CEO of Seattle-based private equity firm Privateer Holdings, talked about why New York became the 23rd state to legalize medical marijuana, how New York's law differs from other states, and how the unions fit into all of this. Here's an edited transcript of our conversation.
To cater to the sensibilities of mainstream consumers, Privateer has raised more than $80 million to fund a portfolio of pot-related companies that reflect the firm’s emphasis on professionalism. Its investments include Tilray, a Canadian mail-order medical marijuana service; Leafly, a kind of Yelp for pot; and Marley Natural, a marijuana and marijuana accessories brand founded in cooperation with Bob Marley’s family.
A forthcoming strain of Marley-branded marijuana and related accessories is being developed by the family, in partnership with the Seattle-based equity firm Privateer Holdings. The venture is projected to generate billions over time as marijuana laws become more relaxed throughout the U.S.
Brendan Kennedy, CEO of Privateer Holdings, the nation's leading cannabis private equity fund, is a bit more optimistic. "It's very likely that the prohibition of retail cannabis will have ended by 2020," he said. "The Berlin wall of cannabis prohibition is past the tipping point."
“Ultimately, we see the recreational product being somewhat close to a commodity,” Kennedy said. “So, we’ll certainly have different levels: Mass consumption brands, premier brands, connoisseur brands. It will probably be closest to something like micro-brewing, or the wine industry in California.”
“When you look at America, our fundamental thesis is that this is a mainstream product consumed by mainstream Americans,” said Brendan Kennedy, Privateer’s CEO, today at TechCrunch Disrupt NY. “Fifty four to 58 percent of Americans believe that this product should be legal. About 85 percent believe that medical cannabis should be legal. You can’t get 85 percent of Americans to agree on anything.”
When news broke that Founders Fund, the proudly contrarian venture firm helmed by PayPal co-founder Peter Thiel, was going to invest a major $75 million in Privateer Holdings, a company focused on producing, distributing and educating consumers about legal marijuana, it opened the floodgates for other investors to barrel in.