$100M in new investment pours into Privateer, the Procter & Gamble of cannabis

Marley Naturals' owners, Privateer Holdings have $100M more to buy up cannabis companies globally.
Marley Naturals’ owners, Privateer Holdings, have $100M more to snap up cannabis companies globally.

By Dan Mitchell

U.S. Attorney General Jeff Sessions threw a scare into the legal-cannabis business early this month when he rescinded Obama-era Justice Department guidance about enforcing federal cannabis laws. But the fear didn’t last long.

Most pot stocks recovered almost immediately. And in the latest bit of news that amounts to a thumb in Sessions’ eye, Privateer Holdings, a diversified cannabis holding company based in Seattle, has announced that it raised a new round of capital amounting to $100 million, doubling the firm’s size in terms of equity.

Brendan Kennedy, a co-founder and Privateer’s CEO, said that while Sessions and the DOJ represent a potential threat to the industry, things are just too far along now for anyone to consider that threat to be existential.

“The regulations are working. The industry is generating well-paying jobs, and it’s taking money and power away from organized criminals,” Kennedy said, noting that medical pot is now legal in 30 states, and adult-use is legal in nine states and counting.

“Every major investment firm in the U.S. has ramped up with a team [focused on] cannabis investments,” Kennedy said. He also noted the alcohol giant Constellation Brands’ recent investment in the industry.

Privateer owns several well-known cannabis brands: Leafly, the leading cannabis-data Web site and mobile app, Tilray, a cultivator and producer of medical-cannabis products, and Marley Natural, a lifestyle brand that licenses the name the late reggae musician Bob Marley. In December, it acquired the edibles producer Goodship.

Privateer acquired Jody Hall's Goodship line of Washington edibles in late 2017.
Privateer acquired Jody Hall’s Goodship line of Washington edibles in late 2017.

Privateer will use the new capital to add more companies to its portfolio and to expand geographically, particularly in Europe and Canada, where it already has a substantial presence. Acquisitions will be “focused on consumer brands,” Kennedy said. The company will consider “any product containing cannabis that people hold in their hands,” or that helps them “store and consume” cannabis products.

Privateer is not identifying most of its investors, which include wealthy individuals, wealth-management firms, and institutional investors such as hedge funds and venture capitalists. Kennedy did say that Founders Fund, run by financier Peter Thiel, took part in this latest round as it has in earlier ones.

Along with the round of financing, Privateer announced that the three founders (Kennedy as well as Michael Blue and Christian Groh) would donate $5 million worth of their personal stakes in the company to initiatives aimed at reducing the harms caused by decades of cannabis prohibition. Those include legalization campaigns, public education, and efforts to clear the criminal records of people who have been convicted of non-violent pot crimes.

Because the donations are in the form of equity rather than cash, Kennedy said, their value will grow along with the firm. Kennedy is encouraging (or perhaps hectoring) the rest of the industry to get on board with such social investments.

“A lot of the companies in this industry talk about doing good. Our money is where our mouth is,” he said. “We see a lot of talk, but not a lot of action.”