A Paypal co-founder is investing big bucks in the marijuana industry, a move reports say makes him the first-ever multimillion-dollar cannabis investor.
Peter Thiel is pumping funds into Seattle-based Privateer Holdings, which owns a Canada-based medical marijuana business, and in Leafly.com, which operates as a customer review site for marijuana dispensaries.
Thiel’s venture capital firm The Founders Fund did not disclose exactly how much it invested in the firm, but reports say Privateer was seeking $75 million in funding; The Founders Fund would only reveal that its contribution amounted to “multimillions” of dollars.
The Founders Fund isn’t deterred by the obvious controversy surrounding such an investment. According to the fund’s partner, Geoff Lewis, the investment “is just a slightly more extreme version of something we’ve shown in our other investments that we’re comfortable with.”
“We’re fine with investing in businesses with regulatory ambiguity, because we believe that regulation follows public sentiment,” he told The Guardian.
Privateer Holdings acquired Leafly in 2011, making it the first private equity firm to invest in the cannabis industry. More than three years later, the political climate remains risky for financial backers of the industry. While medical marijuana is currently legal in 24 states, U.S. businesses investing in cannabis operations are reportedly being targeted by the US Drug Enforcement Agency for possible drug trafficking and money laundering violations.
Still, executives see the potential for major business in marijuana, and the Founders Fund is no different. In a statement, Privateer Holdings CEO Brendan Kennedy described Founders Fund as “known for making some of the most lucrative and radically transformative investments of the past decade.”
“With this investment they are signaling that they, like us, believe that the end of prohibition and the social harms it causes is inevitable,” Kennedy said.