Privateer Holdings Brings Big Money To Cannabis

No matter your level of involvement in the cannabis industry, you’ve surely heard your comrades screaming, “Wall Street is coming!” at the top of their lungs. Some see it as positive, and some see it as a reason to run for the bunkers and don their tinfoil hats.

Prohibition is nearly over. According to the latest Gallup poll, 58% of Americans are now in favor of legalization and every other day, a new state is added to the list of those looking to follow in Colorado’s footsteps.  The war is still raging, albeit in a muted sense, and the feds are using their well-armed forces against the resistance, but we have stayed through the night and our flag is still there.

Wall Street has arrived. History suggests they would be an unexpected ally but when there is money to be made, there is Wall Street—and there’s a lot to be made.

There’s a 60,000 ft2 indoor grow operation in Canada, completely legal. Marley Natural, the new cannabis line from the Marley family, was launched this week to an eager public.  And, Leafly is dominating the internet, educating  their readers on everything cannabis, A to Z, and connecting them with dispensaries.

But, what do these companies have to do with a Wall Street takeover? They’re all owned by Privateer Holdings, a Seattle based company with big plans and an even bigger bank account.  The company recently received over $75 million in funding from Peter Thiel’s The Founders Fund investment group (yes, that Peter Thiel, the co-founder of PayPal). This is the same firm that also invested early into Facebook, Spotify, and Space X.

In order to be a major player in any industry, a company would need a foothold in manufacturing, distribution, product branding, and marketing. Privateer Holding has strategically positioned itself to have control of ALL of those necessary ingredients for success all while being publicly traded on the stock market.

First, Privateer Holdings has principal holdings in a Vancouver Island company known as Tilray. The only thing this company lacks, at least in this writer’s opinion would be decent branding. The company’s logo looks more like something you would see on the coat of the tax man. Nevertheless, their grow op has enough swagger to choke a horse.  Inside their 60,000 ft2 indoor grow facility they house over 30,000 premium grade plants across 40 different strains, providing roughly 50kg of cannabis per week to the market.  That, in itself is absolutely amazing.  The word is, what they lack in marketing, they definitely make up for in quality.

Branding may not be a strength for the aforementioned company to the North, but for Privateer’s next holding, it’s pretty much ALL branding.  Just last week, on Bob Marley’s birthday, Marley Natural was released into the market, offering premium grade cannabis strains under one branded product suite, bearing possibly the most recognized name in the counter cultural world.  Strains include Marley Green, Marley Gold, Marley Red, and Marley Black.  In addition, the brand has also released hemp based oils, soaps, and lotions as well as American Black Walnut accessories for smoking, preparation, and storage.  All of this is under the Marley Natural brand name, creating a one stop shop for everything cannabis that a consumer could desire.

Enter, Privateer Holdings’ third principal holding, Leafly.  While some might find Leafly’s content leaving a bit to be desired, the site has positioned itself well, having carved out the exact demographic for the products in which  Privateer Holdings has financial interests.  Having ownership in one of the largest cannabis manufacturing facilities in the world, as well as ownership in a household name brand such as Bob Marley, isn’t very effective unless you have a vehicle for advertising.  Leafly is that vehicle.  That might be why a quick scan of their products recommended on their website are mostly Tilray products, or why Marley Natural received a full page article when most news stories receive a paragraph or two. In suggesting this, we are making no allegations against the integrity of any of these entities; we are only acknowledging the market savviness the parent company obviously possesses.

Privateer Holdings has built up quite an arsenal of cannabis centered businesses, but there is still a weak spot, and that would be banking; the current focal point of prohibitionist-based market disruption. Though multiple executive directives aimed at mitigating risks in dealing with this industry have been released, none have been enough to  assuage the fears of bankers in regards to getting tied up with a Schedule 1 drug. Obviously, a medium for financial transactions is necessary. Maybe that’s why the co-founder of PayPal, Peter Thiel, and his Founders Firm have now become financially invested into Privateer Holdings to the tune of roughly $75 million.

Clearly, there is a lot of speculation here. However, one thing is clear: thanks to the increasing viability of this marketplace through legalization, institutional money is here and arguably here to stay. On the whole, this should be viewed as a positive step for the industry. Regardless of whether you look at companies like Privateer Holdings as an ally to our cause or the devil on our back, their entrance into this market puts them in the trenches right next to us as we close out the few remaining skirmishes in the war to end prohibition.

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