March 5, 2018

By Michelle Pelletier Marshall

Privateer Holdings is the first private equity firm to invest exclusively in legal cannabis. The company has raised more than $200 million in private capital to invest in the legal cannabis industry globally. Presently, it has three different companies in its portfolio and employs more than 500 professionals on the ground in seven countries spanning four continents. Privateer Holdings brands include Leafly, a cannabis technology, review, news, and entertainment platform; Tilray, a global medical cannabis producer with patients in eight countries; Marley Natural, the official Bob Marley cannabis brand; and The Goodship, all-natural gourmet edibles.

GAI News caught up with CEO Brendan Kennedy for a look at what the nascent sector holds for investors.

How did you come to be involved in the cannabis sector?

Before founding Privateer Holdings, I worked in venture capital in Silicon Valley. At Silicon Valley Bank Analytics, where I was chief operating officer, early stage startups and venture capital firms hired me to value companies across a variety of different sectors. Eight years ago, a technology company from the medical cannabis space came across my desk. Being based in Silicon Valley, I’d worked with dozens of tech companies before, but the cannabis angle was new. And it was intriguing.

At the time, I had about $100,000 in subscriptions to various databases, but when I typed in “medical cannabis” and its synonyms, it was a black hole. There was no data or institutional research. That piqued my interest even more.

My two partners and I decided to investigate. The only way to get information was to talk to people. So we traveled the world to meet with growers, processors, dispensary owners, patients, pharmacists, physicians, activists, lawyers, and political campaigners. We drove down dirt roads to barns in British Columbia, traveled up into the hills of Southern Oregon and Northern California, and walked through fields in Colorado and Washington. We visited hillside grows in Israel, hiked Jamaica’s Blue Mountains, toured coffeehouses in Amsterdam and saw greenhouses in Spain. We went to places people didn’t go. We talked to people that other people didn’t talk to. Because of that, our team knows this industry globally better than anybody else today.

What’s the sector like now?

Fast forward eight years later. Today, we are one of the largest producers of legal cannabis in the world, including the first company to hold federal production licenses from two countries.

Right now, there’s a lot of excitement out there about legal cannabis. It seems like everyone is talking about the “green rush.” Many financial news publications even have writers who are dedicated to covering the business of cannabis. That wasn’t the case until recently.

When we first founded Privateer Holdings, we had to do a lot of convincing. At the time, we were the first and only private equity firm investing exclusively in legal cannabis businesses. For every person who was excited about what we were doing, there were 10 more skeptics.

What does the future hold?

As the pace of regulatory change continues to increase, the investment community is getting wise to the massive, global, and inevitable opportunity that is legalized and regulated cannabis. Like alcohol, cannabis is counter-cyclical and immune to macroeconomic trends. At the same time, it has high barriers to entry, no engineering or market acceptance risk, and proven demand. Cannabis is a $200 billion global industry worldwide, and while much of that total still comes from illegal sales, it’s quickly transitioning to the legal market. Medical cannabis is now legal in numerous countries throughout Europe and Latin America, with additional reforms taking place globally at rapid pace.

This year, the cannabis industry will get even more global. Most people who operate in this industry think myopically about the opportunity in terms of their own niche or corner of the world. We don’t see it that way. We recognize that we are in the midst of a worldwide paradigm shift. Canada, the first G-7 country to establish a federal medical cannabis program, is now poised to become the first G-7 country with a federal adult use program. Half a dozen governments across the European Union have legalized access to medical cannabis, including Germany, the world’s second largest pharmaceutical market, with its population of over 80 million people. Half a dozen more countries are currently debating the issue in their national parliaments. Expect at least some of them to legalize medical access by the end of 2019.

The global cannabis market – both for medical purposes and responsible consumption – presents numerous opportunities. The end of prohibition is inevitable, and I look forward to witnessing market growth, new products being developed, and the social and economic harms of the war on drugs being remedied in due time.

Have questions? You can meet Kennedy at the 10th annual Global AgInvesting conference in New York City, April 23-25 where he will present an outlook on the cannabis industry, alongside Matt Karnes, founder of GreenWave Advisors.

ABOUT BRENDAN KENNEDY

Brendan Kennedy is CEO of Privateer Holdings, the world’s first private equity firm investing exclusively in legal cannabis. He brings a strong background of entrepreneurship and hands-on business experience at the forefront of the venture backed-business community to Privateer Holdings. As a member of the founding team at SVB Analytics, a non-bank affiliate of Silicon Valley Bank, he managed an international team that rendered valuation opinions for emerging growth technology, life science and venture capital companies, helping grow revenues from $0 to over $8 million a year. 

A sought-after thought leader on the cannabis industry, Kennedy has been featured in publications like the New York Times, Wall Street Journal, Bloomberg Businessweek, and Financial Post, as well as on stage at Web Summit, Collision, RISE Conference, and SXSW and Economic Club of Canada. He holds a B.A. from the University of California, Berkeley; an M.S. from the University of Washington; and an M.B.A. from the Yale School of Management.

~ Michelle Pelletier Marshall is managing editor for Global AgInvesting’s quarterly GAI Gazette magazine and an occasional contributor to GAI News. She can be reached at mmarshall@globalaginvesting.com.