Brendan Kennedy doesn’t fit the stereotypical image of a marijuana grower. Neither do his two partners at Privateer Holdings Inc., a Seattle-based venture capital firm. They are former software executives, all armed with MBAs. Mr. Kennedy, who is Privateer’s CEO, and Michael Blue, his CFO, were schooled at Yale.
They’ve worked with Disney, Microsoft and Nextel. Now they’re risking millions of dollars on pot, and the corporatization of weed. Privateer has recently made marijuana-related investments in its home state of Washington, where adults may now legally possess cannabis for recreational use, and where wholesale production and retail store sales will begin this year. But Privateer’s involvement in Washington is peripheral, limited to companies that service marijuana growers and provide consumers with information.
“We don’t invest in U.S. companies that touch the product directly,” says Mr. Kennedy, noting the existing conflicts in state and federal law. They are not so shy about Canada. Privateer’s boldest, most hands-on investment is just a 40-minute flight north of Seattle, in pot-friendly Nanaimo, B.C.
On April 1, rules governing medical marijuana production in this country will dramatically change. No longer will the 37,000 Canadians currently licensed to possess cannabis for medicinal use be permitted to grow their own, or purchase from small-scale producers, as they’ve allowed since 2001.
For the new producers, the stakes are high. By Health Canada’s own estimate, the number of licensed medical marijuana consumers will increase almost ten-fold in the next decade, to approximately 309,000, as more evidence about the drug’s efficacy emerges, and more doctors become willing to prescribe it to patients. Health Canada estimates that by 2024, the “legal marijuana supply industry” may have annual revenues of $1.3-billion.