PayPal Founder Peter Thiel Invests in Pot

By John Lavitt 01/09/15

The weed biz just gained its first institutional investor who has a vision to turn a small company into a major conglomerate.

peter thiel.jpg
Big Weed's first real investor. Wiki

Given his cutting edge history of investing as a venture capitalist and his tremendous success with PayPal, it should come as no surprise that Peter Thiel’s Founder Fund would be the first institutional investor to buy into the cannabis industry.

Spearheaded by partner Geoff Lewis, the fund is attempting to obtain a minority stake in Privateer Holdings, the Seattle-based company behind Although the marijuana business remains illegal in over half the states in the country, Thiel’s Founders Fund took the dive as the first institutional investor to put money into the nascent industry.

The entrepreneur has never been scared off when it comes to investing in companies that are new, experimental, or even radical. Leafly can be described as the Yelp for both recreational pot and medical marijuana customers looking for reviews and comparative price information. Privateer’s marijuana holdings also extend to the Canadian medical marijuana growing operation and other cannabis-related ventures.

Beyond disclosing the hope that Privateer can turn a profit in the coming year, neither Lewis nor Thiel are commenting to any extent on the investment. In its most recent public disclosure to the SEC in July 2014, Privateer was still attempting to raise an additional $56 million of the total $75 million that it needed for the venture.

In a recent interview, Lewis explained how investing in the cannabis business "is just a slightly more extreme version of something we’ve shown in our other investments that we’re comfortable with."

"At this point, we don’t think there is any other company in Privateer’s league," he said "They have a strong first-mover advantage and they’re in a position to build a strong brand.”

The biggest risk for Thiel’s Founders Fund is whether or not the owners of Privateer can realize their plan of transforming a small company into the world’s first marijuana conglomerate. Doing their due diligence, the researchers at The Founder’s Fund studied both Privateer and the entire industry for approximately 18 months before making their move.

Given the results, Lewis and Thiel believed enough in their future success to invest. Still, potheads across the country have a long way to go before they will instantly know to ask for a specific brand of pot in the same manner in which a customer orders a Cinnamon Dolce Latte at Starbucks.

Although Founder’s Fund is ahead of the proverbial curb, the marijuana business as a whole still remains legally, socially, and politically complicated, at best. And the financial risks are huge. In terms of personal risk, Lewis promised that access to the world’s best new strains of marijuana as they are released, “did not play into the investment decision whatsoever."

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Growing up in Manhattan as a stutterer, John Lavitt discovered that writing was the best way to express himself when the words would not come. After graduating with honors from Brown University, he lived on the Greek island of Patmos, studying with his mentor, the late American poet Robert Lax. As a writer, John’s published work includes three articles in Chicken Soup For The Soul volumes and poems in multiple poetry journals and compilations. Active in recovery, John has been the Treatment Professional News Editor for The Fix. Since 2015, he has published over 500 articles on the addiction and recovery news website. Today, he lives in Los Angeles, trying his best to be happy and creative. Find John on Facebook, Twitter, and LinkedIn.