Peter Thiel becomes marijuana's first big investor | Hacker News Reader

Peter Thiel becomes marijuana's first big investor

theguardian.com

129 pointsforloop59 comments

> So it’s hardly surprising that Thiel’s Founders Fund has become the first institutional investor to make an investment in the nascent cannabis industry – a business that isn't even legal in half of the states in the country.

That is some awful fact checking. Last year there were 4 funds that I know of that invested in marijuana companies. I'm sure the actual number is an order of magnitude larger.

I guess this head line gets readers though:)

There are already marijuana companies that list, MJNA US Equity, TWD CN Equity and SUN CN Equity are three that come to mind. All of which have institutional investors.

I think this is a lightly edited press release.

Should't press releases, if anything, be factual?

Press releases are public-relations/marketing/propaganda, the opposite of factual.

I think you are describing the difference between 'should' and 'are'.

No. Press releases always had to goal to pre-write things for journalists and - in the best case - not do too much fact-checking. They are a PR invention and never had the goal to be too rooted in reality.

Being cynical about it, UK banking has been investing in the unregulated end of the cannabis industry for decades.

I see 13 privately held marijuana companies (this is surely a conservative list as well, because many might hide it from their description) that have openly taken investment -

http://i.imgur.com/ONcqb2V.png

12 separate institutional investors involved in these companies too, including Front Street, Broadband and ArcView

I suspect that the national market for legal cannabis is likely maybe ~$25 billion.

Cannabis is inexpensive to produce. Easy to stores and ship. The price will be driven more by taxation than production costs.

It just seems like too small a market for venture capital.

There's definitely room for premium cannabis. Even in the black market, there's been a ton of interest in the breeding and marketing of new varieties (aka "strains"). People pay attention to stuff like the Cannabis Cup.

If I had the resources and some legal assurances, I'd be acquiring all the best genetics, growing them organically, and marketing the hell out of it. Creating a quality brand that people would trust.

With VC funding, you could probably acquire some of the best breeders in the US and maybe even the Netherlands. That would give you serious cachet among connoisseurs.

This is spot on. I could easily see an industry similar to craft beer emerging.

Harborside has been running the most sophisticated operation in the world and they have pretty much been giving away their knowledge base.

Couldn't the same argument be made for booze?

I forsee a future where marijuana is heaving taxed, and the resources previously given to the DEA to combat weed are given to the BATFM (Bureau of Alcohol, Tobacco, Firearms, and Marijuana) to go after untaxed marijuana.

Many technology companies naturally tend toward monopolies (which is one of Peter Thiel's investment theses). If the same is true for cannabis, and you can get a monopoly in a ~$25B market, you've got yourself one of the most valuable companies in the world.

There are maybe opportunities to build a monopoly in the retail space but barriers to entry seem low in most situations.

More likely he's eyeing the tremendous brand loyalty in cigarettes.

I think your estimate is way too low. The alcoholic beverage market in the U.S. has sales of something like $190 billion annually [1].

I think with legal marijuana a lot of people who would otherwise not be willing to use it will definitely be willing to. To a large extent recreational marijuana use and recreational drinking overlap. I would definitely consider the alcohol market to be a good indicator of potential market size for marijuana.

I don't think marijuana will get up to $190 billion or anything, and especially not in the short term. I do however think that its worth quite a bit more than $25 billion.

And that's just recreational marijuana. There is an entire separate market for medical applications that might be quite a lot as well.

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1. http://www.parkstreet.com/industry/alcoholic-beverage-market...

Wasn't he the one who said Twitter execs smoke too much weed?

Yes. His opinion is probably "managers make worse decisions while high" => "Weed is bad for business." Which is not the same as "The weed business is bad."

He may have been engaging in controversy to sell his book at the time

http://techcrunch.com/2014/09/17/tweet-tweet-pass/

As a die-hard fan of recreational marijuana use I can tell you from personal experience that you really should be sober at work. Not only does drug use at work destroy your productivity, it also blurs the distinction between work and pleasure. While this might seem to “enhance” your working experience at first, it also devaluates your spare time and precipitates burn-out syndrome. That knowledge might be trivial for most people, but this seems a good place to spell it out.

'too much' implies that there is an acceptable and responsible level. kind of like 'drink too much beer'.

You can approve of and partake in an activity while also realizing that excessive use is detrimental. Like drinking.

Until recently(?) if you were using the twitter API and were over your rate limit the server responded with "error 420: Enhance Your Calm".

It's still listed on their API docs: https://dev.twitter.com/overview/api/response-codes

The first time I ran into this error, I had a good chuckle. Working with their API is always fun, even when you mess up.

"If there is one figure closely identified with cannabis, it’s probably the late reggae legend Bob Marley – and late last year, Privateer signed a 30-year agreement to use his name on what is likely to be the world’s first global marijuana brand, Marley Natural."

Bob evidently keeps his promises even beyond the grave. https://www.youtube.com/watch?v=zErP5QoMA3w

next: A Che Guevara brand for guns targeting the guerrila "market".

Capitalistic and for-profit guided society is rot to the core

I would not be at all surprised if a gunsmith somewhere in the USA was currently making replica Cristóbal Carbines for that very market.

Is there an avenue for a Joe Schmo investor like me to get some exposure to the marijuana market? I'd definitely put some dollars behind the future of that commodity.

I'm working on a product for it currently in California. Email me if you're interested in talking.

There are public companies in the industry. All are highly risky/volatile stocks, though. Nothing like a blue chip company yet, which you could trust to steadily rise in tandem with the industry.

I think there are only few labs specialized in testing THC and CBD levels yet. While it isn't very hard to grow or create other products, I don't think it's easy to compete with a service like this.

Wouldn't a huge industrial testing company eventually decide the market is big and safe enough to enter and just crush the small players on scale?

There are definitely investment channels. Beware though, the feds could come down at any moment. Some percentage of the money you invest in the stocks should also go to political lobbying to prevent heavy regulation.

Disclaimer: I work at MandJclub.com

Branding is probably the key factor in whether this industry is able to generate wide-spread user adoption. It is interesting that Privateer decided to choose the Marley brand to associate with. However, that still targets a specific demographic that is currently exposed to cannabis, but it won't help draw new users into the segment as recreational marijuana becomes legalized nationwide.

which is still illegal in half the US

I was unaware that it's legal in half the US. That has to be hyperbole, right?

If you are discussing medical use, half is about right.

Recreation is only legal right now in CO and WA, with OR to follow mid year, when it's law goes into effect. June, I believe.

July 15th to be exact.

Isn't Alaska on the list of soon-to-be legal recreational states?

Pretty sure it's already legal in Alaska.

http://ballotpedia.org/Alaska_Marijuana_Legalization,_Ballot...

Possession and personal use, yes, but the channels for commercial production and sale have not been worked out yet.

First state to legalize, in fact

And probably DC, depending on what Congress and the courts do next.

> "Every time the tide recedes, we are able to take a step forward" in building Privateer’s existing businesses and in seeking out new investments, Kennedy said.

I'm not certain the "tide" metaphor is the best choice here...

Yes; you need something that permanently recedes. Hairline? :)

It never occured to me that cannabis would be a next booming industry. I've noticed there are a few traded companies already: CVE:BED, CVE:TWD ...

Anyone know other investment (tradable) vehicules out there ?

I'm sure several billionaires and countless millionaires will come out of the upcoming cannabis boom over the next decade (or two, or three). The real question of interest on HN is how much software will play a role in this.

That's a good question. What would be the analogue industries/commodities to compare to? Tea, Coffee, Tobacco? What role does software play in those other than ecommerce and agriculture on a large scale? Of course cannibis is mostly grown in small scale operations right now but that could change with legal industrial hemp.

> They have a strong first-mover advantage,” – that’s Silicon Valley speak for planting your flag first

Glad that we have articles like this to explain that obscure Silicon Valley jargon to us.

Am I am the only one who is saddened by this headline ? This seriously messed with my day.

You are not alone...

I fear that, unfortunately, a liberal approach to drugs will not end well at all. And I have thought a lot about this and heard all the arguments in favour. And yes, I know about how alcohol is legal and much worse than mj.

But suppose there was a drug even "better" than mj, legal, cheap, very available and had no side effects whatsoever. Suppose it was not addictive, just THE most pleasant thing you could do in your spare time. How would the society be affected by replacement of a complex system of drives and desires with one simple desire, to get high on this new drug whenever possible?

I fear we'd be facign the ultimate Tragedy of the Commons.

Thank God that isn't what's currently happening, then.

This is not a good argument.

Novelty-seeking is a great pleasure for much of the population. Something can't be both non-addictive and also the most pleasant thing to do all the time.

We would have to breed out or genetically engineer out the possibility of boredom, which we're not going to do. Or if we do, then that's the source of the problem, not the drugs.

What? There isn't. You're basing your entire argument on a hypothetical 'what-if' scenario that's most likely never going to happen.

Instead of that, how about actually listing points as to why it could be bad instead of just say 'it will not end well'

It's what this investment implies. That people in our industry are indifferent to the vices that grip poorer communities. It also implies that no tech company that approached him for funding recently had a better idea than getting people stoned.

I have this mental image of a baked Peter Thiel and Elon Musk stumbling out of a crashed space-ship, on Mars.

"Duuuuuude. Whoa!" "Seriously!"

It makes me happy.

That's a "Ted and Bill's excellent adventure" reference right?

Not specifically, but it could be.

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