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June 30, 2013 11:38 pm
The move towards cannabis legalisation in the US has gained momentum since December 2012 when possessing an ounce of marijuana became legal in the state of Washington for those aged 21 and older. A similar law in Colorado took effect the following month.
Marijuana remains illegal under federal law. But the new laws in Colorado or Washington require both states to adopt a regulatory framework for allowing businesses to apply for a licence to grow and sell marijuana from the beginning of 2014. Some 18 states have legalised medical marijuana and there are formal measures pending in 10 more states, according to the National Cannabis Industry Association.
Research among growers, dispensaries, trade publications and political organisations leads Mr Blue and Mr Kennedy to estimate the American marijuana market to be worth around $50bn. But at present, cannabis businesses cannot be financed through traditional channels and the pair say that the industry lacks expertise in everything from branding to staffing.
Their cannabis-focused fund, Privateer Holdings, has received more than 200 pitches since its launch and made its first investment a website and smartphone app. When retail marijuana stores open, they plan to expand the site for the benefit of recreational users.
“Our biggest challenge is to move as quickly as possible,” says Mr Blue. “We have carved out a first-mover advantage in terms of what we are trying to do as a private equity firm, and have spent the last three years making sure we really understand the industry and the opportunities we want to pursue.”
Mr Kennedy says the Colorado and Washington ballot votes on November 6 in favour of legalisation have changed things dramatically. “On November 7 we woke up in a very different world and a lot of things have become a lot easier,” he says. “We have received 200 résumés from top-notch business schools, both here and in Europe, from other MBAs looking for internships or post-graduation jobs, recognising that this is the next big thing. We weren’t getting those résumés two years ago.”
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