High Times in Private Equity

With an influx of capital from alternative and traditional (OK, fringe traditional) investors, the legalization business is about to get legit. In recent months, the financial press and mainstream media have been watching a private equity fund from alternative press trailblazer High Times. It is no wonder that the counter culture publication dedicated to marijuana cultivation would be tapped for advice on growing a fund. High Times Growth Fund has the name brand–but does it have the right stuff to deliver real performance?

According to a story in Businessweek, High Times co-founder William Kennedy was spurred to act by market demand. He fielded hundreds of requests from entrepreneurs seeking funds and investors wondering where to put their money. He saw a fund dedicated to this new cash crop as an extension of the High Times vision of freedom and personal choice. Besides, if they raised their goal of $300 million to spur marijauna-related businesses it would be harder to stop the legalization movement.

Inc.com reports the deal was struck at the Cannabis Cup event in Denver this year. High Times’s Michael Kennedy, Jordan Lewis, the founder of Silverpeak Apothecary, a medical marijuana dispensary in Aspen, Colorado, and Silverpeak investor Ben Zaitz agreed that the opportunity was significant. And so the High Times Growth Fund was born.

Other funds focused on the marijuana business include Privateer Holdings, a $7 million private equity fund. Also in the hunt are Justin Hartfield, chief executive of WeedMaps, who co-founded the venture capital firm Emerald Ocean Capital to invest in cannabis businesses.

HTGF Co-Founder Ivan Wolff emphasized that they all wanted “a professional investment fund in the cannabis space.” Like any fund, a significant confidence-builder comes down to management. Zaitz has the farmland and dispensary investment experience. Kennedy and High Times bring the counter culture brand and industry knowledge. Wolff, a venture capitalist at Rothchild Ventures, and an angel investor and entrepreneur, adds street cred.

High Times has been the world’s number one resource for cannabis information, culture and reports from the War on Drugs for 40 years. Past contributors include Charles Bukowski, Patti Smith, William S. Burroughs, Truman Capote, Debbie Harry, Hunter S. Thompson and Andy Warhol. But it is in the less celebrity-driven coverage that might provide the real value for investors.

Recent reports indicate that HTGF has identified 30 or 40 credible deals from hundreds of pitches. Companies that interest HTGF represent a cross between middle- and early-stage companies and companies looking to invest in or buy entities that are already operating and generating money.

According to Zaitz, they are raising money from “Any respectable person that wants to put a significant amount in. But really family offices and wealthy individuals and some small institutions. Some funds you could say are bleeding edge and adventurist–not university endowments. There are some funds designed to invest in alternatives that may have an interest in this.”

Remember, this is a young business. Few funds have dedicated adequate time and effort to cover the cannabis industry. High Times possesses unique industry knowledge, allowing it to look at the opportunities and vet the players.

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