The End Of The War On Drugs And The Emergence Of The Venture-Backed Cannabis Industry

When news broke that Founders Fund, the proudly contrarian venture firm helmed by PayPal co-founder Peter Thiel, was going to invest a major $75 million in Privateer Holdings, a company focused on producing, distributing and educating consumers about legal marijuana, it opened the floodgates for other investors to barrel in.

We’ve since seen startups like Eaze, which just raised $10 million, and Y Combinator-backed Meadow.

“When you look at America, our fundamental thesis is that this is a mainstream product consumed by mainstream Americans,” said Brendan Kennedy, Privateer’s CEO, today at TechCrunch Disrupt NY. “Fifty four to 58 percent of Americans believe that this product should be legal. About 85 percent believe that medical cannabis should be legal. You can’t get 85 percent of Americans to agree on anything.”

Both Kennedy and his investor at Founders Fund, Geoff Lewis, refer to legalization as the “end of Prohibition,” which is a strong allusion to the era in the early 20th century when alcohol was illegal.

“The high-level macro idea is that for the last 75 years, there’s been this really crazy war that doesn’t make any sense. And one of the key tools to perpetuate the War on Drugs was the demonization of cannabis, despite what medical professionals said,” said Lewis. “We think the war on drugs has been really bad for our country.”


Yet the emerging legal cannabis industry is not without its contradictions, most notably how the War on Drugs was punishing to communities of color and yet many of the entrepreneurs entering the space are white. Rapper Snoop Dogg may become one of the exceptions after he started raising capital for a marijuana-focused fund.

“Those communities have been devastated by prohibition,” Kennedy said. “If someone goes to jail, they can’t get home loans. It’s important for us to create the brands that fuel change, and we’re starting to be able to recruit a more diverse workforce.”

You can watch the whole interview above.

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