This week a private equity firm played a role in the return of the Twinkie. Now an investment outfit called Privateer Holdings wants to spark cravings. The private equity firm has raised $7 million which it plans to invest in 6 to 10 companies positioning themselves in America's nascent legal pot economy.

Pot is now legal in Colorado and Washington state, while 18 states and Washington D.C. allow the use of medical marijuana. Even so, the pot industry is still enough of a grey area that most banks and existing companies don't want to touch it. According to federal law, pot remains illegal and a schedule I controlled substance with no acknowledged medical uses. For Privateer, and several other pot investors, that looks like an extraordinary opportunity.

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CEO Brendan Kennedy told the Wall Street Journal (subscription required) that legalized pot, including production and distribution, could be a $40 to $50 billion industry. The feds can still make life very unpleasant for those involved in the pot industry, but if the law breaks their way, investing in pot looks like a wildly attractive opportunity. Demand for the product isn't in question.

WSJ: