Marijuana is a $40 billion business — and the guys gearing up to turn ganja into the next McDonald's don't even smoke the stuff. Is the culture of weed about to go up in smoke, or are we just paranoid?





Would you like some Alien Asshat? It’s $42 for two grams, or $11 for a half-gram pre-rolled joint, on the menu at a tidy little pot shop called the Seattle Cannabis Company. Also available: Super Silver Goo, Snoop’s Dream, Grand Daddy Purple, and White Widow. There’s a pot named God and another named Jesus. There’s also Juicy Fruit and Girl Scout Cookies, varieties made by two different growers, presumably battling it out to see who can get sued first.

This is the fantasy realized by Washington State’s new law, and it looks and feels exactly like pot lovers dreamed it would. An establishment like this is born of pot culture—as if your neighborhood dealer just put on a nicer shirt. But across town, a different vision of pot is taking shape. “This is a mainstream product consumed by mainstream Americans, and they’re just looking for mainstream brands that don’t insult or offend them,” says the man leading the charge, from the comfort of his conference room. “Not every name has to have ‘cana’ in it, or ‘green,’ or ‘Mary Jane.’ ”

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You can imagine what he thinks of Alien Asshat.

Meet Brendan Kennedy, ceo of the private equity firm Privateer Holdings. He arrives at our meeting carrying a bowl of nuts. He’s been up with his nine-month-old daughter since dawn. He is, like seemingly everyone else at Privateer, an exercise enthusiast. He has completed six Ironman competitions and generally comes across as someone who isn’t frivolous about what he puts into his body. Pot? “It’s not a part of my life,” he says in his soft, deliberate manner. “I’m more of a have-a-beer-on-a-Friday-night guy than a cannabis guy.”

But more than anything, Kennedy is a big-money guy. This spring, he closed a $75 million round of funding to continue building his massive, game-changing marijuana company—including the first-ever backing raised from institutional investors, a very big deal in what wonks call an “emerging market.” He is turning pot into a legit investment, because he sees a fortune to be made when control of a $40 billion industry moves from those who are passionate about smoking pot to those who are passionate about making money. And to accomplish this, he intends to do away with pot as you know it. No more cliché names. No more Baggies. No 4/20 jokes. He envisions beautiful packaging and branding and logos. He wants to build the Budweiser of bud, the Wheaties of weed, the McDonald’s of Mary Jane—products that are “the big, bright, shiny brands that people can point to and say, ‘That’s what the end of prohibition looks like,’ ” he says.

Kennedy’s words are carefully chosen:

Mainstream product.

Prohibition.

Cannabis. Never pot. Latin.

He knows the language matters; as in politics, whoever controls the words controls the debate. He even hired Heckler Associates to work with him. You may be familiar with Heckler’s work: It’s the branding firm that named Starbucks.

Kennedy’s vision represents the logical endpoint of legalization. It was never going to be just a stoner’s paradise. America doesn’t play like that. America seizes a market opportunity and goes for broke. And maybe that sounds heretical—another subculture exploited, another real thing co-opted—but Kennedy has an argument for the stoners, too: “We think that the right professional brands and the right companies in this industry can be as effective as any activist,” he says. “The right brands can fuel change.”

Translated out of corporate-speak, he’s saying that once pot grows into a gigantic business, it can do what gigantic businesses do in America: influence politics. That means Big Pot could bring about “the end of prohibition” far faster than a grassroots movement. For once, the Man just might be the stoner’s best friend.





Privateer Holdings CEO Brenden Kennedy is not a pot user, but he's about to change the industry. (Kamil Bialous)

In 2010, Kennedy was a straight-forward money guy. He worked in valuations at svb Analytics, an affiliate of Silicon Valley Bank. One day he turned down a potential client in the medical-marijuana industry out of concern about associating with the drug. But a few days later, he heard a report on public radio about Proposition 19, an initiative that would have legalized certain marijuana-related activities in California. (It later failed.) He called an old business-school classmate who worked in private equity and told him to quit his job. When pot became legal, someone would make a fortune. He wanted it to be them.

When Kennedy started to pitch potential investors, many were worried about the same risks that he once was. Hedge fund managers were willing to invest their personal money, not the fund’s money, and only in secret. But slowly, pot began to shed its stigma. The stock market now has pot-themed ticker symbols like mjna (Medical Marijuana, Inc.), phot (GrowLife, Inc.), and hemp (Hemp, Inc.). The publicly traded GW Pharmaceuticals is testing drugs based on compounds found in cannabis; its stock more than doubled in the past year. The medical-marijuana delivery app Eaze, which is angling to become the Uber of pot, with Snoop Dogg’s Casa Verde Capital as an investor, closed a $10 million funding round this spring. Management and consulting firms are popping up in states where pot is legal (23 plus the District of Columbia now allow medical uses, and recreational pot is legal in Colorado, Oregon, Washington, and Alaska). Viridian Capital & Research reported that its Cannabis Index, a fund invested solely in pot-related companies, gained 38.4 percent last year—better than the Nasdaq or S&P 500.

And this past January, Kennedy made the biggest news of all, announcing a multimillion-dollar investment from Founders Fund, the venture capital firm created by PayPal cofounder Peter Thiel, known for early investments in the likes of Airbnb, SpaceX, and Spotify. This was a game changer—the first huge, institutional firm to proudly put its name on an investment in pot. “The big question for us was, Would there be an opportunity to build a multibillion-dollar, mass-scale company that could really help to drive the end of prohibition and also build a huge business?” explains Founders Fund partner Geoff Lewis, who led the investment. “Because we do think the end of prohibition will be a social good. For all our investments, we want to believe we’re going to help improve the world in some way.”

That’s big talk. But Kennedy is building the kind of company to back it up. Privateer is structured as a holding company; what it does is launch or acquire other businesses, all related to pot, and then connect them in symbiotic ways. Today, Privateer has three such arms.

The first is called Leafly. It’s been called the Yelp of pot and is a site for smokers to peruse reviews on specific strains, find nearby retail shops, and even search for varieties based on intended goals. (Want to “conquer social anxiety”? Leafly lists 50 strains for the job.) But behind the scenes, Leafly is actually Privateer’s data mine, helping it to build the most sophisticated, granular understanding of cannabis consumer desires in existence. If lots of people in Denver search for a specific type of marijuana, say, Privateer can use that information to make better production, distribution, and marketing decisions. And Leafly cofounder Cy Scott says that smokers’ desires have been changing rapidly. The company has also seen a spike in users identifying as vapers, rather than smokers, and there’s been a notable uptick in interest in edibles.

Privateer will use all that data to launch an actual pot brand, called Marley Natural, which will go on sale later this year. The company has yet to reveal what its packaging will look like, but Kennedy promises something polished and professional—the kind of thing that wouldn’t look out of place on the shelves of 7-Eleven. (Despite Kennedy’s dismissal of pot culture, he does pander at least this once: Yes, the “Marley” in question here is Bob Marley; the late singer’s estate has signed on to the brand. And it will be going up against the competing Willie’s Reserve, a celebrity brand launched by Willie Nelson.) As tastes evolve and are flagged by Leafly, Marley will respond with new products.

In states where pot isn’t legal, the company will sell accessories, such as pipes and containers, and topicals, i.e., cannabis- or hemp-infused lotions and creams. That way, consumers will be introduced to the brand even though they can’t gain access to its main product.

As to where this product will come from, that’s the job of Privateer’s third company, which has spent $30 million renovating a facility in Nanaimo, a tiny city on Vancouver Island. To reach it from Privateer’s Seattle headquarters, you can drive three hours north to Vancouver and take a two-hour ferry ride, or catch a one-hour flight on a small commercial airline that operates nine-seaters. Privateer opts for the latter. They have a tab with the airline, and executives are on a first-name basis with the pilot. They’ve reserved me a seat.

We’re going to see the pot.





A worker inside Tilray's flowering room. (Kamil Bialous)

Nanaimo is beautiful: lush, green, and heavily forested. We arrive on the kind of sunny Northwest morning that residents spend the whole year pining for, and drive to a facility that looks like any other building in any other industrial park. This is the stoner’s Fort Knox. There are 40,000 marijuana plants inside, worth more than $30 million. There’s a gate and barbed wired around the exterior, and a security checkpoint. Employees and visitors must wear hard-toed shoes and scan their lanyards in and out of every room. Before any plant product is discarded, it is soaked with water and covered in cat litter—lest someone outside go digging through the trash. Inside, it smells like a college party.

Welcome to Tilray, officially Privateer’s medical-marijuana growing facility, built in accordance with Canada’s more pot-friendly laws. Tilray does sell marijuana in Canada, under its brand name. But the ambitions here are far larger: While the federal ban is in effect in the United States, Privateer is using Tilray as its staging ground. Employees travel the world to research new strains, then study them here, where the company learns how to get the most potency out of each plant, optimizes the growing and drying processes, and prepares to pounce on legal opportunities as they emerge around the world. (It declines to comment on whether it’s developing its own strains.)

Half of the growing rooms replicate a.m., half p.m., so that three shifts of workers can keep the operation humming 24 hours a day. Employees and visitors must change into fresh, disposable, full-body suits, booties, and hairnets every time they enter a room with plants. There’s not a stoner in sight. Inside one of the growing rooms, Nolan Vollmer, a veteran of the war in Afghanistan, hacks down large plants of the Barbara Bud. Adam Varga, a business student at Vancouver Island University who’s considering switching majors to horticulture, is standing by a nearby scale. Looking on is Josh Eades, Tilray’s tall, soft-spoken, bespectacled chief science officer, who claims to have never tried his own product. Technically speaking, because he’s not a medical-marijuana patient, it would be illegal to do so. When I suggest that it sounds a lot like a winemaker who hasn’t tasted his own chardonnay, Tilray ceo Greg Engel reminds me that they’re making medicine.

“If you were working at a pharmaceutical company,” he says, “you wouldn’t be sampling your blood pressure medication.”

True, but pharmaceutical companies aren’t typically developing new drugs for the day they become available at your local bodega. Privateer doesn’t want to just fill prescriptions; the real prize is folks who just want to get high.

Engel sticks to the party line, though. There’s a lot at stake here. Tilray is eager to grow: As legalization sweeps the country and the world, Tilray will open new facilities in friendly localities. It’s critically important that everyone maintain the image of professionals working on a mainstream product. No city wants a stoner Fort Knox. But every city wants job-creating agriculture.

And Tilray will have an important business evangelist on its side: a politician, Bill McKay, the mayor of Nanaimo, who is evidence of the power of Big Pot’s potential. Before Tilray moved in, the little island city was suffering from a slowdown in its timber industry and known only for a locally made chocolate wafer snack called a Nanaimo Bar. Tilray created hundreds of jobs. In April, McKay and his town’s economic- development team held a press conference to announce that Tilray had pumped $48 million into the local and British Columbia economies and was on its way to becoming the region’s biggest private-sector employer.

“They’ve got all these great names,” McKay says with a laugh, referring to the silly pot names that Kennedy is targeting for extinction. “I’m waiting for a Nanaimo Gold.”





Tilray's lab, where cannabis is tested for microbials, mold, and a host of other potential contaminants — something your old pot dealer, who needed to move product regardless of quality control, likely never did. (Kamil Bialous)

That’s not Big Pot’s only way of appealing to a mainstream audience. With Tilray’s funding, researchers at the University of British Columbia are currently studying whether marijuana helps veterans, first responders, and sexual assault victims deal with post-traumatic stress disorder. “Our investors are looking for a financial return,” Kennedy says, “but they’re also looking for a social return measured by ending the harms caused by prohibition.”

Back in Seattle, newly legal dealers are eager to take up pot’s talking points. “We don’t want people getting shit-faced every night,” says Josh Berman, owner of the PDA Lounge, a onetime bar that’s now a medical-marijuana dispensary. “We would like it if we could smoke a little weed and live a balanced, productive life. Big money’s going to help push that.”

Berman heads out the back door of his shop, where there’s an enclosed deck for customers to sample his products. It’s 10:30 a.m., and managing partner Benito Ybarra is putting cream cheese on a bagel and smoking a joint. “Kosher Kush. It was blessed by a rabbi,” he says. “You guys might want to at least taste it.”

“I might have to,” Berman says, taking a hit.

Across town, Kennedy may one day own a major portion of Berman’s supply chain. With Leafly, he will be busy turning smokers into easily commodified data points. But still, two guys hanging out way before noon, enjoying a spliff without fear? Big Pot approves—after all, these guys represent an emerging market that’s ripe for exploitation. Some prefer doobies, others dollars. But whatever their chosen high, it’s all about the green.

Photos by Kamil Bialous