Pubdate: Mon, 08 Jul 2013
Source: Worcester Telegram & Gazette (MA)
Copyright: 2013 Worcester Telegram & Gazette
Contact:  http://www.telegram.com/
Details: http://www.mapinc.org/media/509
Note: Rarely prints LTEs from outside circulation area - requires 
'Letter to the Editor' in subject
Author: Peter Cohan

THROUGH POT INVESTING, BRENDAN KENNEDY WANTS TO DO GOOD, AND WELL

Brendan Kennedy wants to make the world safe for investing in 
marijuana. Mr. Kennedy, chief executive officer at Seattle's $5.5 
million Privateer Holdings, believes he can make a profit and make 
the world better by investing in marijuana companies.

As he explained in a July 1 interview, Mr. Kennedy is no stranger to 
trying to put numbers to an inherently uncertain future.

"I was recruited eight years ago to Silicon Valley Bank to be senior 
vice president of its turnaround group. We focused on appraising the 
value of technology-based ventures. It was hard to be right. I tended 
to overvalue companies like (now bankrupt) Solyndra and to undervalue 
ones like (booming electric-power car maker) Tesla," he said.

In May 2010, he saw a pitch for a venture "on the inventory side of 
cannabis." But when he tried to learn more about the industry, he 
could not find information. So he started doing his own research. A 
month later, he came across Leafly, "the Yelp of marijuana, run by 
three engineers in Orange County, Calif." He liked the company so 
much that he bought it and is now its CEO. As he explained, "They 
were using Excel spreadsheets to keep track of how different strains 
of cannabis made them feel."

Mr. Kennedy came to this conclusion: "Investing in the marijuana 
industry is the biggest opportunity I've seen. The market is between 
$40 billion and $50 billion, there are no public companies, no 
venture capitalists, no private equity firms and no competition -- 
just green fields galore. It didn't require a technological leap. I 
knew the demand was there. It was already an industry, but it was 
loosely knit."

Despite the legal risks, Mr. Kennedy concluded that cannabis would 
soon be legalized. As he said, "We researched medical cannabis on a 
patient-by-patient, state-by-state basis. We concluded that marijuana 
would be legalized faster than everyone thought. Gallup has been 
asking whether Americans think marijuana should be legalized for the 
last 40 years, and 52 percent answered 'yes,' while 80 percent of 
Americans believe that medical marijuana should be legalized. 
Moreover, money votes for legalization -- as it did in Washington 
state's (marijuana decriminalization) Initiative 502 -- where $6 
million supported those who favored I-502's passage and $6,000 went 
to those against it."

Despite his optimism about the future of legalized marijuana, Mr. 
Kennedy took great pains to assure himself of the soundness of 
Leafly's founders and its legality. It is achieving a beneficial 
social mission as it grows.

Mr. Kennedy explained, "Leafly is the largest clinical trial of 
medical marijuana in the world. It has 60,000 marijuana strain 
reviews. A user can read Leafly's reviews to find out the right 
strain for her disease ... (and) figure out which of 3,000 marijuana 
dispensaries is the right place to buy that strain. Meanwhile, Leafly 
is expanding ... (and) adding people, with 14 now, and we expect to 
have 30 by the end of 2013."

Mr. Kennedy is using different ways to measure whether Privateer succeeds.

"This is a unique opportunity to build a series of successful 
companies. I believe that business is an agent of change -- it's the 
best form of political activism. When -- not if -- we are successful, 
we will have helped to end the harms caused by cannabis prohibition 
in the U.S. That success will be measured by incarcerating fewer people."
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MAP posted-by: Jay Bergstrom