When High Times, the New York publication that's covered marijuana culture for four decades, launches a new private-equity fund, people take notice. Recreational pot has fueled Colorado businesses, and High Times general counsel Michael Kennedy has said the magazine's Web traffic has soared, while advertising has doubled.
Kennedy had long considered launching an investment fund to support new businesses, in the hopes of helping marijuana become legal. At the Cannabis Cup pot festival in Denver earlier this year, he met with Jordan Lewis, the founder of Aspen, Colorado-based medical marijuana dispensary Silverpeak Apothecary, along with Silverpeak investor Ben Zaitz. The three decided to launch a private equity fund as a separate entity under the High Times umbrella.
Although the fund is unusual, it certainly isn't the first of its kind. Last year Privateer Holdings raised a $7 million private-equity fund focused on the medical marijuana industry, while Justin Hartfield, chief executive of WeedMaps, co-founded the VC firm Emerald Ocean Capital to invest in cannabis businesses. Inc. spoke with Zaitz and fellow High Times Growth Fund partner Ivan Wolff to learn what will set their fund apart.
What compelled you to partner with High Times?
Ben Zaitz: The fund started with our family agricultural company investing in Silverpeak Apothecary in Aspen, and through that relationship we became acquainted with Michael Kennedy and his organization. We had very similar objectives, so we decided to combine our efforts into one fund instead of creating two. And High Times has a lot of leverage in the marketplace.
Ivan Wolff: Both of us were aiming to become the same kind of organization: a professional investment fund in the cannabis space. Each had elements that would be useful to the other as well. High Times was an established name in cannabis, and Ben was an established name in agriculture. [Editor's note: Zaitz started the business-to-business website Farms.com in 1995 and later co-founded two agricultural investment funds.]
Have your backgrounds prepared you for something like this?
Wolff: I've been a venture capitalist for the past 25 years at Rothchild Ventures and on my own as an angel and entrepreneur. Ben was at several different entities as a major agricultural businessman and he's had experience in everything ranging from seed corn to grapes to dairy. He's also been a fund manager.
Zaitz: My career has been creating enterprises on top of farmland and focusing on adding value downstream, where we can process and market it. It seems to me that cannabis is a very good fit for that model. It's a crop like any other.
What role will High Times play in the funding process?
Wolff: We have access to the personnel at High Times to help us both with looking at opportunities and vetting people in the industry. Their 40-year history will help us understand who's who in the game. The name itself has attracted a huge number of deals--we've had 125 presented to us, though not all of them were great. Still, we've had 30 or 40 credible deals presented to us. We'll have the best deal flow in the industry. We're a separate entity under their corporate umbrella that's affiliated with but not controlled by them.
You're currently in the process of raising $300 million for the fund. From whom are you soliciting funds?
Zaitz: 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.
What kind of startups are you eyeing and what are your goals for the fund overall?
Wolff: It's likely to be a cross between a typical venture fund that invests in middle- and early-stage companies, and at the same time, a company that may be looking to invest in or buy entities that are already operating and generating money. The defining business commonality will be cannabis and cannabis-related. [The startups we invest in] will run the spectrum from genetics to testing to other kinds of services that people have to making consumables. This business is going to be evolving over the next three to five years.