Privateer Holdings: Navigating a Rocketing, But Complex, Cannabis Marketplace

Privateer Holdings: Navigating a Rocketing, But Complex, Cannabis Marketplace

By
George Foster, Sheila Melvin
2018|Case No.E646| Length 34 pgs.

Privateer Holdings was a Seattle-based private equity firm that was “shaping the future of the legal cannabis industry.” In late 2017, Privateer held an expanding portfolio of global brands intended to “lead, legitimize, and define the future of cannabis” and was preparing to announce the closure of a Series C round that had raised more than $100 million. It was an opportune moment for its founding triumvirate to contemplate the future direction of the path-breaking firm they had established back in 2010 and the global companies they had built, through a combination of acquisitions, investments, and incubation, and in which they held 100 percent ownership. Privateer’s founders had committed to hold true three core beliefs which formed their fundamental investment thesis: • “cannabis is a mainstream product consumed by mainstream people; • the end of cannabis prohibition is inevitable; • brands will determine the future of the cannabis industry.” But, as market velocity and opportunities expanded with ever-increasing speed, it seemed the right time to consider how best to steer, and structure, Privateer Holdings going forward. While the potential growth options were many, there was much uncertainty as to many factors that could impact the cannabis industry.

Learning Objective

This case was written for a course on strategic management and entrepreneurship. It is focused on a sector – cannabis – in which regulatory changes have created significant market opportunities in the United States and other nations. However, because the regulatory environment remains murky and unsettled and the product controversial, there is also considerable risk. The case requires students to consider the many issues that entrepreneurs encounter when they set up early stage ventures in a complex space that has uncertainty in the legal environment and the adoption environment. It also examines the high, and low, moments of entrepreneurship.

This material is available for download by current Stanford GSB students, faculty, and staff only. For inquiries, contact the Case Writing Office.