Founder of PayPal bets on US taste for cannabis

PayPal’s co-founder, Peter Thiel, has made a multimillion-pound investment in the US cannabis industry even though the drug is only legal in a handful of states.

His venture capital firm, Founders Fund, has become the first institutional investor in Privateer Holdings, a Seattle-based company that owns marijuana-related businesses. The drug is now legal for recreational use in four states and the District of Columbia, although it is more widely available for medical use in other parts of the US.

“We believe that by the 2016 presidential elections, six more states will approve marijuana recreational use,” Brendan Kennedy, the founder and chief executive of Privateer, told Bloomberg. “With this investment they are signalling that they, like us, believe the end of prohibition – and the social harms it causes – is inevitable.”

Founders Fund, which has taken an unspecified minority stake in Privateer, said the cannabis industry could be worth “hundreds of billions of dollars” globally. The investment vehicle has $2bn (£1.3bn) under management and has backed tech start-ups like Facebook and Spotify in the past.

Geoff Lewis, a partner at Founders Fund, said: “We are comfortable making investments that look weird… Our view is that the American public widely support the legalisation of cannabis.”