A pair of experienced investment bankers are moving into the marijuana business. They've set up a private equity firm that will buy up businesses in the medical marijuana industry and the nascent market for legalized recreational pot. Brendan Kennedy, one of the cofounders of Privateer Holdings, which has offices in California, Colorado and Washington, said a recent Fox News poll shows 85 percent of Americans support doctor-prescribed medical marijuana. "You can't get 85 percent of Americans to agree on anything, but they agree on that. Cannabis is mainstream, and we just need to create mainstream companies now," he said. Kennedy and cofounder Michael Blue intend to focus on businesses that provide ancillary goods and services like insurance and specialized software for which they see a market of perhaps $10 billion a year. "We're interested in companies that change the conversation," Kennedy said. Wharton Assistant Professor of Management Ethan Mollick said private equity will bring credibility to the marijuana business. "I think you're seeing that process beginning or has already begun but gathering steam in cannabis," he said. But Harvard economist Jeffrey Miron believes Blue and Kennedy are overestimating the size of their potential market and that it will be hard for marijuana businesses to thrive until marijuana is legal under federal law. "To me, there's still a lot of hurdles that have to be jumped through, and it could be five years, 10 years, 20 years before the federal law actually changes. So my hat's off to them, but I don't think I would invest with them at this point," he said. Others are investing, however. Privateer Holdings, has already raised $7 million. (NATIONAL PUBLIC RADIO)
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