By Hal M. Bundrick
NEW YORK (MainStreet) Investors looking for a growth industry may have just hit the jackpot. A new marijuana private equity fund has been launched by High Times magazine, the monthly publication based in New York that has covered the cannabis industry since 1974. The HT Growth Fund is looking to raise $100 million to seed its investments in marijuana-related businesses.
"What we are looking to do is provide capital and credit to companies that are established and have grown and reached their potential as much as they can without access to traditional capital markets," Michael Safir, managing director of the new fund and former business manager of High Times told the Denver Post.
In a statement on the fund's website, the investment team says the fund is the result of consumer demand.
"In the last few years scores of friends, customers, 'joint' venturers and cannabis activists have contacted us seeking business advice, help with existing companies or start-ups, or seeking investment advice in the cannabis industry," the statement says. "We have decided to take these powerful streams of cannabis opportunities and couple them with appropriate investments."
The HTG Fund profile says the team will build a portfolio of holdings within the next two years to "a traditional private equity investment schedule," with an average investment size of $2 million to $5 million per company and an average time-to-exit of five years.
"We have a deep and detailed knowledge of the needs and wants of the cannabis industry," the website statement continues. "The team at the HTG Fund have a combined 70 years of experience related to all things cannabis, which allows us to use our historical knowledge to forsee (sic) the future. The HTGF's team has experience, expertise and significant contacts in all areas of the cannabis market."
Colorado has become the first U.S. state to allow retail sales of recreational marijuana. Washington State is expected to roll out its consumer cannabis program later this year.
"If you are running a cannabis business, you aren't getting (a Small Business Administration) loan, you don't have bank accounts," Safir told the Denver Post. "It is hard to grow when you don't have the tools."
Arcview Market Research predicts legal marijuana sales will grow 64% from current levels, to $2.34 billion by the end of 2014. Arcview says with an expected 14 more states legalizing adult use, plus with the expected growth in existing markets, the five-year national market will grow 700% to $10.2 billion by 2018.
--Written by Hal M. Bundrick for MainStreet