to form a big one is familiar: In traditional buyout shops, it's called a "roll-up."
Just don't say that word to Kennedy, unless you want him to blush. Scratch the term "growing the business" — he catches that one in midsentence, correcting his wording to "expand.'' And forget weed, ganja or pot. He uses the scientific term, #$%$. And the #$%$ business is good, he says.
"We're building the first all-inclusive name brand in the #$%$ business,'' Kennedy declares earnestly. "And it doesn't include Bob Marley, or the Grateful Dead, or …''
"Or puns,'' Blue says drolly. "There are so many.''
Jokes aside, the striking thing about the new gold rush in pot is how familiar it sounds to people used to the technology business.
Just like Silicon Valley entrepreneurs, start-up pot investors such as Kennedy, Blue and ArcView CEO Troy Dayton — whose company runs an angel-investor network matching companies with rich activists — talk about how big and fragmented the market is, and how the relative handful of legal businesses out there lack the leadership and tools they need to (sorry, Mr. Kennedy) grow the industry. That leaves the field open for people who can bring capital and experience, they say.
That part is true. The best way to estimate the potential size of the legal market for #$%$ begins with the illegal market — which is somewhere north of $18 billion a year in pot Americans consume already, said Harvard economist Jeffrey Miron. The trade journal #$%$ Business Daily says the $1.5 billion legal market could reach $6 billion by 2018.
The challenges are myriad. Some are specific to selling a product still illegal in most states. But others are very ordinary, thanks partly to the business' Bohemian roots.
"It's not an industry loaded with operating talent,'' said Josh Rosen, a former Credit Suisse stock analyst who runs Phoenix-based MC Advisors, which backs renewable-energy companies and is, well, experimenting with pot.