Thiel’s Founders Fund Becomes First VC to Back a Cannabis Startup

As cannabis becomes increasingly legal in the U.S. and elsewhere, investors are chilling out about the risks of their money going up in smoke. Privateer announced today that its $75 million Series B round will be the first known time institutional investors have put money into a weed startup.

Founders Fund is participating in the round, as previously reported by Business Insider, which noted that Founders Fund leader Peter Thiel had recently gibed Twitter’s management for pot smoking (apparently it was meant as a compliment about their business model, he later clarified).

Privateer and Founders Fund are casting themselves as some of the few respectable businesspeople amid potheads and hippies in a growing industry, which the ArcView Group predicted to be worth $10 billion dollars by 2018.

“In this industry, there were no leaders, there were no standards, and the branding bar was very low,” said Privateer CEO Brendan Kennedy. Privateer, founded in 2011, is different, Kennedy argued, because it only does legal business.

So far, the Seattle-based company has bought the “Yelp for cannabis” (a review site called Leafly), started a Canadian marijuana-by-mail company called Tilray (where pot-by-mail is legal), and announced a yet-to-launch venture with Bob Marley’s family to create cannabis strains and accessories (to be grown and sold only where legal).

Along the way, Privateer will have raised $99 million when it completes this round, it said. The rest of the money came from high-net-worth individuals. Privateer now has 160 employees.

For now, Privateer isn’t much of a technology startup. Though a crop of on-demand medical marijuana delivery startups have come up in places like Seattle and San Francisco, what they are doing is still illegal at a federal level, so Privateer has kept its distance.

“This obviously doesn’t look like a software company, but neither did SpaceX in 2009,” said Geoff Lewis, the Founders Fund partner who has also led the firm’s investments in the ride-sharing service Lyft and Hampton Creek, which makes plant-based mayonnaise. Lewis said there wasn’t anything unusual about the deal in terms of getting clearance to put money in cannabis. “We do have a little more latitude, because our LPs are used to us investing in things that seem crazy. They kind of expect that from us,” he said.

Does that mean we can expect more Founders Fund investments to go to pot?

No, Lewis said. “I do not expect to be ‘the cannabis VC,’ although I’m sure I’ll get branded that way.”

This article originally appeared on Recode.net.