Snoop Dogg Is Making a $25 Million Bet on Legal Marijuana — Here's Why He's Going to Win

Snoop Dogg Is Making a $25 Million Bet on Legal Marijuana — Here's Why He's Going to Win
Source: Getty Images
Source: Getty Images

The latest big name to cash in on marijuana legalization has decades of experience with the herb: multimillionaire hip-hop artist Calvin Broadus Jr., better known as Snoop Dogg.

TechCrunch reported the 43-year-old rapper and well-known toker "hopes to raise $25 million to fund the nascent, but fast-growing legal marijuana industry." This would be major influx of high-profile cash into a budding industry, although the full size of Snoop's investment remains to be determined.

A few years ago, any story involving Snoop, cash and massive quantities of weed would probably have more to do with his prodigious consumption of marijuana than his business portfolio; he's even claimed to have smoked it in the White House with the assistance of staffers who looked the other way. But with weed now legal in the states of Oregon, Washington, Colorado, Alaska and also Washington D.C., Snoop's investment would be one among many.

A lucrative market: In Colorado, where recreational marijuana dispensaries began operating last year, the Cannabist reports that combined sales of marijuana products reached more than $573 million. The state took in so much revenue from weed sales that it might need to refund up to $30 million in pot taxes to state residents.

With that kind of money floating around, Snoop isn't the only savvy investor waiting to get in. 

"This is the fastest-growing industry in America, Troy Dayton, CEO of cannabis industry investment and research firm ArcView Group, tells USA Today. "Despite all the stigma, people are recognizing this could be the next great American industry." ArcView claims to have already invested $20 million in the cannabis market, with an estimated market value of $2.7 billion in 2014.

Source: CrunchBase

Companies in the market offer everything from dispensary software to farming equipment to hash oil-infused edibles. At a convention sponsored by the group, glass pipe manufacturer Scott Hunter told USA Today that he needed a $750,000 investment to increase his production capacity.

Another investment group, Poseidon Asset Management's Pioneer Hedge Fund, told the Wall Street Journal that they had already invested $5 million into marijuana businesses. 

Snoop isn't the first musician to lend their image to the budding weed industry. The descendants of reggae legend Bob Marley announced in November 2014 that they were joining forces with Seattle-area company Privateer Holdings to create Marley Natural, "premium cannabis brand rooted in the life and legacy" of the late singer-songwriter. 

Privateer Holdings CEO Brendan Kennedy told NBC News that he estimated the value of the U.S. cannabis market at $50 billion if prohibition ends (for comparison, the U.S. beer market is estimated to be around $100 billion). In January, TechCrunch reported that the firm was raising $75 million in institutional financing. 

Simply put, weed is going mainstream. With a slim majority of Americans now in favor of outright legalization, it seems inevitable that the legalization experiment will eventually spread across the country. As the initial speculation over the marijuana market settles, savvy investors like Snoop will still be around and stand poised to make a lot of money off weed.

Just a few years ago, these investors would have been considered drug dealers. Now, they're legitimate entrepreneurs. Considering the 8.2 million marijuana arrests the American Civil Liberties Union estimates were made across the country between 2001 and 2010 (88% for simple possession), that's some real progress.