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Pot-focused investment fund backed by Peter Thiel gets a boost from its big stake in Tilray

Key Points
  • Shares of Tilray nearly doubled at one point on Wednesday in volatile trading that included multiple trading halts.
  • Seattle-based Privateer Holdings has at least a 76 percent stake in Tilray, according to FactSet.
  • The surge of interest in companies that are connected to the marijuana industry comes as a few large consumer product companies step into the mix.
A Privateer Holdings marijuana facility
Harriet Taylor | CNBC

A small private equity fund devoted to the growth of the marijuana industry is getting a big boost from its stake in Tilray.

Shares of Tilray nearly doubled at one point on Wednesday in volatile trading that included multiple trading halts. But it was the third straight day of gains. On Tuesday, the company said it had the okay from the U.S. Drug Enforcement Administration to import medical marijuana for a clinical trial in California. The stock only began trading publicly in July.

Seattle-based Privateer Holdings has at least a 76 percent stake in Tilray, according to FactSet. Earlier this year, the fund raised $100 million, bringing the total amount it has raised since 2010 to $200 million. Privateer has disclosed investments in four cannabis-related companies, including Tilray and Leafly, Marley Natural and The Goodship.

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Leafly is a social network on which users can share advice on different products and dispensaries. Tilray produces and distributes cannabis and researches ways to use it. The two others make products containing cannabis, such as hand cream and chocolate.

The surge of interest in companies that are connected to the marijuana industry comes as a few large consumer product companies step into the mix. Constellation Brands, the maker of Corona beer, has an 8 percent stake in Canopy Growth, Canada's largest medical marijuana producer. Shares of Canopy also had a wild ride on Wednesday but closed down nearly 5 percent. Coca-Cola has also said it was looking at the industry.

A spokesman for Privateer said the firm didn't want to comment on Tilray's stock moves.

Privateer has raised money in prior rounds from Founders Fund, the firm run by Silicon Valley mogul Peter Thiel, and other small funds such as Subversive Capital, whose Michael Auerbach sits on Tilray's board as well as Privateer's board.

Privateer founders Brendan Kennedy, Michael Blue and Christian Groh have committed their own money to "help communities harmed by cannabis prohibition," according to a firm announcement earlier this year.

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