Singer Jimmy Buffett and billionaire William “Beau” Wrigley Jr. are getting behind a U.S. marijuana startup, joining a scrum of companies betting on the increasingly crowded cannabis industry.
Mr. Buffett, whose hits like “Margaritaville” evoke a beach-bum lifestyle, will license his Coral Reefer brand to Surterra Holdings Inc. for a line of cannabis products including vape pens, gel caps, edibles and lotions.
The deal comes a month after Mr. Wrigley, 54 years old, the former CEO of the Wrigley gum and candy company, joined Surterra as chairman when his family investment firm Wychwood Asset Management led a $65 million fundraising round.
Founded in 2014, Surterra is based in Atlanta and is licensed to operate in Florida and Texas. It grows marijuana, manufactures medical cannabis products and operates retail outlets. It has raised more than $100 million since 2015.
Surterra is one of many startups seeking to capitalize on legal marijuana sales. Although marijuana use is prohibited by federal law, 30 states permit medical use, and it is allowed for recreational use in nine states and Washington, D.C.
Cannabis startups have access to a limited pool of capital because many limited partnerships and retirement funds are restricted from investing in marijuana. These companies are increasingly turning to high-net-worth individuals and family offices.
In the U.S., more than 60 cannabis startups have raised at least $5 million from venture capital or private equity in the past five years, according to research firm PitchBook. Others have listed on stock exchanges in Canada, where recreational cannabis will become legal in October. Three big brewers, including Corona brewer Constellation Brands Inc., have recently announced large investments in Canadian cannabis companies.
Mr. Buffett, 71, whose fans are known as Parrotheads, has built a licensing empire that includes Margaritaville-branded restaurants, hotels, casinos and retirement communities. Earlier this year came a Broadway musical based on his songs, but it generated lackluster sales and closed in July.
The musician was approached by several other cannabis ventures but decided to go with Surterra because it focused on health and wellness rather than recreation, according to John Cohlan, Mr. Buffett’s business partner. He said Mr. Buffett would receive royalties from the deal but not a stake in the startup.
“We have made a conscious decision to not go into the recreational business,” Mr. Cohlan said in an interview.
The Coral Reefer marijuana products will initially be available at Surterra stores in Florida starting next spring. In other states, the products could later be sold through other retail outlets or wholesalers, said Jake Bergmann, Surterra’s founder and CEO.
Surterra will market Coral Reefer products aimed at improving appetite and mood, relieving pain and alleviating symptoms from chemotherapy, he said. In states where recreational marijuana use is legal, the products won’t require a prescription.
Appeared in the September 11, 2018, print edition of WSJ as ‘Jimmy Buffett, Wrigley Scion Back Weed Startup.’
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