Hedge fund billionaire Leon Cooperman investing in marijuana

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Hedge fund billionaire Leon Cooperman is investing in the marijuana industry. He’s the biggest name so far to purchase stock directly in a marijuana cultivator.

Cooperman posed a series of detailed questions to Green Thumb Industries (GTI) CEO Ben Kovler during the company’s Q2 earnings call on Tuesday afternoon. GTI is a publicly-traded chain of marijuana dispensaries, cultivators, and distributors with licenses to operate in a number of states where marijuana is legal.

Following the call, Cooperman confirmed to Business Insider that he is a stockholder in the company.

“I’m investing because I’m a fan of Ben’s,” Cooperman told Business Insider over the phone. “I think he’s doing a great job.”

Cooperman added that he’s been friends with Kovler’s family for “decades.” Kovler is the heir to the Jim Beam liquor empire — the bourbon brand was built up by his great-grandfather, Harry Blum.

Cooperman bought stock in GTI individually and said that the investment is too small for his fund, Omega Advisors. He’s converting Omega into a family office to manage his own fortune at the end of 2018.

Omega was founded in 1991 after Cooperman left his partnership at Goldman Sachs.

GTI went public via a reverse-takeover of Bayswater Uranium in June, and is listed on the Toronto-based Canadian Securities Exchange.

Companies like GTI are riskier investments for major institutional funds because marijuana is still considered an illegal substance by the US federal government. GTI is a “plant-touching” business, which means though it’s legal in the US states it operates in, the federal government could still decide to crack down.

Some big hedge funds, like Tiger Global, have invested in tech companies that provide software and services to the marijuana industry, but don’t deal with the plant itself.

Cooperman is the latest in a line of big-name investors to pile into the sector.

Danny Moses, the head trader at FrontPoint Partners under Steve Eisman during the housing crash in 2008, called investing in marijuana the “big long,” at a conference in June.

Moses has put personal money into Merida Capital, a New York-based private-equity fund dedicated to the emerging cannabis sector.