Red, White and Green: How Willie Nelson's Political Gesture Puts $25 Million At Risk

Outlaw Country only matters when you’ve got something to lose. With a thriving investment and philanthropic profile, Willie isn’t just talking into the wind.

Losing some fans over backing a Democrat in Texas for the Senate is tough, but when you’ve spent 60 years in the music business, you’ve seen it all.

Willie Nelson is 85 years old. If he dies with hecklers on his Facebook page and lower song download rates, he might shed a tear.

But it’s just the cost of doing business. His new album is a country exploration of Sinatra standards. When you’re pushing the boundaries, hecklers come and go.

At this stage, the risks of bucking the status quo are more structural than personal.

After all, Willie Nelson the man can roll with just about anything. Willie Nelson the institution is more brittle in some ways, slower and less nimble.

And the institution is exposed to different levels of pressure. Estimates of the net worth are in the $25 million range. The man can almost become a liability.

Willie’s Reserve under the microscope

Start with the family business. He’s appreciated cannabis for decades and once the legalization process started he was eager to play a commercial role.

His personally branded cannabis company went live in Colorado in 2015. Since then sales have spread to Washington, Oregon, Nevada and now California.

Private equity jumped to give him and his partners cash. From industry rules of thumb, this year’s funding round values the enterprise at maybe $400 million.

But the energy around that round has been a little jagged thanks to the regulatory rollercoaster in Washington. 

The business is legal where it’s legal. On a federal level, the Attorney General still considers it a crime. That’s enough to spook both big funds with strict risk parameters and little ones that simply can’t afford to get caught in the red tape.

As a result, despite all the buzz around Canadian cannabis lately, movement around Willie’s Reserve has been a drag. 

A $12 million offering opened up a year ago finally closed early this year. A $32 million followup is working its way through the market now.

The process can be precarious. This is probably not a great time to insert a volatile principal into the headlines.

Turning Willie into a institution is the whole reason this company exists. It’s a way to monetize his personal brand and outlaw reputation.

Outlaw founders rarely prosper on Wall Street. Reading between the lines, I think that’s a reason he’s never listed in the company filings despite his name being the main draw.

If Willie’s politics start irritating the people who control the licenses and the financial side, they push back. Scrutiny on a legal grey area builds. Idle threats turn into test cases.

That’s just how enforcement works. Maybe the institution is built to call the bluff, but staying in the game can be expensive and frustrating.

Either way, now is probably the time to keep a low profile. Finish the round. Ride out one more twist on the regulatory rollercoaster.

In Willie we trust?

Of course Willie Nelson does what he wants. He backs the causes he likes and supports the politicians he believes in.

It’s always been central to his brand. Arguably that integrity is part of the reason there’s even a legal cannabis industry and a business to defend right now.

And he’s backed causes in the past. People tell me he still spends a fair amount of time in Washington working with the successor organization to Farm Aid. 

He took Farm Aid seriously. He’s already visible in legislative circles. One more senator here or there isn’t going to change his long-term profile or his legacy much.

Back then he was already in the early stages of a long fight with the IRS. He arguably won that one via extremely unorthodox, even unique tactics.

But that was close to 30 years ago. And it was just him and his personal toys then — the golf course, the ranch, the Hawaii house, the guitars. 

Friends made sure to grab each piece of his life when it came up for auction and get it back to him, sooner or later. 

He’s got to have better management now than he did back then. The tax profile is probably rock solid. If not, it’s malpractice.

After all, you’re looking at a man who’s already fought the agency over a cloud of bad tax shelters and come up smiling.

Now he’s engaged in a cash business with accounting rules that don’t always line up to federal expectations. It’s like touching up the paint on the target on your back.

And he lives in Texas and Hawaii, which aren’t full “recreational” states yet. He probably has doctor’s notes for his personal use, but doing business takes things to another level.

I suspect that’s part of why he’s a low-key figure in the corporate filings. The Colorado people are front and center there.

Keeping him out of the loop probably protects him from blowback. It’s a good thing. His advisors are doing their job.

And in theory it protects the company. His friends in Colorado can always distance themselves from him even if it means alienating his fans, their customers. 

It’s always a tricky business, negotiating the scale between the man and the myth. 

Of course that's what a trust is for. Should he have kept the songs and the property in trust decades ago?

It wouldn't have saved him from the IRS, but it would create a nice layer of distance between his gestures and the legacy he wants to leave behind . . . to his kids, to his shareholders.

Does he have a trust now? The private equity stage is a great time to do that. The assets aren't valued high so he can squeeze a lot of founder's stock into the exemption limits. 

He's also in estate tax territory and he's 85 years old. He might not hate the IRS, but the prospect of handing them millions more than necessary should burn him.


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