According to website TechCrunch, the rapper, whose real name is Calvin Broadus, is looking to raise $25m to get the fund going. Previously, Broadus has backed the likes of news aggregator Reddit and stock trading platform Robinhood.
His move to create a dedicated marijuana fund follows the ongoing legalisation of the drug in the US. Since California made its medicinal use legal in 1996, 22 other states have followed suit. There are also four US states, Washington, Colorado, Alaska and Oregan, that have legalised the recreational use of marijuana.
Figures from investment portal CrunchBase found that 29 venture capital investments were made during 2014 in the cannabis space, representing $90m committed.
Businesses such as Weedmaps, which is described as a Google Maps-type service for finding marijuana dispensaries and MassRoots, a social network for those interested in the space, have emerged in recent years.
Broadus has long been an advocator for the full legalisation of marijuana, and has apparently been certified for medical use in California since 2007 to treat migraines that he has. In 2012, he was banned from entering Norway for two years after the drug was found in his luggage as he looked to attend the Hove music festival.
The coming together of businesses and celebrities has grown in prominence during recent years. In November, Real Business profiled five well known personalities that had joined the boards of global businesses, including Al Gore at Apple, Alicia Keys at BlackBerry and Ashton Kutcher at Lenovo.
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Sources told TechCrunch that Broadus investment fund will not be backing businesses in the production and cultivation side of things, but rather those using technology to build a service.
The rapper, whose back catalogue dates to the early 1990s, has not yet come out to confirm or deny the development.