With the former president of Mexico beside him high up in Seattle’s tallest skyscraper, Diego Pellicer founder Jamen Shivley announced to the world last Thursday plans to turn his commercial marijuana company into the Starbucks of Pot.
So as Diego Pellicer commands the attention of the public — and potentially federal authorities — there is another medical marijuana startup purring along at a brand new office nestled in Seattle’s Eastlake neighborhood. But Leafly isn’t making noise with flashy announcements; rather, they’re making wallets fat and investors happy.
We wrote about the company last October, outlining its plans to professionalize a booming yet controversial industry with a crowdsourced review platform like Yelp and Consumer Reports, but instead for medical marijuana strains.
Things have been going well since then for Leafly, which makes most of its money through advertising packages to dispensaries and other companies that run anywhere from $195 per month to over $3,000 per month. They’ve just moved into new digs, have been on a hiring spree and are reaching nearly 2.5 million website hits per month. There’s even a Leafly storefront now.
The startup is also close to raising another round this month, which would put total funding up to $7.2 million. Pulling in cash is certainly one thing, among many others, that has changed dramatically since Leafly started three years ago. The attitudes of many potential investors did 180-degree turns once recreational marijuana was recently legalized in Washington and Colorado.
“A lot of people thought we were pretty crazy when we started,” said president and co-founder Brendan Kennedy. “People sat on the fence and waited until November 6th. When they woke up November 7th, we seemed a lot less crazy. Now, we’ve spent a lot less time doing pitches and have been mostly waiting for investors to find us.”
Those investors aren’t all pot-smoking, cannabis connoisseurs, either.
“If you put all of the investors in a room, they wouldn’t agree with each other on most political topics or even most social topics,” explained Kennedy, a Yale grad and former managing director at Silicon Valley Bank. “But they all are interested in ending the harm caused by prohibition.”
It’s no wonder investors are now opening their wallets — Leafly’s business is ripe for growth when literally anyone can go to state-controlled cannabis shops later this year and buy pot. Want to know what strain will keep you from being a coach potato? Trying to avoid the bud that dries your mouth out like a desert? Leafly does all that already, and will continue to do so as marijuana becomes legal.
The website also serves as a map for medical marijuana patients to locate more than 3,000 dispensaries. Just like they do now, Leafly plans to add all the places that will sell recreational marijuana starting in December.
“[Leafly] is a model that’s successful in the medical states, but will thrive under the changes in law in Colorado and Washington,” Kennedy said.
Kennedy, along with Michael Blue and Christian Groh, run a private equity holding company called Privateer Holdings, which was started specifically for this industry and wholly owns Leafly. The founders, who recently added I-502 Outreach Director Tonia Winchester to the team, are looking at a list of about a dozen potential additional acquisitions around the country, from the online-world to product-focused and even the retail space.
Kennedy is quick to point out that “we will never have a chain of retail locations,” like Shively’s Diego Pellicer wants to accomplish.
“But if Diego Pellicer opens up dispensaries, we’d be glad to list their retail locations on Leafly,” he added.
It’s not all gravy for Privateer Holdings, though, with the federal government still classifying marijuana as an illegal drug. Banks and security companies are weary about entering the industry, and a tax code exists that forces dispensaries to give back a large chunk of profits to the governments.
Still, the general public seems to be warming up to the idea of legal marijuana. Pew recently released a report that showed a majority of Americans supporting legalization for the first time in more than 40 years.
Kennedy and his team have that going for them, along with a whole lot of support.
“This is different from any startup I’ve done, in that everyone is rooting for us,” he said. “All of our investors are rooting for us, all of our consumers, all of the patients who use Leafly, the dispensary owners, our external team — they are all rooting for us to succeed because everyone realizes the harms caused by prohibition and the need for social change.”
Previously on GeekWire: What legalization means for a medical marijuana startup