Seattle-based marijuana strain and dispensary review startup Leafly is raising cash, but not with breakneck growth mind: the startup is simultaneously implementing a company-wide effort to limit spending and slow down hiring.
A new SEC filing reveals that Leafly recently raised $2.3 million in a convertible note round.
In a company memo, first reported by Business Insider and confirmed by a company spokesperson, CEO Tim Leslie told employees that Leafly would be taking cost-control steps like cutting non-essential travel, pausing hiring and pulling back on its holiday party. The company has already used up its annual travel and expense budget, and will only hire for product and engineering roles through the end of the year, Leslie said.
Leslie indicated the moves were necessary to integrate the 150 new employees who came on board in the past seven months — doubling the size of the company in the process. He asked employees to better manage their budgets, saying: “We need to lean into our guiding principle of acting like an owner.”
Leslie is a former Amazon Prime Video executive who joined the company in March following the removal of former CEO Chris Jeffery last year.
The hiring pause is an abrupt deceleration for Leafly, whose rampant growth was encapsulated in plans for a Seattle headquarters that is more than triple the size of its current downtown office.
The news follows announcements from other major cannabis companies to lay off employees. PAX Labs, the maker of popular marijuana vaping products, recently cut a quarter of its workforce. Weedmaps, Eaze, Hexo and Canntrust also announced cuts in recent weeks.
Leafly’s website and apps connect people who are looking for cannabis with retailers and brands. It also publishes cannabis-related news and was behind a recent investigative report into illegal, contaminated THC vape cartridges.
The company launched more than a decade ago and is now riding a massive wave of interest in cannabis as legalization of recreational and medical marijuana increases. Funding for cannabis companies more than doubled from 2017 to 2018 to $1.3 billion, according to Crunchbase.
Leafly has been operating as an independent company since February when it was spun out of former owner Privateer Holdings, a Seattle-based private equity firm. Privateer is in the midst of a merger with cannabis company Tilray, one of its portfolio companies.
Earlier this month, Leafly launched a cannabis guide that uses data and design to help people better understand marijuana effects.