LeafLink Inc and Canopy Rivers Inc (CVE:RIV) Join Forces to Launch International Expansion

LeafLink Inc Co-Founder and CEO Ryan Smith provides an introduction to the company and details of its recent deal with Canopy Rivers Inc (CVE:RIV) (OTCMKTS:CNPOF). LeafLink is a cannabis wholesale marketplace featuring 950 brands and 2800 retailers. The B2B platform is available in 16 territories and generates profits through monthly hosting fees charged to companies using the platform. LeafLink and Canopy Rivers announced a joint venture to bring LeafLink’s cannabis supply chain e-commerce platform to additional legal cannabis jurisdictions internationally. LeafLink completed a Series A financing 18 months ago and the private company currently has no plans to go public.

Transcript:

James West:   Ryan Smith, co-founder and CEO of LeafLink Inc. joins me now. Ryan, how are you?

Ryan Smith:   Doing well, thanks for having us.

James West:   Good. Ryan, LeafLink has come out of nowhere, and suddenly, like, that’s quite a press release! It says in your, that you’re serving more than 950 brands to 2,800 retailers in 16 territories in the US. Tell me about your business.

Ryan Smith:   Yeah. So we’ve been hard at work here for just about the last three years, building a B2B wholesale marketplace, and our entire goal is to really streamline how the transactions happen between, as you said, retailers, dispensaries, and leading brands in the cannabis space.

James West:   Right. Okay, so you actually have – you supply 2,900 dispensaries currently?

Ryan Smith:   So the way our platform works is, we are a technology platform. So imagine there are brands and retailers like, for example, Kiva, Venice Cookie Company, Iguana, that sell their products using our platform. And then they handle, you know, the logistics and the delivery of that product. So we’re not warehousing or physically selling it ourselves, but we’re providing the connections online for people who are.

James West:   Ah, I see. So, do you – how does the economics work? Do you get a cut of every transaction?

Ryan Smith:   Yeah, so there’s a few revenue lines that we have on the platform. To date, we’ve been really a stats-enabled marketplace, so we charge a monthly fee to brands to be on the platform. We recently have now had opportunities, as well as a few other revenue lines coming around about moving capital. So there’s some limitations around taking a straight transaction piece, so we haven’t historically done that.

James West:   Sure. And how does your collaboration with Canopy Rivers work?

Ryan Smith:   Yeah, so it’s a really exciting joint venture that we’re excited to be a part of with Canopy Rivers, in that they have this incredible strategic network that they can tap into on, I think over a dozen countries that they are launching an operations in with Canopy Growth. And then from our side, really exciting that we’ve built this technology with in hand all of our partners that are already live in the space and have been working hard to scale their own businesses. So in this very complimentary relationship now that can bring all those learnings on both sides to these new markets; that’s really the goal behind it, and it was a perfect, you know, strategic investment from both companies to help achieve that.

James West:   Fantastic. So then, what is the next sort of stage of evolution for LeafLink and, in the context of the Canopy Rivers partnership?

Ryan Smith:   Yeah, so obviously now that we have these, you know, great partners with an international footprint, we’ll be looking to, and strategizing over the next couple of months, on how to open up operations and bring the things that we’ve created for the supply chain domestically, to these international markets. And what’s exciting about that is, we’re really now building in efficiencies that some of these international territories may not need to make mistakes over the next two, three, five years; we can bring them these solutions right from the get-go, and that will allow companies to continue to grow mainstream in the industry. And then which countries we pick – you know, all this is to be determined and set out – but obviously, you know, Canada, Germany, UK, are the ones amongst the top of the list.

James West:   Does the association with Canopy Rivers imply that you have to give Canopy Growth products a preferential treatment in the context of your relationship with them?

Ryan Smith:   Absolutely not. So the whole reason this deal made sense from us as an ancillary technology company as a marketplace, is that we are working with the venture arm of Canopy Growth, which is Canopy Rivers. So for us, they will receive no special treatment than any other partner/investor that we have. Our goal is to really create this agnostic, fair marketplace; that’s what we’ve done to date and will continue to do, now just alongside, you know, some new partners that have this complementary benefit we could keen to.

James West:   Mm-hmm. So this is basically the infrastructure on the IT side for vendors of cannabis products to keep their supply chain running at optimum perfection?

Ryan Smith:   Exactly. Like, if you think about the way you or I purchase things online when we’re home, B2C marketplaces are everywhere. And then we go to work and there are these really antiquated B2B legacy supply chains that, they’re just, you know, there’s no online marketplace to use.

Part of what’s exciting and we’ve created here at LeafLink, and we’ll look to now move internationally expanding, is that you can go to work in this new industry and we will really begin creating and defining how the supply chain should work in a very efficient way, tech first. So like, what does that look like in two or three years in this very new space, inherently progressive, tech-first community? That’s what we’re looking to build.

James West:   And I see you also have a human resource component in the form of your services marketplace listing. How – is that a core part of the business, or is that something that you’re just recently adding to the mix?

Ryan Smith:   Yeah, there’s a number of features that we’re trying out. So services marketplace is historically LeafLink really connects brand producers, product producers, with those retailers’ physical items; we’ve really taken a bet on leading brands, CPG skus. But the services marketplace is a way, more similar, probably, to a Yellow Pages, where you can, if you’re a lawyer, a consultant, or some other, an accountant, but you serve the space, in pursuit of our goal of helping other companies grow that are on the LeafLink community, they can now go here and find vendors of those, you know, non-physical services. And that’s what the services marketplace is. It’s one of a number of new features that we launched that we’re really testing the waters on to see if it makes sense for what industry is growing, how LeafLink’s growing.

James West:   I would think that this mix of incoming data from 750 vendors in 20 – sorry, 950 vendors and 2,800 retailers has got to generate a lot of data, and is there a – there must be a revenue stream coming from that too, I would think?

Ryan Smith:   Yeah, it’s a great question. So one interesting element of the data that we’ve, you know, we’ve processed now, almost a $1 billion in transactions on the platform, and within that, we, you know, can begin to create some really powerful business intelligence tools for the community.

So we recently released a whitepaper on pricing differences in all the 15 different states that we’re live in. We also now have case studies that are tied objectively to metrics and data that we can share that companies that we work with are comfortable with us sharing; we get approval from everyone and everything, so that we can help catapult the industry forward.

And so yeah, there might be an opportunity down the line to begin to monetize that, but for us, that really hasn’t been the goal. It’s how can we take the information we have, brush it up, streamline it, make it digestible, usable, in a way, for people that are using LeafLink’s platform from the get-go.

James West:   Right. So this, your wholesale cannabis pricing guide is very interesting. There was another company that made an announcement today, I don’t know whether you saw it, about a wholesale cannabis marketplace called Cannamerx. Did you hear about that?

Ryan Smith:   Yeah, so, I think that name has come up. I mean, for the way we look at it is, there’s a mix of marketplaces and then quasi-marketplaces that are really more of a commodities exchange; I think some of these things are a little too complex for where the industry currently is. That could be, you know, an opportunity a few years down the line. But yeah, we try to, you know, stay tuned in with marketplaces that are popping up and those that make sense for us to work alongside. Like, we’re not trying to be everything to everyone; we really want to own this marketplace portion of the supply chain, and then people that are building great other data tools, ERPs, whatever it might be, we want to work alongside them just to help our clients continue to achieve their goals.

James West:   So I’ve heard that the market in Oregon, for example, is 100 percent oversupplied with cannabis. And –

Ryan Smith:   Yeah.

James West:   So from where you sit, how does that market evolve without wiping out half of the cannabis suppliers and causing it to be unstable in terms of price and supply?

Ryan Smith:   We talk about this a lot at LeafLink. I mean, it’s interesting when you think about how regulators are creating these schematics of how supply chains are to operate. There are a lot of examples of successful ones, or more successful than others that they could emulate from other states; but for example, Oregon, like the example you just said, had an unlimited number of licenses effectively that could be gotten by anyone and everyone for a few thousand dollars. And what that’s done now is, you have this crazy oversupply. Most other states we serve have limited license counts, and I think that is what the industry and the market is saying makes the most sense.

The one for being positive on how incredibly underpriced cannabis has become in the Oregon market, is that we’re starting to see now some movement by Oregon regulators for state-to-state commerce, just so that they don’t let that oversupply go onto the black market. And so that could be an interesting positive progression, you know, a good from a bad type situation. But yeah, there’s still a lot of learning that’s happening in each state. And we want them to continue to speak to each other, because I think that’s the best way everyone could learn, you know, learn faster and not make the same mistakes twice.

James West:   Sure. LeafLink is currently a private company?

Ryan Smith:   Yeah, we’re a private company, headquarters in LA and New York, and you know, we raised our Series A about 18 months ago.

James West:   So at some point, will you serve the Canadian industry? I mean, I guess it doesn’t make that much sense, given the sense that it’s largely government-regulated – at least, government-administrated and sold…or does it?

Ryan Smith:   Most of it seems that way. What we’re starting to see, though is, in certain provinces, they’re taking on more quasi-private positioning, which will allow for stores and some brands to grow in the way we’ve seen them growing in the States. I think a lot of it is still being determined. The question that a lot of these provinces are going to have to figure out is, you know, there’s only so much state capital they can use to open up the number of shops, the number of brands, to yield the highest tax rate and properly regulate the space.

So what we’re hearing more and more is, there will be exactly what you’re saying: like, not too different from liquor, vertically integrated distribution in these Canadian provinces. But on top of that, to help it grow even faster, they’re going to be allowing some of this private capital to come in, and I think that’s ideally where our position will be.

But there is also potential to, you know, maybe work with regulators. We are trying to be compliant in every way possible to help them make their jobs easier and streamline the transparency they need to make sure everyone is following the rules.

James West:   Mm-hmm. Do you envision seeking a public listing on a public exchange at some point?

Ryan Smith:   Like any other startup, if it makes sense, we’ll do it. But we have a lot of growing to still do; private markets are incredibly supportive of the efforts that we’ve set forth, so it’s definitely not a near-term thing. We’re at first, you know, a technology company building great software for this space, and if we grow to the point, when we do, to publicly list, or it’s possible in the United States, something we’ll explore.

James West:   Yeah, you bet. Okay, Ryan, that’s a great introduction to the company. We will follow you with interest. Good luck with your efforts, and I look forward to learning more.

Original article: LeafLink Inc and Canopy Rivers Inc (CVE:RIV) Join Forces to Launch International Expansion

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