Exclusive Interview with Leaf Trade Founder and CEO James Yi and President and Chief Revenue Officer Michael Piermont
Cannabis ordering platform Leaf Trade focuses on the B2B supply chain and supporting compliant cannabis business. The company is in more than 20 markets across the United States, with an emphasis on highly regulated, newly emerging markets. Founder and CEO James Yi and President and Chief Revenue Officer Michael Piermont spoke with New Cannabis Ventures about how the Leaf Trade platform works, scaling with the complexity of the cannabis industry and the company’s path to growth. The audio of the entire conversation is available at the end of this written summary.
The Co-Founders and the Team
Prior to launching Leaf Trade, Yi started another B2B software company. When the medical cannabis industry launched in Illinois, he got his foot in the door via consulting. He learned the ins and outs of the regulatory environment and identified the wholesale transaction process as a major pain point in the industry. Companies were conducting wholesale business via texts, emails, phone calls and spreadsheets. Yi decided to use his experience launching a software business to bring a solution to the Illinois cannabis market in 2017.
Leaf Trade has been able to partner with some of the largest MSOs starting in Illinois, growing with them as they expand to other states, according to Yi.
Piermont has a long history of serving as a founder or an early employee of B2B marketplace and sales platforms. He worked with a number of B2B companies in the fitness space and spent time doing corporate development with Career Builder. Yi shared his vision with Piermont, and he saw the opportunity to leverage his experience building go-to-market plans and teams.
The co-founders highlighted other members of the Leaf Trade team, including Director of Marketing Katie Byrd, VP of Engineering Mike Palac and VP of Finance and Data Neil Block.
The Leaf Trade Platform
When Leaf Trade was first launched, the goal was to digitize and streamline the wholesale ordering process. The platform has grown to offer ordering, fulfillment and payment processing. The company is also rolling out a logistics platform. Cultivators and retailers are able to use the platform, knowing all transactions are done in accordance with state-by-state compliance requirements.
The Leaf Trade platform is also designed to integrate with multiple different systems, in order to streamline the customer experience. Customers can plug in other systems like QuickBooks, Sage and Salesforce.
Market Reach and Customers
Right now, Leaf Trade is in 22 states, soon to be 25. The company expects to be in close to 30 markets by the end of the year. It is growing 40 percent faster than the team had anticipated a year ago, according to Piermont.
A number of other companies are offering a similar service to Leaf Trade, but most of this competition is focused on established recreational markets out west, according to Yi. Piermont sees one other company that lines up on paper as Leaf Trade’s main competitor, but Leaf Trade has yet to lose a customer.
In many places, like the East Coast, spreadsheets are Leaf Trade’s main competitor. Emerging companies don’t necessarily realize they need a solution like Leaf Trade until they begin to grow, according to Yi. The Leaf Trade team works to start the conversation early with businesses in emerging markets, demonstrating the value of saving time via the Leaf Trade platform.
The industry consolidation taking place among MSOs and cultivators is helping Leaf Trade to grow. When one of its customers adds to its footprint, it adds more Leaf Trade accounts.
Leaf Trade has also been approached a number of times with potential M&A. The team is open to considering deals that will help customers in the long term, but the company will not execute a deal just so it looks good in the market, according to Piermont. There remain plenty of partnership opportunities, and Leaf Trade has plenty of runway ahead of it.
Federal legalization, when it comes to pass, will lead to more money in the cannabis space and more M&A, as tech companies aim to buy their way into the industry, according to Michael.
From a product perspective, the Leaf Trade platform has been built to be nimble, according to Yi. It currently accommodates the nuances of varying state regulations, but it could be adapted to handle interstate commerce if legislation allows that shift in the industry.
This spring, Leaf Trade closed its $5.5 million Series A. The company has a strong cap table and a history of efficient use of capital, according to Piermont. Now, it is focused on building out its West Coast sales team, led by Evan Stafford, and putting more resources into its product. Leaf Trade likes to be able to accommodate customer requests for new features. With the bandwidth to handle these kinds of requests, Leaf Trade ultimately adds key product features that serve many of its large enterprise clients. It is also ready to put capital to work to help really show off its brand.
The amount of orders placed on the platform is an important metric for the Leaf Trade team. The team drills down further to examine the number of orders customers are driving. Currently, 73 percent of orders are placed by retailers rather than sellers placing orders on behalf of their customers.
This year, Leaf Trade is targeting $3 to $5 million in revenue. That target will increase to $15 to $20 million next year. As the company’s revenue grows, so do its margins. The team is looking to offer more services to its existing customers, expanding their relationship from simply order management to also include payment, data services and logistics. Customers will find greater efficiency and cost savings when using a single platform, according to Piermont.
Leaf Trade is managing the challenge of launching in multiple markets at once while trying to add employees and preserve its culture. The platform must also keep up with the changing regulations in its new and existing markets. Ultimately, the Leaf Trade team continues to look for ways to make processes easier for their customers.
To learn more, visit the Leaf Trade website. Listen to the entire interview: