Exclusive Interview with Leafly CEO Yoko Miyashita
Leafly (NASDAQ: LFLY) is an online cannabis marketplace. The company connects cannabis retailers, brands and consumers on a platform for ecommerce shopping and education. CEO Yoko Miyashita spoke to New Cannabis Ventures about the company’s mission in May. At the beginning of 2023, she reconnected to share updates on the company’s evolving platform, its market penetration and how it is navigating the challenging dynamics of the cannabis market.
Listen to the entire interview or read the summary below:
Leafly’s Delivery Service
In May, Leafly relaunched its delivery gateway to offer consumers an end-to-end delivery experience. The delivery offering has grown significantly since then, particularly in markets where the company has been historically challenged, like California, according to Miyashita.
The company is also developing partnerships to support the growth of its delivery offering. For example, it is has partnered with food delivery platform Uber Eats in Ontario. Leafly is aiming to be the bridge between consumers who want to order food and cannabis from local retailers. While that market has faced challenges, this partnership can be a real source of new business for retailers, according to Miyashita.
Thus far, the partnership is serving approximately 30 stores. Leafly’s partnership with Uber Eats is in its early days, but Miyashita is looking forward to expanding it in the future.
The company continues to build on its platform, offering more tools for its users. For example, it recently introduced Marquee Ads–retailer-specific ads placed on Leafly’s highest traffic pages and strain lists. The company has seen a promising uptake, and it plans to continue expanding that product offering.
Over the past 18 months, the company has been exploring data and audience extension products. The team is aware of how valuable consumer insights are for retailers. It is actively considering the possibility of establishing strategic partnerships with cannabis data providers to develop co-branded data offerings.
The Leafly team refers to its market penetration strategy as “land and expand.” When the company brings its marketplace platform to a new market, retail acquisition is essential. It needs retailers on the platform to offer consumers the choice they want. In any given market, the company aims to have 70 to 80 percent market penetration in the retail space.
Miyashita shared insight into the company’s approach in two adult-use markets: Montana and New Mexico. The company reorganized its sales teams, adopting a local, go-to-market approach. It has account executives and customer success managers on the ground leveraging their local expertise to build relationships with retailers.
Working with Brands
Leafly also works with cannabis brands. While there has been some market normalization over the past year, Miyashita still sees plenty of significant cannabis brands with dollars to spend. She believes these brands are looking for comprehensive, consultative partnerships that can help them reach the broadest audience possible. The company is looking for ways to be that partner by showing brands how it can drive performance and add value.
The company works with brand partners. It has partnered with gummies brand Wyld in a couple of states and premium cannabis brand STIIIZY in Arizona. The latter was an early adopter of Leafly’s menu merchandising product. The company focuses on delivering valuable insight on traffic, click-through rates and product performance.
Over the past 18 months, Leafly has been in investment and growth mode. Now, it is shifting to optimizing the enhancements it has made to its platform. But organic growth remains an opportunity. More markets will open up; more licenses will come online. The company also has the prospect of growth through partnerships, like the one it has with Uber Eats.
While the M&A landscape remains interesting, the company is not actively pursuing deals. Rather, it is remaining watchful for any accretive opportunities that would help it to better serve its retailers and brands, as well as cannabis consumers.
Leafly has plenty of room to grow in markets it has underpenetrated, according to Miyashita. While she knows there is competition in the market, the company is more focused on leveraging its unique position as a cannabis educator with nearly 13 years of experience in the industry and helping its retailers and brands grow.
In October, Leafly named Carlos Pinto its new Chief Commercial Officer. Pinto comes to the team with extensive experience working in digital media and technology services. His appointment brings the company’s sales and marketing teams under a single leader, helping it be more efficient as it executes, according to Miyashita.
Cost Reduction Strategy
Leafly also announced a cost reduction plan to improve its financials in October. While it was a tough decision to make as a leader, the plan was reflective of the challenging environment, according to Miyashita. Growth at all costs is no longer viable, and the company needed to embrace sustainable growth. Going into 2023, the company has reduced its burn and focused on extending its cash runway to execute on its upcoming opportunities.
The company has pivoted to eliminate the need for outside funding. For now, it is in a comfortable position to achieve its goals. But becoming public gave Leafly the opportunity to access capital, which it would consider doing when the environment becomes more favorable.
Leafly’s stock has been below $1 for a while, which may mean a reverse split is on the horizon. The company is open to all options while recognizing that the market is fickle and subject to significant swings, according to Miyashita. For now, the team is not hyper-focused on what happens in the stock market.
The company plans to release earnings and projected 2023 numbers in March. This year, it will be putting the foundation it has built over the past 18 months to work. It has significant optimization opportunities ahead of it, as well as organic growth. The company is looking at new markets and new licenses issued in states like Illinois. It has ambitious goals for the year while acknowledging that 2023 will likely still be difficult.
Execution remains the company’s priority. While the industry is facing challenges, Miyashita is bullish on continued momentum, as well as indications that cannabis will be a recession-proof product. Regardless of what happens in the macro environment, the company is committed to connecting retailers and brands to consumers to ensure it is delivering value.
To learn more, visit the Leafly website. Listen to the entire interview: