Seattle-based online cannabis marketplace Leafly has closed $23 million in new funding, GeekWire confirmed with the company. The fresh cash infusion comes as the cannabis market sees an increase in sales as more states legalize pot and dispensaries were declared essential businesses during the pandemic.
The startup plans to expand its online marketplace that lets customers and retailers buy and sell cannabis. Leafly also serves as an educational resource. The platform has 120 million annual visitors.
The funding will be used to add to the company’s 160-person workforce and follows a series of layoffs over the past few years.
In January 2020, Leafly cut 18% of its staff, or 54 positions, which then-CEO Tim Leslie attributed to “market realities of the technology and cannabis sectors.” It cut 91 more employees two months later, citing the uncertainties caused by the coronavirus pandemic.
Leslie, a former Amazon exec who was Leafly’s CEO for less than two years, is now a founder of a farming nonprofit called Living Roots.
Leafly spun out of Seattle marijuana investment firm Privateer Holdings in 2019.
The company’s revenue primarily comes from a monthly subscription fee paid by cannabis retailers to be listed on the platform and to access e-commerce tools. It also makes money from advertising.
The cannabis industry saw a 71% increase in sales in 2020, according to Leafly’s report based on marijuana state tax and revenue records. Americans spent about $18.3 billion on cannabis products last year.
Leafly said marijuana legalization trends are accelerating the cannabis market. The company will use the new funding to fuel marketing on the east coast, where several states have legalized marijuana recently.
Recreational marijuana is legal for adults in 16 states and the District of Columbia. Medical marijuana is legal in an additional 20 more. Some of these changes were made this year, with New York legalizing pot on March 31, and both Virginia and New Mexico passing similar legislation, which will take effect this summer, according to Insider.
Other companies are responding to the trend — tech-giant Amazon just announced it would stop screening certain job applicants for drug use, and it backed federal legislation that would legalize and decriminalize pot.
Investors are also getting on the cannabis boom. Dutchie, an Oregon-based cannabis e-commerce platform, announced $200 million in new funding in March. The company was valued at $1.7 billion.
Another cannabis company, Weedmaps, went public and officially began trading on Wednesday.
Leafly has raised $38 million in total funding. The recent round was led primarily by existing investors, but Leafly didn’t disclose specific firms or individuals.