October 8, 2021 8:00 AM
 — 
3
 min

Leafly

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Founded in 2010, Leafly operates an online trading platform for the North American legal cannabis market. The company's service helps customers learn about all the cannabis products featured on the platform. On the other hand, licensed manufacturers can post information about their products with the option of selling. Leafly's mission is to provide maximum customer information about products in terms of safety, recreational value and quality in the burgeoning cannabis market. On the other hand, the platform allows you to single out individual manufacturers based on a rating system, which helps to increase audience loyalty. Leafly says the platform is used by 125 million people a year and 7,800 independent vendors.

The company's revenue comes primarily from the monthly subscription fees paid by cannabis sellers to list their products on the Leafly platform. More than 55% of all North American licensed cannabis growers currently use Leafly's SaaS services, according to the company. The company also makes money from advertising. It is expected that Leafly's revenue by the end of 2021 will amount to $ 43 million, and by the next year the figure may grow to $ 65 million. It is expected that the company will enter net profit closer to 2024. In February 2021, Leafly announced a new strategic partnership with Jane, an online cannabis promotion platform. The union of the two companies, according to the management, will cause an explosive growth of online orders across North America.

Over a decade of operations, Leafly has raised $ 47 million in two investment rounds in May 2020 ($ 15.5 million) and June 2021 ($ 31.5 million). In early August, it was revealed that Leafly had made the decision to go public through SPAC in its deal with Merida Merger Corp, which raised $ 120 million through a 2019 listing. The indicative terms of the deal indicate that Leafly could be valued at $ 532 million, while the company could raise $ 161.5 million, which is planned to be used for platform scaling and marketing goals. Following the merger with Merida Merger Corp, the main shareholder of Privateer Holdings will continue to own a 72% stake. Leafly is expected to be listed on the Nasdaq by the end of 2021 under the ticker LFLY.

We believe the Leafly placement will be accompanied by strong demand as the cannabis market grows and the expected easing of legislation in individual states. Leafly has an important role to play in connecting consumers and manufacturers as they cannot advertise on social media under US law. Among the main risks, it is worth highlighting the growing competition in the cannabis market, including among online trading platforms. Among the positive drivers for publicly traded companies in the industry could be the launch of the new Roundhill Cannabis ETF in November.


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