It looks like Leafly is rolling up some green in a new round of funding, which is bound to spark a little reefer gladness at the cannabis strain guide, dispensary review, and ecommerce company.
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Filing paperwork with the Securities and Exchange Commission this morning, the company disclosed it has closed $2.32 million of a $25 million round of funding. According to the filing, the new capital comes in the form of debt and options contracts which would grant Leafly’s creditors the right to acquire company securities at some unspecified date in the future.
Crunchbase News reached out to Leafly for comment, but did not hear back prior to publication. This article will be updated when we hear back.
Leafly was founded in March 2010 and was acquired by cannabis-focused private equity holding company Privateer Holdings in December 2011. It’s unclear how much capital Privateer Holdings invested in Leafly over the years, but the firm has raised over $200 million from its financial backers including Peter Thiel’s Founders Fund.
Leafly was spun out of Privateer Holdings in February 2019 and is once again an independently operating venture. The new capital comes at a time when Leafly is trying to pare down expenses as it finds its bearings as a rapidly-growing company under new leadership. Tim Leslie took over as Leafly’s CEO in March. Prior to Leafly, Leslie most recently led Amazon Prime Video’s global expansion efforts as the last act of his 20-year tenure at Amazon.
Last week, Business Insider obtained and published an internal memo Leslie sent to the company, notifying current employees of a hiring freeze and requesting that travel that is not business critical be either cancelled or postponed. Leslie wrote that the company has doubled in size, adding 150 people to its organization in the past seven months, since he took over as CEO.
Headquartered in Seattle, Leafly will not be flying satellite staff in for its end-of-year holiday party. Remote staff and those working in Leafly’s local offices will instead be flown out for the company’s summer party next year, and each local office will host its own holiday party. For the holiday season, fully-remote employees will “be receiving a gift certificate to take yourself and a friend or significant other out for dinner.”
Leafly may be putting a pause on hiring for all but the most important engineering and product roles right now, but there was no word of layoffs.
Competition is fierce in the legal cannabis recommendation business, which has grown rapidly as more states opt to legalize the plant and its derivatives. And it’s looking like a winner-take-most niche in the industry. Leafly’s principal competitor, Weedmaps, announced layoffs of 100 employees (approximately 25 percent of headcount) two weeks ago.
Though most states allow for some type of cannabis use, most often on medical grounds, expansion of the market has been somewhat slow over the past year or two. THC-containing cannabis remains federally illegal in the United States. Though the current U.S. administration is unlikely to liberalize federal drug policy, several Democratic challengers are promising to reschedule or fully legalize cannabis if elected in 2020 which would usher in a new wave of growth for the industry.
Illustration: Li-Anne Dias