Tech Startup: The Priceline of Pot
Leafbuyer allows users to peruse prices and specials at dispensaries before they buy
WHERE: Greenwood Village
INITIAL LIGHT BULB:
With respective backgrounds in television advertising and technology, Mark Breen and Kurt Rossner met through their wives before they started brainstorming a new venture together.
After Amendment 64 legalized recreational marijuana in Colorado in 2012, the pair decided to go into the cannabis space. “We were looking for industries with massive growth opportunities,” says Breen, the company’s VP of business development. “Neither of us use the product.”
Rossner, now Leafbuyer’s president and CEO, says the goal was a company with “a very scalable business model and a recurring revenue model.”
The big question? Whether the company should be a supplier of “picks and shovels vs. the guys who do the mining,” Rossner says. “We chose the picks and shovels.”
The company has 25 employees and offices in Greenwood Village, Seattle and Los Angeles.
IN A NUTSHELL
“We’ve been called the “Priceline of pot,’” Rossner says.”We’re connecting consumers with dispensaries and product companies.”
Leafbuyer allows users to peruse prices and specials at dispensaries before they buy. Consumers typically land on Leafbuyer via Google or another search engine, then peruse its database of dispensaries on its website or mobile app. “That allows people to look in a very hyperlocal setting,” Rossner says. “They’ll be able to compare offers.”
Leafbuyer pulls prices directly from dispensaries’ point-of-sale systems and allows users to post special deals in real time. “It works well with dispensaries, because this is a crop, Rossner says. “It’s a plant. It has a shelf life.”
Dispensaries sign up for subscriptions that typically run $500 to $600 a month in Denver, but vary by location.
“We’re adding more products that complement this initial product,” Breen says. Rolled out in late 2017, the first is a pay-per-use text-messaging technology that’s already in use by a full 80 percent of Leafbuyer’s customers. “That allows the dispensary to have constant communication with that customer.”
Denver-based LivWell Enlightened Health has 14 dispensaries in Colorado and one in Oregon and uses Leafbuyer at all of them. “They’re an efficient way to get our message out to a wide range of customers,” says Chris Mapson, senior director of marketing.
Leafbuyer’s three-year plan forecasts $10 million in annual revenue for 2020. “A large part of that is going to be through acquisition,” Rossner says.
The differentiator? “We’re a professional management team versus companies with 22- to 25-year-old CEOs who have never done this before,” he says.
Next up: “We’re going to be overhauling our technology and incorporating blockchain into it,” Rossner says. “We’ll have clear and transparent visibility of any customer who goes into any store.” Leafbuyer has partnered with New York-based Wunderkind on the technology; a Leafbuyer cryptocurrency is a possibility.
Leafbuyer is currently operating in Colorado, California, Oregon, Washington and other states with legal recreational and/or medical marijuana. “We have about 25 percent market penetration [in Colorado] and low single digits in the other states,” Rossner says.
Analysts see the legal marijuana market topping $20 billion in the U.S. by 2020. Sales hit $1.5 billion in Colorado in 2017.
“Last year, we went public,” Rossner says (OTC: LBUY). “The strategic goal there is to have a big capital raise. We’re almost done with that.
“The ultimate goal is an uplisting on NASDAQ and hopefully an expansion into Canada,” he adds. “The appetite for this in Canada is going to be much higher because of the banking regulations.”