Navigating the landscape of payments in the cannabis industry presents a unique set of challenges, marked by regulatory hurdles and the inherent complexities of handling transactions in a rapidly evolving market. From the intricacies of compliance to the limitations of accessing traditional banking systems, stakeholders in the cannabis sector are constantly grappling with the need for secure, efficient, and compliant payment solutions. The delicate balance between federal and state regulations further adds to the complexity, requiring industry players to seek innovative approaches to streamline payment processes while ensuring adherence to the ever-shifting legal framework.
In a recent interview with MyCannabis, Ryan Himmel, the Head of Corporate Development at LeafLink, shared insights gained from his extensive experience in the payments world and shed light on the significance of addressing payment challenges within the cannabis industry. LeafLink, renowned as the go-to wholesale cannabis platform, is at the forefront of revolutionizing B2B transactions in the cannabis space. Offering a comprehensive suite of solutions, including the LeafLink Marketplace, Ads platform, Market Insights, and Payments solutions, LeafLink aims to empower cannabis businesses to digitize their transactions, eliminate redundancies, and foster growth. The interview delves into the pivotal role played by LeafLink in facilitating secure and efficient transactions within the cannabis industry, demonstrating how their payment solutions alleviate the pain points associated with cash transactions, regulatory complexities, and bookkeeping challenges.
As a brief intro, can you tell us how your career path led you to the cannabis industry?
Overall, I've spent the better part of my career in technology and financial services primarily focused on supporting small businesses. Early on in my career, I had what I would call “career building type jobs” at organizations such as PwC as well as at Cowen and Company on Wall Street. This enabled me to build key skill sets around financial statement analysis and understanding the mechanics that go into growing a business. From there, I spent about 8 years as an entrepreneur building a marketplace focused on serving small businesses and tax accountants using data driven marketing approaches which scaled quite well. That led me to Xero which, at the time, was growing its presence in the Americas but looking to leverage the scale of large financial partnerships to really grow the business.
At Xero, in addition to leading a cross-functional team of 15, I secured deals / integrations with some of the largest T1 financial institutions in the US on use-cases critical to small businesses which include streamlining data aggregation for reconciliation, integrating payments into the invoicing and billing workflow as well as leveraging financial / behavioral data to surface credit insights / opps to our customers. I’m highlighting Xero here because all of the opportunities we are focusing at LeafLink compare closely to what we did at Xero.
Fast forward to today, to be honest, I didn't envision my career really entering the cannabis space, but had developed a rapport with a peer while I was an entrepreneur about 13 years ago which led to an introduction to LeafLink in helping them scale their financial services and partnership motion. After doing some of my own diligence, I felt as though there was a significant opportunity to leverage some of my previous relationships / experiences to build the foundation for opening up access to financial services in the cannabis industry and eventually bringing payment and broad based financial services onto the platform. My role has since expanded to cover broad based Corporate Development.
LeafLink has become a major player in the wholesale cannabis industry, with over $5 billion in annual orders. What factors do you attribute to this impressive growth, and what unique value does LeafLink bring to the cannabis marketplace?
Our growth really started from the early days when our founders went into the Colorado market to understand the challenges both brands and retailers experienced in facilitating commerce due to a lack of enterprise technology tools. There was no easy way for licensed brands and retailers to find each other (match making) and the industry is a cash heavy one. Capital was, and still is, difficult for businesses to access like loans, credit, investment, etc. It was hard for retailers to reliably access inventory and even then, compliance was difficult to manage.
Our mission ever since has been to power cannabis commerce which we’ve achieved across many states and through a cohesive platform which includes the unique opportunity to manage the lifecycle of wholesale ordering, financial services, and logistics – all in one place.
In such a highly regulated industry like cannabis, building partnerships with financial services, technology, and logistics providers can be challenging. Can you elaborate on the strategies and approaches that have made LeafLink successful in creating a seamless and compliant embedded finance platform?
Our partnership and corporate development playbook mirrors a lot of the learnings I’ve had in prior lives in technology and as an entrepreneur. Fundamentally, any partnership or strategic opportunity we evaluate must align to a core strategic initiative for the business. The interesting challenge that we’ve been successful at has been in engaging and partnering with the more sophisticated financial institutions and other technology providers that historically shy away from cannabis space due to compliance, legal or concerns around optics. We’ve particularly had a lot of success in having those organizations trust us and understand that LeafLink has built a world class platform.
We believe that removing cash from certain areas of the cannabis industry will be a major milestone and allow the industry to move forward. There are of course barriers to this that need to be resolved but we are actively pursuing ways to do this. Cannabis companies need a safe and reliable form of handling payments and electronic payments are the safest and most compliant way to complete B2B transactions. One of our strategies is to solve this need for a safe place to transact with our own solutions, like Direct Pay, and build that into our platform seamlessly.
The cannabis industry is rapidly evolving, with changes in regulations and market dynamics. How does LeafLink stay adaptable and responsive to these changes, and what role does corporate development play in this agility?
We have a team of experts that have strong roots in evaluating cannabis and other collary industries (e.g. Alcohol, Tobacco). It helps us be at the forefront of all these changes and as a technology organization, we are nimble and agile. We spend a lot of time listening to market and customer needs and we take that feedback and apply it to our solutions whenever we can. The corporate development team is critical in identifying opportunities that further our mission of powering cannabis commerce.
With over 8,400 retailers and 3,700 brands and distributors connected on the LeafLink platform, what initiatives are in place to ensure that all parties have a positive experience and can leverage the platform's full potential?
LeafLink is known for its Marketplace but we also have several other solutions that are growing in popularity. If you’re on our platform, know that we are always trying to improve and offer ways of resolving hurdles and remove redundant, time consuming work while also helping you grow your business.
Marketplace: The LeafLink marketplace is the real enabler for our customers. It’s a highly efficient way to sell and buy products, it's secure, and it’s trusted. We’re proud to say that many of our customers rely on LeafLink for their day-to-day operations and we’ve facilitated over 50% of wholesale transactions in the industry. We’ve spent a great deal of time figuring out how we can remove redundant and time consuming processes from customers day-to-day so they can do more with less time.
Ads: Our product offerings remain strong performers and we’re seeing growth in certain solutions as the market matures – for example Ads. Advertising in cannabis is notoriously tricky given the many restrictions platforms have in place. We’ve been working really hard to come up with a solution to effectively grow brand awareness for our customers through our Ads platform. As businesses mature and see the value of running Ads, we have a solution to help get their products on more shelves.
Market Insights: Data insights are so important for businesses and historically, cannabis data has been unreliable or not really available. The LeafLink platform is able to give our customers the important data they need to make better, informed decisions. Whether that is looking at historical sales data for major holidays or what product categories are on the rise in their state.
Payments: Cash is messy and regulations are hard to track, LeafLink’s payments solutions take the pain out of payments. Streamline your payment workflow, get paid in full on delivery, mitigate the risks of dealing with cash, and close the books quicker.
As the industry's wholesale platform, what are the upcoming trends or innovations in the cannabis space that LeafLink is particularly excited about, and how will your team work to stay at the forefront of these developments?
Like the rest of cannabis, LeafLink entered into a new phase and brought the focus back to our technology. We’ve narrowed our focus, making significant progress in one – how people buy and sell wholesale cannabis, two – we've simplified, digitized, and secured the procurement process, and three – helped businesses manage their finances better so it's easier to pay, get paid, and borrow funds as needed. We think that a platform built around providing a unified source of truth is the path to a more successful industry and that form of innovation is crucial for cannabis. Like I mentioned, our team of experts have deep roots in cannabis. We are here because we believe in the positive power cannabis can bring to the world and that passion really drives our mission. We are always analyzing what trends are appearing and how that could fit into the platform.
What’s next for LeafLink?
We’re continuing to look at how we are solving problems our customers face on a regular basis. We’re doing this through a few ways like new product features and upgrades, new solutions, and more. We’re also tracking how payments and banking solutions unfold in the industry as it continues to be a huge hurdle for businesses. Overall though, 2024 looks like a pivotal year for LeafLink and we’re preparing in a great place to really be a powerful tool for businesses of all sizes to grow. One major item we continue to talk about is trust in the cannabis industry and how we build a stronger community that trusts each other. We refocused our efforts around our core technology with the goal of being the trusted place operators go to transact with each other.
It was a pleasure to have this conversation with Ryan Himmel, the Head of Corporate Development at LeafLink. Readers wishing to keep tabs on what Leaflink is doing are encouraged to do so through their website.