The Weedmaps business model comes from a technology company that serves the cannabis industry. The company was founded by Keith Hoerling and Justin Hartfield in 2008. Weedmaps is based in Irvine, California. It employs more than 400 people at the moment. The company also has offices in Tucson, Denver, Barcelona, Toronto, and New York. In the year 2019, Chris Beals was appointed as the CEO of Weedmaps. The earlier CEO Doug Francis stepped down from his responsibilities of running the company daily. He became the chairman of the organization.
Beals arrived at the WM tech leadership team having a solid background in serving as an advertiser for life science and technology companies. There is a lot in common between life science, and cannabis segments. Beals has a lot of experience in the quickly changing technology platforms. It helped make the WM Technology a fit naturally. Beals joined the executive team of WM including CFO Arden Lee, COO Juanjo Feijoo, CTO, CIO Justin Dean, and general counsel Brian Camire.
Weedmaps business model
The Weedmaps platform is popularly known all over the world and in the cannabis trade as a great marketplace. However, the Weedmaps business model is more than that. The organization has a growing selection of B2B and SaaS software business solutions.
The technology portfolio of Weedmaps consists of both the Weedmaps platform and the B2B suite of products. On the B2B front, the company offers things such as e-commerce tools for empowering retailers to support consumer search discovery. It also offers a point-of-sale software solution in retail.
Over the years the company has also added more things to its services. It acquired a cannabis delivery software solution called Cannveya together with the cannabis integration software CannCurrent. The company also acquired CRM and loyalty software organization called Sprout. On the marketplace front, Weedmap’s business model connects brands and retailers with the customers for facilitating orders.
The company has a great background in M&A. It helps the organization work through the post-merger integration and diligence process. On the technology front, the company has an onboarding ramp for its products. It makes the new technology integration a lot easier. Although these acquisitions by Weedmaps are not too old, they are helping the company build the ecosystem.
With the company offering a range of products, it also offers plans for brand and analytics solutions. If you consider brands, WM technology aims to offer solutions to manage brand catalogs. As far as analytics is concerned, the company is trying to leverage industry data they have to explore the possibilities of developing subscription-based services.
M&A and Market Reach
WM Technology has a great presence across several markets that have recently legalized the use of cannabis across the U.S. The legalization can be observed in countries such as Spain, Canada, Uruguay, and the Netherlands as well. There is a government relations and policies team in place for Weedmaps. It is led by the VP for government relations, Bridget Hennessey. The team works on starting new markets and focuses on legalization and social equity.
Weedmaps is also positioned with a public stock currency. This will be attractive for prospective acquisition targets. The technology offers smaller companies that are led by its founders a platform that allows their products to grow and evolve. The company has been on the lookout for a probable M&A for some time.
Weedmaps has a broad portfolio but the CEO brands it as a universe of one. The competitors Weedmaps has to face in the fragmented cannabis technology sector tend to be from the individual solutions that reside in a big portfolio. Weedmaps has plans for a broad integration. It is still trying to work with several other companies that are competing with some portions of the company portfolio.
The SPAC transaction
Late in 2020, Weedmaps announced its plans to go public on the NASDAQ business listings. This was to be done via a merger with another organization called SPAC or Silver Spike Acquisition Corp. The organization completed this deal in June 2020. Weedmaps had been in the cannabis delivery business for more than 13 years at the time. This makes it the second ancillary cannabis provider in the space. So, the going public made good sense in terms of better access to larger capital and differentiation for the company.
The route taken by the company via the SPAC deal was hugely appealing to the business due to the complexity of Weedmaps’s business model. This provided an opportunity to take more time for explaining why its business model is more compelling than other ones out there.
The IPO roadshow was a perfect opportunity to do this according to Beals. This transaction was carried out by using an Up-C structure. The shareholders from WMH LLC retained the equity stakes and had an opportunity of converting the stake into reserved shares in C-Corp.
This merger with SPAC allowed Weedmaps to continue scaling its organization and its marketplace in the U.S. and internationally. It was also a great opportunity to expand the functionality of WM Business Saas’s offerings to their customers. The Weedmaps business model is twofold. First, it pulls advertising revenues from the weed retailers that pay to reach out to the clients that are utilizing the dispensary finder of the website. Secondly, the company also sells a cloud-based OS that caters to the cannabis businesses.
Relationships with the investors and funding
In its 15-year history, Weedmaps has been profitable and bootstrapped. All things said and done; the company remains profitable as a public organization. According to Beals, the company has a sizable cash chest of $78 million. The company concentrated on getting funds from investor groups that are interested in investing in cannabis and technology. It used a high-touch strategy for advocating the business to display to the current and probable investors what it can do. Beals realizes that there is still the stigma lingering in the industry for using cannabis. But the company is working towards eliminating it.
Weedmaps reported $50.9 million in revenues in the 3rd quarter of 2021 and rose to more than $50 million in the 4th quarter. This revenue growth was as a result of moderation in spending with several other cannabis operators grappling with all kinds of competition coming via illicit markets. In the year 2020 WM Technology reset its revenues in Canada and it is now expecting to get help from monetization that will be available in the 4th quarter.
The company is expected to see a growth of more than 30% in 2022. But these expectations are based on multiple factors. Several factors such as new acquisitions, a greater range of products, a growth in the number of new clients, and new market openings are the different growth factors governing this rise. There are a series of new metrics the company will have to tackle with the growth. Client retentions, net dollar retention, client growth, GMV, active users, and cross-product adoption are some of them.
There is a broad range of products available with Weedmaps. Due to this fact, Weedmaps had the opportunity for an organic cross-product adoption. This is also providing the company an opportunity of deepening its ties with different cannabis brands.
Weedmaps will also have to face challenges going forward such as slow growth of licensing in various markets and a complicated regulatory environment. However, the CEO is looking forward to 2022 being a banner year for the company in terms of market penetration, product adoption, and growth.
Weedmaps is an Orange County, California-based organization that boasts of more than 18000 business listings throughout the U.S. and Puerto Rico. The company also has other similar business listings in 9 countries such as Canada. It is estimated that the company serves 10 million users monthly.
The company has observed a growth of more than 40% in the last five years and, it keeps growing. If you are looking to build a marketplace for cannabis products get in touch with the pros at Jungleworks. They can assist in building an online marketplace and provide expert advice as well.
Subscribe to our newsletter
'Jungleworks Entrepreneur's Den' to get access to the latest industry & product insights.