The cannabis industry can be a complex marketplace for business owners.
With so many regulations and concerns about compliance, managing and marketing one’s business can seem like an overwhelming task.
There’s no shortage of CRMs or compliance platforms, but with the recent increase in demand for automated solutions, some technologies stand out for their ease of use and accessibility.
We spoke with James Yi, founder and CEO of Leaf Trade, to discover how they’re setting themselves apart as the wholesale platform of choice for more than 600 dispensaries across the U.S.
Cannabis & Tech Today: What inspired you to create the Leaf Trade platform?
James Yi: Solving complex problems has always been innately what I’m fascinated with.
A series of unplanned events led me to have a perspective and hands on role deep in the cannabis space — and not just the cannabis space — at the genesis of what I’d describe as the highly regulated, newly emerging markets.
These are the States [where legal cannabis has] been popping up over the last few years, primarily east of Colorado, lesser known than what people typically think of in terms of the Californias and the Colorados.
And it came with a whole slew of unknowns and new problems and new challenges particularly as it related to the very complex regulations and compliance around it.
Leveraging my background in building technology companies, and then just happening to know people who had licenses to operate in these states, led to putting on some consulting hats to really dive into the opportunity to learn about these challenges and put the pieces together and find the biggest gaps in the industry.
At the end of it, what we identified was that there were just so many manual processes and fragmented processes that led to a lot of time consumption and resource consumption in doing everyday business things.
I just knew there could be a better way. That’s how Leaf Trade was born.
C&T Today: James, can you tell me a bit about what you did prior to working in cannabis? I know you have a background in tech.
James Yi: My previous venture to Leaf Trade is a company called NextME, which builds technology to address queue management problems.
More specifically, if you’re a business and you need to manage a wait, oftentimes restaurants, or doctor’s offices, health clinics, beauty salons, etc., you can toss the pen and paper system and digitize that whole process and make the customer experience much more enjoyable using NextME.
C&T Today: As the pandemic pushed all these dispensaries into an essential role, how have you seen interest in Leaf Trade change?
James Yi: I think for us and for the rest of the world, it was a scary time.
We were just trying to gauge all the unknowns. I think, every day I count my blessings that this industry was deemed essential.
We were very fortunate in that regard and really what we saw a lot of during that time was sort of a rush or a hastening of our clients and license holders in the industry looking to digitize their processes as much as they could in every way that they could.
We’ve never been busier. We like to think that we’re contributing to helping redesign this with the dynamic of how people work, especially in the cannabis industry.
C&T Today: How does Leaf Trade work and what makes it unique among point of sale systems?
James Yi: If you are a licensed cannabis or hemp business and you sit on any level of the wholesale supply chain, on one side of the spectrum you’re a grower or a cultivator of the plant, and then all the way at the other end would be the retail stores, or more commonly known as dispensaries.
We help these businesses streamline sales, fulfillment, and financial processes around available-for-sale products that are moving across that supply chain.
So step one, we help sellers of any licensed cannabis products to create a custom branded online storefront, where they can really showcase their product information and availability to anyone downstream — their target audience.
Then on the flip side for the buyers, typically dispensaries, Leaf Trade is a one stop shop for them, and if they need to stock their shelves with products, they’re not having to learn different ways of shopping with different vendors.
It all happens in one place. And they’ve got transparency to all the transactions and product information in a centralized place.
It is a very, very powerful data analytics and reporting solution for our clients, whether it be their own sales, transactional data, or using information for production forecasting and planning.
Or when it comes to audits, information that they have to provide to regulators and even investors that are looking for market specific data, but of course we protect everybody’s identifiable data.
So it really is up to our clients to use their own data how they see fit.
C&T Today: How does Leaf Trade streamline the compliance process for your clients?
James Yi: There are a number of different ways that we help companies manage and navigate regulatory compliance.
Step one, the platform is a closed network, meaning that it’s not like any one of us can go on and shop for stuff like Amazon.
There is a component where a very diligent vetting process to validate that the people that we’re creating accounts for do indeed have compliant and active licenses.
When participants join our platform, they are assured that whoever they are engaging in commercial transactions with, they have peace of mind that they don’t have anything to worry about there.
Next, our technology is built in a way where we’ve set up the walls to ensure that every transaction is compliant.
So depending on what type of license you have, what market you’re active in, or even specifically what type of products and SKUs you have, we ensure that only products can be transacted with buyers that can compliantly purchase those products.
A good example of that would be because this isn’t federally legal, all transactions in a given state need to be siloed to that state.
And depending on what kind of license you have, there are certain types of products that you can’t buy. So we are able to manage all of that for our clients.
The next evolution is in providing a compliant payment solution for the industry. Leaf Trade is, I’m proud to say, the very first platform that has an embedded payment solution within it.
So not only do we help our clients streamline their sales and their fulfillment and then their accounting needs, the next step is, “Hey, how do we streamline payments that go between both parties?”
C&T Today: I’d love to hear more about that because cashless payment has been a big issue for the industry.
James Yi: Payments can be a very convoluted thing in this industry.
Our focus is really on these highly regulated, newly emerging markets where because there’s such a strong regulatory foundation, the local banks service the industry in a very transparent and compliant way.
So we partner with these regional banks, typically state charter banks or credit unions, and once we integrate with them, any of the transactions that go through our site can be deposited, from a transaction between a buyer and the seller, directly into the seller’s account with the bank that we’ve integrated with.
We’re able to save and incorporate all of the business rules around it, like term periods and stuff like that.
So it’s really a good way to automate this payment process that can really be resource intensive, managing AR and AP, and make it super easy for our customers.
With the pandemic and everything, everybody’s looking for cashless solutions, cash flow management, and any way that we can help to digitize and automate it is our goal.
Our goal isn’t to take away the human factor.
Our goal is to take away the burden of the administrative piece and the logistics around these transactions so that sales reps and companies can have more time to develop and focus on relationships with their customers.
Some of that has been taken away by the pandemic, because typically before, cultivators would have sales teams who would go into the field to visit dispensaries, pull open Leaf Trade on a tablet and walk them hand in hand in creating orders and stuff like that.
Now they can just do that remotely.
They can just give them a call if they need to, and walk them hand in hand through the sales process.
They could just have Leaf Trade open and work on that collaboratively.
The same goes for payment.
I think that the industry, up until very recently, has been more focused on land grabs and planting a flag in as many states as they can.
Now they really want to focus on revenue and optimizing their business. And so anywhere where they can find room in creating those efficiencies, I think is providing a lot of value for them.
C&T Today: How do you see the industry evolving technologically as a result of the crisis?
James Yi: I think there’s going to be more and more transitions to, “Hey, how can we digitize our processes?” I think payments are really the next frontier.
I think the pandemic has really put a microscope to some of these problems and that regulators need to hear the message [and provide] more access to traditional solutions that are already available to “normal industries.”
The Safe Banking Act is something that Congress is having a conversation about right now.
That’ll put more protection on the financial institution side so that more traditional financial solutions are provided to the cannabis licensees.
Having started very early on the ground floor for this nascent industry and creating custom solutions around it, where we can step in and help out with digitizing all their processes, puts us in a very good position.
We have never lost a paying customer. And so, knock on wood [laughs], I think that’s validation and it makes me really happy because we are hyper focused and our North Star guiding light has been to focus on product and customer service.
And I think that’s a really validating sign that I’m proud of and will continue to keep the focus on.
We consider ourselves an enterprise level solution.
So we recognize that not all businesses are cookie cutter and their needs may be different from another business’s needs or different from market to market.
With an enterprise level solution comes more robust functionality that helps them to streamline all of their different departments — allowing integrations with all their different software platforms and allowing different teams to work cohesively together internally.
Our success is really attributed to listening to our customers and their needs from market to market, business to business.