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LeafLink debuts option for delinquent cannabis payments

Thursday, September 26, 2024 — 13:18:59 (EDT)

NEW YORK, Sept. 26, 2024 /PRNewswire/ -- LeafLink, the nation's leading cannabis wholesale platform, today announced Payment on Sell Through (PoST), a first-of-its-kind payment option for cannabis wholesale that guarantees payments to brands as retailers pay for what they sell. Along with Direct Pay and FlexPay, PoST marks the 3rd payment option offered in the LeafLink platform. In July, LeafLink acquired Dama Financial to offer customers access to a reliable, secure, and compliant banking solution. This new payment option is another significant step towards building a cannabis e-commerce ecosystem to help businesses operate more efficiently.

(PRNewsfoto/Leaflink)

By using PoST, payment is guaranteed to the brand (the supplier), who receives automated weekly payments based on the prior week's sell-through by the retailer. This new model will help alleviate delinquent payments to brands, free up needed capital for retailers, provide data insights to help both make better business decisions, and help build a more profitable cannabis industry.

"Over the last 2 years, we've doubled down on improving our platform to meet the needs of our customers, especially in the financial services area," said LeafLink CEO, Artie Minson. "We're seeing an average of 100,000 orders happen on LeafLink monthly. The need for solutions that address delinquent payments is as critical as ever. With PoST, we're putting in place a tool that creates transparency and guarantees payment for everyone involved. It puts an end to delinquent payments while helping dispensaries reduce upfront spend on products and losses on the backend. We strongly believe that this technology will be an industry game-changer, ushering in a new era of efficiency and solving one of the industry's biggest pain points."

Currently, brands have been setting payment terms and are responsible for tracking down their owed receivables. On the other hand, retailers need to front large sums of cash to stock their shelves by buying in bulk, oftentimes with little data backing those decisions. They are then stuck with large accounts payable, disconnected from their actual cash flow and performance of the SKUs they're stocking. PoST aims to solve this with an effective payment model that mirrors other consumer packaged goods, while also offering a host of additional benefits. By using PoST, retailers are able to keep more capital on hand and only pay when the product sells to the end consumer. Brands can help boost sales of their product by driving foot traffic to retailers through marketing campaigns that increase awareness and interest.

PoST is currently available in Michigan, Mississippi, and Colorado with plans to expand the offering to additional states this year and next. Customers interested in using PoST should contact their account representative for more information.

Late payments in the cannabis industry were more than $3.8 billion in 2023, about 1.6 months' worth of all legal cannabis sales nationwide, according to an April report by Whitney Economics. The delinquency is mainly due to missed payments from dispensaries to brands and cultivators. Retailers are in a challenging environment and struggling with cash flow constraints, limited startup capital, federal tax issues from ongoing national prohibition, and competition from the illicit market.

PoST improves inventory insights by identifying the right SKUs, quantities, and order frequency for each storefront. This detailed data helps avoid stock outs and stale inventory by providing accurate data updated daily. This detailed visibility also helps brands in upstream product development based on real consumer data. The result is a more collaborative partnership between brands and retailers to optimize product sell-through and meet consumer demand.

Real World Results: Improving Data Quality, Boosting Savings, Accelerating Payments PoST has delivered promising results in beta already. Since initial trials began in June, 70+ customers have implemented it into their workflow. Michigan based cultivator Six Labs was one of the first to use PoST and has been documenting the results. Since June, they have adjusted 3 SKUs to avoid stale and overstocked inventory, used transactional data to proactively restock a SKU and increase order size to match the discovered demand, and doubled the sales on a stale SKU to make room for new items. Six Labs has now expanded PoST integration with 4 other retailers.

"PoST gives us visibility into how our products are moving, allowing us to right-size orders for each retail partner and location," said Ron Gibori, CEO of Six Labs. "As a result, the retailers are able to stock the right products for their customer base and make more money, and we receive more frequent, consistent orders."

Michigan based retailer Bloom City adopted PoST and has also been documenting the results. Since implementing PoST, Bloom City has doubled sales on a pre-existing stale product through a discounting strategy, increased ordering on SKUs that sell better than previously thought, freed up needed cash on hand by not having to pay for stock up front, and had zero days of stock outages because of an enhanced look at sales data.

"PoST has changed the way my clients think about wholesale cannabis commerce. On the sell side, Six Labs has seen immense value in having direct access to sell-through data as well as guaranteed regular payments, and they've already rolled it out to numerous additional customers," said Sandra Lee, Controller of CannaPro Solutions, a company that assists with back-office needs for licensed cannabis dispensaries, processors, and growers. "On the buy side, Bloom City Club has gained powerful insight into product performance that helped them optimize ordering for each of their stores. I've since recommended the program to multiple other retail chains. The PoST model is a win for both brands and retailers, and I'm excited to see it change the industry for the better."

Contact: Press@LeafLink.com

About LeafLink

Founded in 2016, LeafLink is the wholesale cannabis industry's leading B2B technology platform helping thousands of customers in 30+ markets buy, sell, pay and ship orders. LeafLink believes that better access to modern financial services will propel the industry towards sustainable growth. In July of 2024 LeafLink announced the acquisition of leading cannabis banking platform Dama Financial in order to provide access to safe, reliable, and compliant banking. In 2024 LeafLink was included in the Fast Company, Best Workplaces for Innovators List in the Banking, Finance, and Fintech category and was also awarded Green Market Report's Best Cannabis Fintech.

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Source: Company press release.