Founded in 2016, LeafLink is a B2B technology platform for the wholesale cannabis industry. Today, the company announced Payment on Sell Through (PoST), a new payment option for cannabis wholesale that guarantees payments to brands (suppliers) as retailers pay for what they sell. According to the company, the feature is an industry first.
In July, LeafLink acquired Dama Financial to offer customers access to a reliable, secure, and compliant banking solution. This new payment option is another step towards building a cannabis e-commerce ecosystem to help businesses operate more efficiently.
By using PoST, payment is guaranteed to suppliers, who receives automated weekly payments based on the prior week's sell-through by the retailer. The new model should help alleviate delinquent payments to brands, free up capital for retailers, provide data insights to help both make better business decisions, and help build a more profitable cannabis industry.
According to CEO Artie Minson, LeafLink averages 100,000 orders monthly. He says PoST addresses some of the industry's biggest pain points and "puts an end to delinquent payments while helping dispensaries reduce upfront spend on products and losses on the backend."
Currently, brands have been setting payment terms and are responsible for tracking down owed receivables. On the other end, retailers need to front large sums of cash to stock 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 offer 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.
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 can also improve inventory insights by identifying the right SKUs, quantities, and order frequency for each storefront. Detailed data helps avoid stockouts and stale inventory by providing accurate data updated daily. The 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.
Since initial trials began in June, more than 70 customers have implemented PoST into their workflow. For example, Michigan-based cultivator Six Labs was one of the first to use PoST and has been documenting the results. Since June, the company has adjusted three 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 expanded PoST integration with four other retailers.
Michigan-based retailer Bloom City also recently adopted PoST. 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 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, according to the company.
