Exclusive: Forty Colorado cannabis brands say they may ditch LeafLink over changes they say could lead to a 700% price hike

LEAFLINK
Exclusive: Forty Colorado cannabis brands say they may ditch LeafLink over potential 700% cost increase

Driving the news: Last month, LeafLink, a wholesale marketplace for cannabis, rolled out a suite of service and pricing changes that’s left some cannabis brands scrambling for a cheaper alternative.

The new features, launched on April 22, are designed to help cannabis businesses get paid faster, avoid lost sales, and run more efficiently, the company says. But for many smaller brands, all they see are unfeasible price hikes.

What happened: A group of 40 Colorado cannabis brands met in April to discuss the changes. 

They shared a letter with Cultivated they wrote to LeafLink execs, including CEO Artie Minson and Chief Commercial Officer Matt Hutchison.

In the letter, the brands say the changes could result in price increases of 300-700%, as the new model layers on per-transaction fees on top of the general $599-$999 monthly subscription fee.

“Even more concerning than the proposed changes themselves is the way in which they were communicated: Unilaterally, without collaboration, and in a manner that demonstrated a profound disregard for the businesses that helped build your ecosystem,” the letter reads.

Many of the brands say they are leaving the platform, or creating an exit strategy to do so. They say that the new features are useful, just not for the price. 

In the letter, the brands recommend LeafLink abandon the transaction-based pricing model, enact a moratorium on price increases in Colorado, and seek collaboration to come up with a pricing model that works for everyone. 

Brands that signed the letter include Binske, Mary Jane’s Medicinals, Stratos, O.pen, and more. 

Some LeafLink competitors have jumped on the issue as well, criticizing the company and advertising their alternative services on social media as well. 

LeafLink’s response: “Colorado is where LeafLink began — a pioneering state in recreational cannabis legalization. Our roots in this market run deep, and we remain committed to supporting Colorado's operators,” the company said in a statement to Cultivated. 

LeafLink said they were aware of the ongoing conversation among Colorado cannabis brands and that the changes were designed to address persistent challenges that their clients face including delinquent payments, bad debt, and inventory writeoffs, which LeafLink says results in $4.2 billion lost annually.

The company added that one-third of LeafLink customers won’t see a price increase, and those who do should expect “5-15x” return on investment through increased sales and greater efficiency.

“We value our long-standing relationship with the Colorado market and invite operators to meet with us in person to discuss these changes,” the company said.

Colorado isn’t alone: Colorado isn’t the only state where LeafLink’s rollout has ruffled feathers. Missouri Greenway reports that operators in the state are leaving the platform over the fee changes as well. 

“It felt like it was a cash grab, and people took it personally,” Local Cannabis/Calyx Peak CEO Howie Keum said. “It wasn’t just about the money, it was about the way they went about it.”

And more: We had LeafLink’s Matt Hutchinson on Cultivated Live in April to discuss the changes and asked him to directly address these issues. You can watch the conversation here.

-JB

“We got stuck moving at the slow speed of government, which was also marred, potentially, by some opposing it from within,” Rahul Gupta, the director of the Office of National Drug Control Policy in the Biden administration, told The New York Times in an interview. 

The New York Times took a deep-dive into why, despite both President Trump and Biden backing cannabis reform, the process to reclassify cannabis federally to a less restrictive category has sputtered. The story discusses institutional obstinacy on the DEA’s part — the federal agency that oversees drug scheduling — as well as Trump’s reluctance to expand access to cannabis (or any intoxicating drug). 

Read the full New York Times story here.

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In New York the revenue pie keeps growing, but so too does the number of slices. This data comes from the state’s Cannabis Control Board (CCB):

As more stores open, sales per store continues to drop. It's a sign that New York's market is starting to mature. This is likely why there is increasingly more discussion from the CCB about the retail capacity of the market. 

Overall, the market is still performing well: 

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