Canopy Rivers, a publicly traded, cannabis-focused investment and operating platform valued at approximately $1 billion – market cap fluctuates with stock prices, is announcing today that it has entered into an agreement with LeafLink, a company that operates what’s considered to be the largest B2B marketplace for marijuana brands, processing transactions with an estimated annual gross value of $900 million – which represent roughly 13 percent of all domestic legal cannabis transactions.
As per the covenant, the two companies will collaborate to deploy a proprietary cannabis B2B software platform globally. The new joint venture, dubbed LeafLink Services International, will license and leverage LeafLink’s pre-existing supply chain and marketplace technologies, seeking to position them across legal marijuana markets around the world.
Canopy Rivers will invest $2 million, retaining the option to put in up to an additional $6 million on preferred terms. Canopy Rivers will own 18 percent of LeafLink International.
Why It Matters
While this may seem like a relatively small announcement, it marks the first time Canopy Rivers (the investment arm of Canopy Growth, the largest cannabis company in the world) will work to develop and distribute its own technologies, instead of simply investing in operating companies – including other tech-oriented businesses like Headset, which announced a partnership with Nielsen and Deloitte last week.
Canopy Rivers explained that this is a way for the company to increase its exposure to the cannabis value chain, while maintaining capital expenditures at bay. In addition, this is a highly scalable business, the company argued.
Ahead of the announcement, Forbes spoke with Ryan G. Smith, co-founder and CEO of LeafLink. He told Forbes that this new entity, created in partnership with Canopy Rivers, allows LeafLink to bring the innovative solutions the team has built over the last few years “to define, rather than disrupt”, how new markets write their regulations and determine their supply chain structure.
International Cannabis Markets
According to BDS Analytics and Arcview Market Research, global consumer spending on legal marijuana is expected to hit $17 billion in 2019, growing almost 40 percent year-over-year. In this context, U.S. and Canada-based cannabis companies are rushing to capitalize on the fast expansion of the markets. Many of them also have policy-shaping ambitions.
“Given the federal legal status of cannabis in the United States, we have not been able to integrate certain features that are available to other industries – such as payment gateways and shipping providers. With federally legal markets like Canada leading the way, we look forward to continuing to build industry-defining features that allow companies in the LeafLink community to thrive. We believe our industry deserves the same tools as any other industry, from technology to finance to logistics.”