Leaf Trade, a Chicago startup that’s building enterprise software for cannabis dispensaries and growers, raised new financing as it works to bring its platform to more states.
The startup raised $4.5 million in a round led by Hyde Park Angels and Duke Software Investments. Chingona Ventures, a new local VC firm founded by MATH Venture Partners investor Samara Hernandez, also participated.
The funding will be used to help Leaf Trade expand to new states and markets, as well as expand its data science and engineering teams.
Leaf Trade, founded in 2017 by CEO James Yi, connects dispensaries with cultivators to purchase cannabis products. Because cannabis has long been an illegal substance in the U.S., the industry has suffered from a lack of uniform processes and tech infrastructure to simplify the supply chain. Many cannabis vendors have relied on phone calls, text messages and emails to complete orders or communicate with customers.
But with Leaf Trade’s platform, vendors can easily place orders, manage order fulfillment and view helpful analytics on business performance.
“We have focused on how to make this process more efficient and how to make it easier for both sides,” said Leaf Trade Chief Revenue Officer Michael Piermont, who previously held executive-level roles at CareerBuilder and Fooda.
Leaf Trade currently offers its software in 12 states, including Illinois, but plans to grow to 20 by the end of this year. Piermont said the startup focuses on emerging marijuana markets east of Colorado. Its clients include large cannabis companies, such as Verano Holdings, Green Thumb Industries and GrassRoots Cannabis.
Cannabis growers pay a fee to use Leaf Trade’s software, but the platform is free for dispensaries, Piermont said.
“We feel like a lot of how we build value is on the cultivation side—that’s where the process and the operational consistency is really, really important,” Piermont said.
Leaf Trade currently employs 20 people and plans to add up to 15 people in 2020. To accommodate the growth, the startup is moving to a new, 6,000-square-foot office next week at 412 S. Wells St.
Leaf Trade is one startup in a growing group of cannabis tech upstarts in Chicago gaining both attention and funding as Illinois approaches recreational marijuana legalization in January. Other cannabis upstarts include marijuana advertising compliance company Fyllo, which recently raised $16 million to grow its business, and CannaTrac, which is making a consumer smartphone app to purchase cannabis from marijuana retailers.
“As legalization comes through, the demand is going to go up because there’s more people that can really buy cannabis,” Piermont said. “And as our customers get bigger, operational processes need to be more defined to scale, and that’s where we come in.”
