CEO Chris Beals has positioned WM Technology among the nation’s largest marijuana e-commerce and advertising platforms.
The parent company of Weedmaps closed 2021 with record annual revenue of $193.1 million.
Irvine, California-based WM Technology also recorded a sharp jump in net income, to $152.2 million versus $38.8 million in 2020.
The company’s average monthly paying clients, meanwhile, rose 5% in 2021, to a record 4,337.
“Clients” include cannabis retailers that use the company’s online ordering and point-of-sale platform as well as other services under its WM Business unit.
At the end of 2021, the company also counted 15.7 million consumers – or “monthly active users” – who accessed its website or mobile app or used its technology to order products and have them delivered.
MJBizDaily spoke with Beals about WM Technology’s strong financial performance last year – although its stock (MAPS), like those of other cannabis companies, is down roughly 70% since last June. That’s when Weedmaps went public on the Nasdaq through a merger with blank-check operator Silver Spike Acquisition Corp.
Beals discussed what’s on tap in 2022 and how Weedmaps navigates the highly regulated cannabis sector.
He also confirmed the company is no longer part of a federal probe believed to have centered around California cannabis companies.
What were the main growth drivers in 2021, and what’s the business outlook for 2022?
People coming back and shopping in this marketplace. Their average purchase size is high.
There’s really nothing else out there like us. In times like these, the strong get stronger.
And I think you really see that with the client growth, the user growth and those continuing trends.
We’re guiding the market to 32% to 37% revenue growth.
Is that guidance a mix of new markets coming on board or other factors?
Over 90% of our revenue is recurring in nature. As new markets open, it can take time for them to really get their footing.
There’s always these sorts of delays on license issuance.
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A lot of our growth this year is by increasing our penetration with clients’ licenses that are already out there.
Roughly half of all cannabis licenses are on our marketplace, or 55%, to be precise.
A big part of the growth is just attacking that remaining 45%.
What are the biggest benefits and challenges of going public?
One of the biggest benefits, especially for us going public on the Nasdaq, is just the visibility.
The legitimacy it brings, the sort of recognition that this is a company that’s really run in a best-in-class way.
Going public brought a lot of attention and, frankly, brought in a lot of new investors who never invested in cannabis before.
The world turmoil going on and the tragedy happening in Ukraine, obviously, when you’re a public company, you’re more directly impacted by the sort of public-market turbulence.
How has your business evolved as new cannabis markets open?
One of the big evolutions was just an expansion of the power capabilities of the marketplace, the ability to help consumers understand what these different types of products are.
We’ve invested heavily in the compliance components.
One of the big expansions was adding WM Business, which is the suite of power tools that goes along with the marketplace.
We spend a ton of time improving the transactability of the marketplace.
We’re really investing heavily in these kinds of power tools that complement the marketplace.
That’s been a really big differentiator, especially in newer markets, where you see businesses really trying to use a broader suite of tools to attack all the opportunities much earlier in their lifecycle.
What are some new business initiatives or pilot projects underway at Weedmaps?
We are going to make investments in some strategic opportunities that we see driving outsized growth.
Increasing the breadth of our offering for brands, letting them better power e-commerce analytics for brands, helping them better normalize their brand information and reach consumers directly.
We’re also focused on winning the Big East. The tri-state area (New York, New Jersey and Connecticut), I think, can rival California in terms of cannabis market size.
Keep in mind when California opened, only about 15% of cities and counties opted into cannabis legalization under Prop 64.
What’s the business strategy of operating in a big cannabis market versus a small one?
These new states that are opening, the density that they have, whether it’s high, whether it’s low, the regulations they have, there’s usually a past analog where we’ve been incredibly successful at a macro-region level within one of the states.
We don’t generally look at any state in its entirety.
We look at subregions within it, because that’s how we split it up – our revenue, sales, customer support and success teams.
What international opportunities lay ahead and what’s Weedmaps’ current business internationally?
We were early on in Spain and built a dominant presence and continue to have a dominant presence in Spain that started back in probably 2011.
We intentionally scaled back our presence in Spain and sort of in the (European Union), just because the markets weren’t growing as quickly as the opportunities we could attack in the U.S.
We’re seeing an increased attention to cannabis legalization, expanded cannabis legalization in Germany and other EU jurisdictions.
Looking at places like Mexico. That feels at times like a perpetual waiting game.
We’ve seen Thailand, some movement starting to happen in Southeast Asia.
What are the challenges in the California market or opportunities?
One of the big questions in California is going to be: Do too many people let their grow go fallow? Do too few?
But that’s ignoring the broader thing that 20% to 25% of cities and counties have opted in, and that’s just got to go up.
The closest thing to a silver bullet in this case is you’ve got to increase the number of retailers.
You’ve got to service these kinds of cannabis deserts where there’s nothing around.
Otherwise, you’re going to have a 100% illicit market if there’s not a store nearby.
What advice do you have for ancillary cannabis businesses?
We have to be customer-centric. We have to meet the customer where they are.
The value prop of the marketplace is undeniable, and it’s incredibly outsized.
But if we can’t explain that in a way that the customer cleanly understands, that’s our problem, not theirs.
You really have to get your hands around the compliance in all these jurisdictions and quickly be omnipresent in a compliant fashion.
That’s a pretty big lift. Because you’re an ancillary service provider doesn’t mean that there’s not heightened scrutiny.
We have to be twice as buttoned up, twice as precise, twice as crisp on what we do, because there’s still this unfortunate stigma around cannabis, despite the fact that’s a $25 billion industry.
Discuss the protocols Weedmaps has in place to distinguish licensed operators from unlicensed ones.
We have a trust and safety team that reviews all business listings.
Someone asked me this the other day, and I was really hard-pressed to think of another scaled marketplace that firmly puts itself … as front and center of vetting who is on the marketplace as we do.
That’s going to be a real strength for us and a differentiator going forward.
One thing we’ve even discussed is if there’s a position for us to basically turn verification into a service, something that we project outwards to other ancillary businesses that are trying to figure out how to get their heads sort of around this issue.
Weedmaps was involved in a federal subpoena in 2019. Has there been any resolution there?
It was withdrawn in the first half of last year.
This interview has been edited for length and clarity.
Chris Casacchia can be reached at email@example.com.