LeafLink, an online commerce platform for cannabis dispensaries, raised $10 million from venture capital firms to expand its business in California as the state prepares to allow sales of recreational marijuana, according to CEO Ryan Smith.
The oversubscribed round comes on the heels of a $3 million seed round LeafLink closed in February of this year.
The round was led by Nosara Capital, a London-based firm, and included Casa Verde, a venture capital firm that focuses on early-stage ancillary investments in the cannabis industry, and Lerer Hippeau Ventures, which has invested in companies such as Venmo, Casper, and Warby Parker.
The funds will also be used to expand to new markets across the U.S. LeafLink is already live in 6 states — it expanded to Arizona earlier this month as the state’s medical marijuana market came online — and it plans to put their product in dispensaries in a total of 10 states.
“We’re very supportive investors,” said Karan Wadhera, the managing partner at Casa Verde.
Smith — who is just 26 years old — was the first cannabis entrepreneur to make the Forbes 30 under 30 list in 2016.
LeafLink handled $186 million in transactions since 2016, Smith told Business Insider. It works with 400 brands, 1,700 retailers, and handled $16 million in gross merchandise value in November, Smith said.
By 2018, the company predicts that its order volume will grow to $500 million as more states legalize cannabis and bigger markets come online, a pitch deck reviewed by Business Insider shows.
“This is a unique opportunity to define an industry that is scaling rapidly,” Smith said.
And, according to the company, LeafLink has 90% market penetration in two of the cannabis industry’s most mature markets — Colorado, and Washington — and it’s seeking to increase its foothold in the lucrative California market.
California is set to begin sales of recreational marijuana on January 1, 2018.
Cannabis tech companies like LeafLink are well-positioned to capitalize on burgeoning cannabis industry. Traditional venture capital firms are reticent to invest directly into “plant-touching” businesses, as cannabis is considered illegal by the federal government.
Companies like LeafLink, which serve the industry but do not touch the plant, are much safer and more “scalable,” Wadhera previously told Business Insider.