WeedMaps or WM Technology (MAPS) goes public today on the NASDAQ. This is the first cannabis-tech company of this caliber to be publicly listed. They don’t have to go OTC like other US cannabis stocks since they don’t “touch the plant”.
WeedMaps provides enterprise software to cannabis businesses, running their point of sale (POS) services as well as aiding with logistics, regulatory compliance, wholesaling, and ordering. Clients (dispensaries) pay a monthly fee in a standard SaaS model, with fees for other optional services like featured posts or listing priority on the WeedMaps Marketplace.
The company has been operating since 2008 and has been consistently profitable from the start. Weedmaps delivered approx $160 million in revenue in 2020 and has been profitable for its entire 12-year history.
They have 18k+ dispensaries listed on WM Marketplace and over $1.5B GMV (Gross merchandise value) across the WM Business-in-a-Box platform. WeedMaps operates a high-margin marketplace services and never “touches the plant”.
WeedMaps is an essential service for the operation of many retail dispensaries across the US and the many other countries. (including Canada, Austria, Germany, the Netherlands, Spain, and Switzerland).
For instance, one dispensary chain owner said: “I remember when they (WeedMaps) raised their rates by 400% one year and we took a month off of our listings in protest. Our new client acquisition went down by 35%. Our monthly revenue went down by over $50,000 per location. Lesson learned.”
Another owner said: “WeedMaps costs us a fortune, but it is worth every penny. They hit us over the head to be listed on the daily deals page, but that shit flies off the shelf.”
WeedMaps operates a cloud-based platform, and unlike other cannabis-related businesses, they require minimal physical footprint and are not directly exposed to fluctuations in product input costs. WeedMaps does not require real estate or other significant capital outlays to enter new markets. Their offerings can be customized to new markets to help facilitate expansion, which provides significant flexibility to scale and enter new markets with minimal investment. The capital-efficiency of the WeedMaps business model is evidenced by their robust margin profile and high level of EBITDA converting to free cash flow while achieving their growth. From 2014 to 2020, WM grew revenue at a CAGR of 35%. Over that period of time, WeedMaps has expanded their gross margin rate from 92% to 95%. For 2020, their net income was $39 million and EBITDA was $43 million.
Keep in mind. These financials are still without many states who are bound to legalize or have just recently legalized (NY most notably). As the US cannabis market continues to expand at an exponential rate, WeedMaps will undoubtedly capitalize.