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BeLeaf Taps Cannabis Boom, One Degree Removed

The cannabis industry is booming, generating $9.7 billion in North America last year, up 33% over 2016, according to a report by Arcview Market Research and BDS Analytics that predicts the market will reach $24.5 billion in sales by 2021.

Despite the growth—recreational marijuana is legal in nine states, medical marijuana in 29 as of April—marijuana dispensaries and cannabis brands struggle to advertise products.

Online digital advertising giants Facebook and Google don’t allow drug or drug-related advertising on their sites, leaving dispensaries and brands without effective means to target online customers, who currently have limited information.

BeLeaf plans to “go after that opportunity,” said David Cheng, chief executive of Pathfynders Corp., which built and runs the platform. He’s also a general partner at REDDS Venture Investment Partners, of which Pathfynders is a portfolio company. All three entities are based in Irvine.

The first official version of the medical marijuana information app launched in September, according to Cheng. “We’re continuing to evolve it with a focus of building a positive community for cannabis.”

Gray Area

The challenge for the rapidly growing industry is that marijuana isn’t yet legalized at the federal level, meaning TV and radio advertising come with their own set of rules and each state has its own cannabis advertising regulations.

California’s marijuana advertising and marketing restrictions, found in the state’s Business and Professions Code, Division 10, Chapter 15, include a stipulation requiring “any advertising or marketing placed in broadcast, cable, radio, print, and digital communications shall only be displayed where at least 71.6% of the audience is reasonably expected to be 21 years of age or older, as determined by reliable, up-to-date audience composition data.”

The 71.6% can be tricky to figure out using traditional forms of advertising, and with Facebook and Google out of the game, that leaves a large share of marijuana advertising to blogs and news sites.

Here’s where BeLeaf comes in, providing curated content to help customers better understand the world of medical cannabis.

Pot of Gold

Cheng said that while there’s plenty of information on cannabis, it’s hard “to separate quality content from unvetted content.”

The platform, also available as an app for iOS devices, delivers content, such as articles and videos about cannabis strains and available product, and helps the app’s users find nearby stores that best fit their medication needs. Users must be at least 21.

Cheng pulled up the app on his phone to show a 3-D feature that allows users to see a pot strain life-like and up close. “We are aware that cannabis connoisseurs are very specific,” he said.

He said Irvine-based Weedmaps helped shake up the industry when it debuted in 2008. The online “community where businesses and consumers can search and discover cannabis products,” according to Weedmaps’ website, functions like digital billboards for brands, dispensaries and delivery services.

Advertising with Weedmaps doesn’t come cheap; Cheng said he’s heard that rates for listing can go up to the thousands of dollars. BeLeaf is currently free for users and stores. Cheng said the company’s future revenue will be from targeted ads similar to Google, “by impression,” but for the cannabis industry.

BeLeaf has raised $800,000 and is opening a $2 million round to support marketing, generate relevant content for the community, and add blockchain technology capability to the platform, in part to develop cryptocurrency to reward content creators.

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