Leafly Holdings, Inc. (LFLY): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at the competitive structure of Leafly Holdings, Inc. (LFLY) right now, and honestly, the picture painted by Porter's Five Forces as of late 2025 is challenging, especially when you factor in their recent performance. We see intense rivalry, where a competitor like Weedmaps dwarfs their $34.642 million 2024 revenue, and customer power is high because retailers can easily jump ship, which contributed to that 18% revenue decrease last year. While some supplier costs seem low, the core issue is a market where substitutes are easy and new competition is only a low-cost listing service away. To truly understand the near-term risk and where Leafly stands in this zero-sum cannabis marketplace, you need to dig into the details of these five forces below.

Leafly Holdings, Inc. (LFLY) - Porter's Five Forces: Bargaining power of suppliers

When we look at Leafly Holdings, Inc.'s supplier landscape, the power dynamic is mixed, but generally leans toward being manageable for the company right now. You have to remember that for a digital marketplace like Leafly Holdings, Inc., the key inputs aren't raw materials; they're cloud infrastructure, specialized content, and, most critically, the actual menu data from dispensaries.

Tech and cloud service providers hold moderate power due to few alternatives. Honestly, for a company of this scale, relying on major hyperscalers for hosting and core services means you don't have a ton of leverage if AWS or Microsoft Azure decides to adjust pricing. It's a necessary cost of doing business in the modern tech stack.

Here's the quick math on Leafly Holdings, Inc.'s cost structure, which gives us a big clue about the cost of its other inputs: Leafly Holdings, Inc.'s gross margin (LTM) sits at a very healthy 89.54%. That high gross margin suggests that the cost of goods sold (COGS)-which would include direct costs related to delivering its core service, like data hosting fees-is relatively low compared to its revenue. This low COGS implies that, so far, the costs associated with its primary tech suppliers haven't severely eroded profitability.

Content providers, like the writers and reviewers who fuel the consumer-facing side, are highly fragmented, limiting their leverage. Leafly Holdings, Inc. has already made strategic shifts, pivoting away from traditional journalism to focus more on product and marketplace-driven content. This move suggests they are either bringing more content creation in-house or sourcing it from a wide, non-unionized pool of freelancers, which keeps individual supplier power low.

The primary input-cannabis menu data-is non-exclusive and readily available to rivals. This is a huge factor working in Leafly Holdings, Inc.'s favor regarding supplier power. The data comes from the retailers themselves, and since Leafly Holdings, Inc. is one of several platforms they list on, no single retailer or group of retailers can hold the entire data set hostage. Leafly Holdings, Inc. exposes customers to over 7,800 brands and 4,600 marijuana retailers, meaning the data pool is vast and diversified.

We can map out the scale of the platform, which helps contextualize these relationships:

The bargaining power of these suppliers can be summarized by looking at the nature of their input:

• - Tech and cloud service providers hold moderate power due to few alternatives.
• - Leafly Holdings, Inc.'s high gross margin of 89.54% LTM suggests low cost of goods sold relative to revenue.
• - Content providers (writers, reviewers) are highly fragmented, limiting their leverage.
• - The primary input-cannabis menu data-is non-exclusive and readily available to rivals.

To be fair, while the menu data is non-exclusive, the quality and breadth of that data are what Leafly Holdings, Inc. sells. If a major competitor managed to secure exclusive data feeds from the largest multi-state operators (MSOs), that would shift the needle quickly. Still, for now, the sheer volume of data sources keeps supplier leverage in check.

Finance: draft sensitivity analysis on a 10% increase in cloud hosting costs by Friday.

Leafly Holdings, Inc. (LFLY) - Porter's Five Forces: Bargaining power of customers

You're looking at the customer side of Leafly Holdings, Inc.'s business, and honestly, the leverage retailers hold right now is significant. This force is high because the cost for a retailer to list their services elsewhere, or even to pull back on advertising spend entirely, isn't prohibitively high. Retailer switching costs for listing services are relatively low; they are essentially paying for digital shelf space, and shelf space is available on competing platforms.

The competitive landscape definitely empowers the customer. Leafly Holdings, Inc. faces strong platform alternatives. For instance, in 2024, Weedmaps was cited as an industry leader with an audience of 16M monthly users, compared to Leafly's 11M monthly users. Furthermore, Dutchie is noted for processing 75,000 daily orders. This direct competition means retailers have viable, high-traffic options if they feel Leafly isn't delivering the right return on investment.

The broader market conditions are certainly pressuring Leafly's customers. The struggling cannabis retail market pressures customers to cut non-essential ad spending. This financial strain directly impacts Leafly Holdings, Inc.'s top line. Customer churn is a major challenge, which contributed to Leafly Holdings, Inc.'s total revenue decreasing by 18% in the full year 2024, landing at $34.642 million. It's a tough environment where every marketing dollar is scrutinized.

The customer base itself is small and potentially volatile, which concentrates the power of each individual account. Paid retail accounts totaled just over 3,300 at the end of 2024, a small, concentrated base. This small base means losing even a few key accounts has a noticeable impact, and the trend shows this pressure continued into 2025, with ending retail accounts declining 3% sequentially from 3,480 at December 31, 2024, during the first quarter of 2025.

Here's a look at the recent performance metrics that illustrate the customer dynamics:

Even though Leafly Holdings, Inc. managed to increase its Retailer ARPA by 8% to $695 in Q3 2024-largely by removing lower-spending accounts-the underlying issue remains the retailer's willingness to pay. The fact that Leafly Holdings, Inc. reported a reduction in account churn in Q3 2024 was a positive sign, but it followed significant account losses driven by customer budget constraints.

The leverage held by customers is clear when you look at the pain points:

• Platform alternatives like Weedmaps command a larger audience base.
• Retailers are highly sensitive to pricing in a tight market.
• Switching platforms is relatively easy for a listing service.
• Budget constraints led to an 18% total revenue drop in 2024.

Finance: draft 13-week cash view by Friday.

Leafly Holdings, Inc. (LFLY) - Porter's Five Forces: Competitive rivalry

You're looking at a marketplace where the competition isn't just stiff; it's existential, especially when you factor in Leafly Holdings, Inc.'s current financial footing as of late 2025. The rivalry here is intense, driven by the presence of well-funded, established players like WM Technology, Inc. (Weedmaps).

Honestly, the scale difference between the two is what really defines the competitive pressure. Here's the quick math on revenue scale, which shows you exactly how much heavier the competition's wallet is:

That revenue gap-Weedmaps' TTM revenue of $179 million versus Leafly Holdings, Inc.'s $33.47 Million USD TTM-shows you the disparity in resources available for platform development, marketing spend, and absorbing operational losses. It definitely forces Leafly Holdings, Inc. into a defensive posture.

This digital cannabis marketplace functions very much like a zero-sum game for retailer and brand advertising dollars. When one side gains a listing or a premium placement, another loses visibility. This dynamic naturally forces aggressive competition on two fronts:

• Pricing for retail subscriptions and add-on products.
• Feature parity and development velocity.

The rivalry is critically heightened by Leafly Holdings, Inc.'s own precarious financial situation. You see this reflected in the audit opinions; there is substantial doubt about the Company's ability to continue as a going concern based on its inability to meet debt maturity obligations without significant capital infusion or refinancing. This financial strain limits Leafly Holdings, Inc.'s capacity to fight back effectively against a larger rival.

Furthermore, the underlying revenue trend for Leafly Holdings, Inc. shows the pressure. Its 2024 annual revenue was $34.64 Million USD, a decrease of 18.01% from 2023's $42.25 Million USD. Even the TTM revenue as of late 2025 is down year-over-year. This downward trajectory, set against a competitor that posted $184.514 million in revenue for FY 2024, means Leafly Holdings, Inc. must focus intensely on operational efficiency rather than matching competitive spending.

The market's evolution itself adds to the rivalry risk. The legal cannabis market may not develop as anticipated, and intense competition affects Leafly Holdings, Inc.'s ability to compete effectively.

Finance: draft 13-week cash view by Friday.

Leafly Holdings, Inc. (LFLY) - Porter's Five Forces: Threat of substitutes

You're analyzing the competitive landscape for Leafly Holdings, Inc. (LFLY) as we move through late 2025, and the threat of substitutes is definitely a major pressure point. This force looks at how easily a customer can switch to a different product or service that meets the same need-in Leafly's case, cannabis discovery, menu access, and ordering.

The most immediate substitute for the Leafly platform is the dispensary's own digital front door. When a licensed retailer directs its existing customer base to its in-house e-commerce site, it completely bypasses the Leafly marketplace and its associated transaction fees or listing revenue. This is a direct substitution for the discovery-to-order funnel Leafly provides. Consider Leafly's own scale: in the third quarter of 2024, the company reported retail revenue of $7.4 million from 3,554 ending retail accounts. If a significant portion of the total U.S. legal cannabis market-projected to reach almost $45 billion in revenue in 2025-moves to direct ordering, Leafly's top-line revenue is directly threatened.

Beyond direct sales channels, consumer information gathering has fragmented. Free social media platforms and dedicated, niche cannabis forums now serve as primary substitutes for Leafly's educational and strain-discovery functions. Leafly maintains a substantial content library, including over 5,000 cannabis strains and over 1.3 million user-generated strain, dispensary, and product reviews. However, the rise of AI-driven search summaries means users can get quick answers without visiting any dedicated site. New data from mid-2025 indicates that when Google's AI Overviews appear, users are only 8 percent likely to click a traditional link, compared to 15 percent when no summary is shown.

The threat intensifies when looking at B2B tool substitution. Competitors offer in-house e-commerce and operational solutions that directly substitute Leafly's offerings to retailers. Dutchie, for example, is a major player in this space, powering over 6,500 dispensaries across North America and facilitating over $22 billion in sales annually. This scale shows that many retailers prefer or rely on a competitor's integrated technology stack over Leafly's marketplace tools. For context on the competitive scale, here is a quick comparison:

Finally, general search engines are the primary entry point for many consumers, effectively substituting Leafly's core discovery function. Google holds a massive share of U.S. searches, estimated at around 91 percent. The shift to Generative Engine Optimization (GEO) means that even if a dispensary ranks well, the answer may be served directly by the search engine, leading to a 'zero-click search' scenario where Leafly gets no referral traffic. This trend is projected to accelerate, with Gartner predicting that website traffic from search engines could drop by 25 percent by 2026 as users lean into AI agents.

The threat is multifaceted, involving:

• Direct ordering from licensed dispensary websites bypasses the Leafly platform.
• Free social media and dedicated cannabis forums serve as consumer information substitutes.
• In-house e-commerce solutions from competitors like Dutchie offer a direct substitute for Leafly's B2B tools.
• Search engines (Google) are the primary entry point for many consumers, substituting Leafly's discovery function.

The company's transition to the OTC market in January 2025, following a Nasdaq delisting notice, suggests that external capital markets view these substitution threats as significant risks to its growth trajectory. Finance: draft 13-week cash view by Friday.

Leafly Holdings, Inc. (LFLY) - Porter's Five Forces: Threat of new entrants

You're looking at the barriers to entry for Leafly Holdings, Inc. (LFLY), and honestly, the landscape is a mix of massive digital scale and a regulatory minefield. For a new player to even get noticed, they have to fight through the audience Leafly has already captured.

The need for a large audience is a high barrier. Leafly Holdings, Inc. reported attracting an average of 5.1 million monthly visitors to its platform in 2024. That kind of traffic doesn't appear overnight; it takes years of content investment and brand trust. To compete, a new entrant needs to immediately offer a compelling reason for consumers to switch from Leafly's established destination.

Regulatory complexity in the fragmented US cannabis market deters many entrants. The patchwork of state-by-state legality, coupled with ongoing federal uncertainty-like the status of cannabis under the Controlled Substances Act-forces any new platform to build compliance infrastructure for dozens of different jurisdictions. For instance, cannabis businesses still grapple with the limitations of IRS Code Section 280E, which effectively doubles their federal tax rate compared to standard corporations. This regulatory overhead acts as a significant moat for incumbents who have already navigated these waters.

New entrants must overcome the network effect of existing consumers and retailers. Leafly Holdings, Inc. had over 14,000 retail listings on its platform by the end of 2024, with more than 3,300 of those being paid accounts. Plus, the company states that more than 125 million people visit Leafly each year to learn about cannabis and order online. This creates a classic two-sided market problem: retailers won't list where consumers aren't, and consumers won't visit where retailers aren't listed. It's a tough cycle to break into.

Still, low capital intensity for a basic listing service means a low-cost entrant is defintely possible, but only if they ignore the true costs of the industry. While a pure-play digital listing service might seem cheap to start, the broader cannabis ecosystem requires massive capital for compliance and operations, which indirectly raises the bar for any service provider wanting deep integration. For context, starting a full-scale dispensary in 2025 often requires liquid capital between $250,000 and $2 million, with licensing fees alone ranging from $10,000 to $250,000+. A new entrant focusing only on the digital layer must still contend with the high operational costs faced by their potential retail partners.

Here's a quick look at the quantitative barriers facing a potential new entrant:

The regulatory environment itself presents hurdles that are more about legal overhead than pure technology spend. You have to factor in the complexity of state-by-state compliance, which is a non-negotiable cost of doing business in this sector.

• Regulatory fragmentation across 42+ states with legal programs.
• Federal tax code burden under Section 280E for operators.
• Potential for major shifts from DEA rescheduling in 2025.
• Banking restrictions forcing cash operations for many licensees.

If you're thinking of building a competing platform, you're not just building software; you're building a compliance and trust layer that has to match Leafly's established footprint. Finance: draft 13-week cash view by Friday.