LaunchBar script that returns the path of a folder "dropped" on it
The open() handler gets passed an alias (which is a kind of a pointer to a file or folder). You can then simply convert the alias to text, but it will show you the path with colons as separators (e.g. "Macintosh HD:Users:Username:Documents:Folder:").

Use POSIX path of to convert it to a UNIX-style path with "/" separators, and if you want to paste it into Terminal, especially if the path has spaces in it, you should use quoted form of to properly enclose it in quotes.

The following script works with both folders and files for me, when an item is passed to it via LaunchBar:

on open (thisItem)
    display dialog (thisItem as text) -- alias
    display dialog quoted form of POSIX path of thisItem -- POSIX path
end open