Online advertising giant Weedmaps said Wednesday it will begin requiring a state license number for all marijuana retail listings on its site, indicating it will cease carrying ads for unlicensed cannabis shops and delivery services.
The move could prove an enormous boon to legal retailers that have been struggling to compete with illegal shops simply by eliminating the black-market advertising presence on Weedmaps, which remains one of the most commonly used dispensary finders by marijuana consumers.
A spokesperson for the Irvine, California-based company did not immediately respond to a request for further comment, so it’s unclear exactly when the new requirement may go into effect.
According to a news release, Weedmaps will also be “restricting the use of its point of sale, online orders, delivery logistics and wholesale exchange software-as-a-service (SaaS) platforms to licensed operators exclusively.
“In addition, Weedmaps will explore ways to make it easier for patients and adult-use consumers to identify the license number on advertised listings.”
Insiders in California’s cannabis industry said Weedmaps was “capitulating” to pressure from both state regulators and others in the industry to quit carrying ads for hundreds of unlicensed companies that don’t comply with state regulations and don’t pay taxes, which critics of Weedmaps argue has undermined California’s legal market since it launched in January 2018.
Weedmaps CEO Chris Beals said in the release, however, that the move is a reflection of the company’s “commitment to working with lawmakers and regulators to foster a flourishing legal market.”
The California Bureau of Cannabis Control (BCC) sent Weedmaps a cease-and-desist letter in February 2018 regarding its ads for unlicensed retailers, but the company last March refused to comply, contending it was protected by federal law.
That means Weedmaps has been advertising for nearly 2,000 illicit competitors of California’s legal market for over a year and a half.
Sacramento-based cannabis industry consultant Jackie McGowan estimated that, as of Aug. 1, Weedmaps was still carrying ads for roughly 400 unlicensed marijuana storefronts and 1,400 unlicensed MJ delivery services in California.
Weedmaps conceding to state
“That’s how I read it – they’re capitulating,” Khurshid Khoja, a longtime California cannabis attorney, said of Weedmaps’ statement.
Weedmaps’ ads have served as a flashpoint since the legal market launched and have led many in the legal market to push for any action they can get to force the site to stop advertising for unlicensed shops.
Longtime critics hailed Wednesday’s news as a win.
“It’s good to hear. That’s all we’ve ever wanted,” said Jerred Kiloh, the president of the Los Angeles-based United Cannabis Business Association.
Kiloh has been one of the most vocal critics of Weedmaps and has been sponsoring a bill in the state Legislature that would help force Weedmaps to stop advertising for unlicensed retailers if it becomes law.
But he and others in the industry believe another new law – Assembly Bill 97 – has already given the BCC the tools it needs to force Weedmaps to comply because the statute includes a possible $30,000-a-day fine for violations that could apply to companies that don’t hold state MJ business licenses.
If regulators chose to do so, they could have possibly levied a fine in the tens of millions of dollars against Weedmaps for its carrying ads from illegal MJ sellers, sources said.
“I know the BCC has been putting pressure on them to comply or else, so this is the ‘or else’ part,” Kiloh said.