Aug 21

Weedmaps says it will stop promoting unlicensed marijuana businesses by end of year

Facing growing pressure from state regulators and legal vendors, the popular online cannabis shop directory Weedmaps said Wednesday, Aug. 21, that it plans to stop carrying listings for unlicensed marijuana businesses before the end of the year.

The Irvine-based company has promoted illicit cannabis shops since its website launched in 2008, when recreational use of marijuana was still illegal in California. The company has continued to list unlicensed shops even as California legalized marijuana and required all businesses to get pricey state licenses, start testing products for safety and pay hefty taxes.

That practice has generated money for Weedmaps from companies knowingly breaking the law, and helped Weedmaps maintain its market share in the world of pot online advertising.

Many cannabis entrepreneurs who’ve struggled to make money in the state’s strict legal market have blamed Weedmaps for helping the illicit market continue to thrive, since its Yelp-like service is often the first thing shoppers find if they do an online search for a dispensary in their city. That’s given unlicensed stores and delivery services a substantial advantage, since they haven’t been paying to comply with state regulations but could still be easily found by consumers who often assumed a public platform would only list legal businesses.

“Advertisers such as Weedmaps who have promoted unlicensed dispensaries have greatly hurt the legal market in California and confused consumers,” said Aaron Herzberg, an attorney with Los Angeles-based The Puzzle Group, which specializes in cannabis real estate. So he called Wednesday’s news “a win for the legal market, state regulators, local law enforcement and consumers.”

Josh Drayton, spokesman for the California Cannabis Industry Association trade group, said Weedmaps’ commitment to work only with regulated operators by the end of the year should help level the playing field and give licensed businesses a fighting chance.

That commitment marks a 180-degree reversal from Weedmaps’ stance at this time last year.

Officials at California’s Bureau of Cannabis Control sent Weedmaps a cease-and-desist letter in February 2018, telling the company it was breaking state law by listing unlicensed shops. Weedmaps’ leaders fought back with a letter of their own that cited protections for technology companies, while critiquing cities and the state for making it hard for shops to get licensed.

In a previous interview, Weedmaps CEO Christopher Beals was defiant, arguing that his company was simply providing the same information about marijuana shops that’s available via Google, Yelp and other platforms.

“To sort of say, ‘Let’s pretend an illegal market doesn’t exist,’ or that people can’t just type ‘dispensary’ into Google and find this information… isn’t really realistic,” Beals said.

For the past year, Weedmaps seemed to be winning the fight. Hundreds of illicit marijuana shops and delivery services are still listed on the company’s website, and no civil or criminal complaints have been filed as a result.

But a new law may well have turned the tide.

Assembly Bill 97, which Gov. Gavin Newsom signed last month, lets regulators fine unlicensed parties up to $30,000 each day that they’re in violation of state cannabis laws. The cannabis bureau didn’t immediately respond to a request for comment, but attorney Hilary Bricken says the new rules mean the state could have been fining Weedmaps $30,000 a day since the bill took effect July 1.

“I would be surprised if this didn’t play into the decision making at Weedmaps somewhat as the financial penalties are significant,” Bricken said.

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