Online cannabis platform Weedmaps announced last Wednesday new details of its plan to remove listings and advertising for unlicensed websites from its services. Weedmaps announced last month that it would work to remove listings for unlicensed cannabis businesses in California, responding to criticism that including them was contributing to the state’s illicit market marijuana sales. The company also announced that it would take steps to support regulated businesses owned by minority entrepreneurs.
“Just three weeks ago, we announced a first-of-its-kind program to help social equity participants gain a rightful foothold in the cannabis industry. We also announced our plan to use the power of our platform to help support licensed cannabis businesses,” said Chris Beals, the CEO of Weedmaps, in a press release on Wednesday. “While these policy changes will only have a symbolic impact on the size of California’s unlicensed market without more licensing opportunities and other large listing platforms following suit, we want to continue to lead by example.”
Weedmaps said it plans to make several enhancements to its website to support licensed businesses, including a new user interface to highlight license information to make it more visible. The company also plans to develop online resources to help consumers learn where California licensing information can be found and will create an educational program and software to help licensed operators comply with driver and delivery tracking regulations.
“As these efforts progress, the company will explore ways to work with regulatory agencies in California to provide enhanced functionality and to encourage consumers to verify that they are buying fully tested products from licensed retailers,” Weedmaps wrote in the release.
Trade Group Calls for Fines Against Weedmaps
But the efforts being taken by Weedmaps to remove unlicensed operators from its platform isn’t sitting well with some licensed businesses, who believe that action should be taken more quickly. After Wednesday’s announcement, the United Cannabis Business Association, a trade group representing mostly Southern California retailers, sent a letter to Democratic Gov. Gavin Newsom and Bureau of Cannabis Control chief Lori Ajax asking that Weedmaps be fined up to $85 million for violations of state regulations related to the listings for unlicensed companies.
“We request the state immediately and retroactively impose the maximum fines permissible by law on Weedmaps’ illegal operations,” wrote the UCBA.
The trade group also noted that unlicensed cannabis operators have been implicated in the ongoing rash of vaping-related lung illnesses that so far have affected nearly 500 cannabis and nicotine users and taken at least six lives.
“Just last week, after a series of deaths, the federal Food and Drug Administration (FDA) formally warned consumers to avoid vapes containing THC,” the UCBA wrote in its letter to Newsom. “While still under investigation, all 57 cases so far in California have involved purchases from unlicensed “pop-up” shops. This outbreak serves as a tragic reminder of the dangers that the unlicensed industry poses to consumers.”
An audit conducted by the UCBA released this week determined that 2,835 unlicensed cannabis dispensaries and delivery services were operating in California, compared to the 837 licensed retailers serving California’s market.
Ironically, an audit of the UCBA website on Thursday afternoon revealed that only four of the 39 member retailers were displaying license numbers with an ‘active’ status according to the BCC’s license search tool. Dozens of the listed license numbers had a status of ‘canceled,’ while several others produced no results from the BCC website.
A spokesperson for the UCBA assured that all of the group’s members are properly licensed by the state, but was unable to explain why the trade group was listing invalid license numbers for its members on its own website. After the discrepancy was brought to the trade group’s attention, the license numbers on the UCBA site were updated later on Thursday to reflect currently valid numbers.
Weedmaps CEO Responds to Criticism
In an email, Beals said that removing unlicensed operators is “not as simple as flipping a switch” and that many licensed businesses had not yet submitted licensing information to Weedmaps. In the statement he seems to blame governing bodies and the recreational market for his company’s recent involvement with less-than-legal companies.
“But more importantly, the fact remains that California has not made enough licenses available for a legal cannabis market to thrive and self-regulate and a disproportionate number of those without licensing are people of color and those without unlimited capital,” Beals said. “Roughly 75% of California municipalities have declined to make cannabis licenses available, so when you consider the impact this has on consumers that depend on cannabis for their medicinal needs, the issue becomes even more magnified.”
Beals also said that efforts to stem California’s cannabis illicit market by sanctioning digital platforms are misplaced.
“We know from other jurisdictions that trying to censor the internet will have no impact on the size of the unlicensed market,” he said. “This information is widely available on any search engine. The only proven solution to unlicensed dispensaries, particularly in California, is to make sufficient licenses available to meet consumer demand and allow unlicensed operators to have a chance to comply and compete.”