California Weed

California told Weedmaps to stop promoting illegal pot. But the ads are still up

A billboard for Weedmaps in Los Angeles.
A billboard for Weedmaps in Los Angeles.

Almost three weeks after the head of California's Bureau of Cannabis Control told operators of a popular website to stop "engaging in activity that violates state cannabis laws," Weedmaps.com continues to advertise unlicensed cannabis retailers.

Hundreds of dispensaries and delivery services advertise on Weedmaps in California, far more than the number of companies licensed by the Bureau of Cannabis Control.

Bureau chief Lori Ajax said her agency compared businesses on Weedmaps to licensing records to determine that the website was violating state law. She said the agency has sent similar warning letters to other publishers of advertisements for unlicensed retailers. In Sacramento, the city's cannabis regulator has sent a similar letter to the Sacramento News & Review.

If Weedmaps continues to violate state law, the company will face criminal and civil penalties, Ajax said. She would not further discuss how the enforcement action might play out.

Weedmaps did not respond to questions emailed by The Bee earlier this week. The questions were sent after the company's spokesman, Carl Fillichio, said executives would not be made available for an interview.

The Irvine-based Weedmaps serves as sort of Yellow Pages for the cannabis industry across the country, using mapping software on its website to guide customers to dispensaries, delivery services and doctors who provide recommendations for weed.

Ajax said the agency initiated enforcement action against Weedmaps and other businesses in response to complaints from licensed retailers who say unlicensed retailers enjoy an unfair competitive advantage by not having to pay taxes and license fees that went into effect with the state's new cannabis regulatory system on Jan. 1.

"It is prevalent across the state and it is jeopardizing the legal market," Ajax said.

Retailers have said the state's high rate of taxes and licensing fees are making it difficult to compete with the black market.

Cannabis retailers say they pay hundreds and even thousands of dollars a month to advertise on Weedmaps, depending on the location of their business and the prominence of the advertisement. They say they are willing to pay such costs because Weedmaps has established itself as the leading platform for marijuana advertising.

A competitor of Weedmaps, Leafly.com, recently announced that it would only allow advertisements of licensed businesses in California, starting March 1. "The California state government has made clear that only licensed retailers and delivery services may advertise via technology platforms," Leafly said in a press release last month.

Ajax's letter, sent Feb. 16 to Weedmaps' CEO Doug Francis, tells the company to "immediately cease" all illegal activity.

The letter states that Weedmaps is violating state law because all cannabis businesses must include their state license number on advertisements. Instead, Weedmaps has been using a license identification number that differs from the state's. Weedmaps has used these internally generated license numbers for companies that don't have a state license, as well as those that do.

On Wednesday, unlicensed businesses continued to advertise on Weedmaps.

The letter follows requests by officials in Sacramento and San Diego asking Weedmaps to stop advertising illegal businesses. Sacramento pot czar Joe Devlin said Weedmaps has not responded to his request, while a San Diego city councilman received a response from the company saying the city's regulations were the issue.

Last month in Sacramento County, about 200 marijuana delivery services were advertising on the website. Only one jurisdiction in the county, the city of Sacramento, has plans to allow cannabis delivery services, and it has yet to issue permits. In the interim, Devlin has told delivery companies to register with city, and eight have done so.

As in Sacramento, Weedmaps became an enforcement issue in San Diego because of illegal delivery companies. San Diego Councilmember Chris Cate said he became concerned because many companies were delivering without having a storefront location, in violation of San Diego regulations. He sent Weedmaps a letter asking for "voluntary compliance" by stopping the ads for such delivery services.

In a letter sent to Cate, Dustin McDonald, Weedmaps' vice president of government relations, responded that "it seems the real issue is that the city has enacted a licensing and zoning system so limited that it ensures a robust unlicensed market that will drain taxpayer dollars and rob the city of jobs and tax revenue."

Some political observers say the company's actions are a testament to its political clout.

"They are a classic operator -- come to Sacramento and throw some money around," said consultant Andrew Acosta, who led the unsuccessful campaign against Proposition 64, which legalized recreational marijuana in November 2016. Weedmaps "hired the same lobbying firm that was pushing the campaign, and now they are running amok," he said.

In an industry that is only starting to spend money on campaign contributions and lobbying, Weedmaps is an outlier. The company contributed $1.4 million to state and local races from June 2016 to December 2017, according to state records. Most of the money, $1 million, went to the pro-Prop 64 campaign.

The company also spent $325,000 on lobbying at the state capitol from 2016 through the end of last year. The money was paid to California Strategies, a Sacramento firm that employs one of the former leaders of the pro-Prop 64 campaign, Jason Kinney. He declined to comment for this article.

State lawmakers also have questioned Weedmaps for advertising its website on billboards, saying that state licensed cannabis companies would not be allowed to do the same thing. Ajax said the bureau is exploring whether Weedmaps is violating state law with the billboards, even though as an information listing website, it is not required to obtain a license.

However, the company has started a new service that raises questions about whether it needs a state cannabis license. In the Los Angeles market, customers can directly order cannabis through the Weedmaps site, as opposed to other areas where customers are directed to retailers' websites, phone numbers or email addresses.

Some of the Los Angeles retailers involved in the new service are not licensed.

Ajax said the bureau is examining whether Weedmaps needs a license for the service.

Bureau of Cannabis Control’s letter to Weedmaps

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