Advertising mogul Weedmaps announced that it will now need state license numbers for all listings on their site selling marijuana products. This implies it will no longer post ads for unlicensed cannabis shops and third-party delivery companies.
This could mean a sharp increase in sales for legal sellers who have been battling against illegal unlicensed shops who undercut their competition by advertising on black market spaces like Weedmaps. Weedmaps continues to be one of the top dispensary sites for marijuana users. The company has not yet responded to requests for comment, and as such it is not clear when the new licensing requirements will be put into place.
However, a news release has said that Weedmaps will not only be restricting its advertising space to those who have licenses but will be tightening their Point of Sale, logistics, SaaS platforms, and online orders to include licensed operators only. Further to this, they will be instituting ways for users to easily identify licensing on their adverts.
Those in the know in the California cannabis industry have said that Weedmaps is bowing to external pressure from regulators and other big players in the market to halt adverts for the hundreds of non-compliant companies who use their site. These companies, in general, do not pay taxes, which has those against Weedmaps arguing that their behavior undermines the legal market in California.
In the initial press release by CEO of Weedmaps, Chris Beals, it was stated that the new regulations are only a reflection of his company’s overall dedication to working within the confines of the law and enabling the legal market to flourish.
It has been reported that the BCC, in February 2018, sent Weedmaps a cease and desist directly related to its unlicensed company advertising space. Weedmaps, however, dug their heels in, refusing to comply, saying they were protected by federal law. What this means is that Weedmaps has allowed more than 2000 nonlegal suppliers of marijuana to advertise on their site for the last year and a half.
Jackie McGowan, a cannabis consultant, estimates that around August 1st, Weedmpas still had an estimated 400 unlicensed cannabis stores advertising on their site and around 1,400 unlicensed delivery services in the greater California area.
A long-time marijuana attorney Khurshid Khoja says that Weedmaps is just bowing to state pressure. Weedmaps advertising as been a point of contention since the legal market emerged with pressure being put on them by legal distributors to stop allowing unlicensed shops to advertise on their space, so it comes as no surprise that those critics have called the announcement a win.
A long-time critic and sponsor of the bill in the state Legislature, which pushed to force Weedmaps to stop allowing illegal advertising, Jerred Kiloh said that it is good news. He believes that a new law, Assembly Bill 97, is part of the reason that Weedmaps eventually complied. The law states that an amount of $30,000 per day can be fined for violations of the licensing laws in the marijuana industry. This means that regulators could have enforced millions of dollars of fines against Weedmaps for advertising on behalf of illegal marijuana sellers.
Lori Aja of the BCC stated on Wednesday, saying that Weedmaps compliance is a move in the right direction for the legal cannabis industry in California, which helps users to identify legal, licensed marijuana businesses when wanting to buy safe cannabis. Saying she applauds the move by Weedmaps to comply.
Those in the legal industry have come forward saying that over the last two years, Weedmaps had undermined the legal industry by allowing illegal online store owners a foot into the market, a massive blow to the legal market which is still losing out to a much larger illegal market. Weedmaps’ decision to comply with licensing authority evens the playing field in California. It is now estimated that Weedmaps has cost the legal trade more than $800 million in sales since the legalization of marijuana in California. An amount of $200 million in tax revenue for the state.
A large chunk of this revenue can be moved into legal sectors now that Weedmaps has complied. It is one of the best-known marijuana search finders on the internet for those in California. Senior adviser of cannabis-related matters in California, Nicole Elliot has put her support behind Weedmaps, saying that she hopes they live up to the expectations placed upon them. She said the Office of Business and Economic Development is one hundred percent behind the legal marijuana market, and the advertising sector is not exempted from the support.
And while it appears that for now, Weedmaps is making it a priority to step up and become compliant, the devil is always in the details, and the result will have to be measured over time.