An Irvine-based website known as the Craigslist of pot for linking consumers with marijuana providers is pushing back against allegations that it is violating state law, arguing that it’s a technology company and not a marijuana business.
Last week, the state Bureau of Cannabis Control said it had sent 900 warning letters to marijuana shops suspected of operating without state licenses since Jan. 1 and recently sent a cease-and-desist notice to the marijuana-location service Weedmaps.com, warning it to stop advertising sellers that lack a permit or face civil or criminal penalties. It was the state’s first action against a marijuana advertiser.
The website responded Monday, stating that, as a service site like Google, Craigslist or Yelp, it was not subject to the same laws as its advertisers. But it also struck a conciliatory tone.
“We note at the outset that Weedmaps is a technology company and an interactive computer service which is subject to certain federally preemptive protections...of the Communications Decency Act,” the company’s letter to Bureau of Cannabis Control chief Lori Ajax stated. “Nonetheless, as a technology company that has serviced this industry for a decade and as a company which employs almost 300 California residents, we wish to work together as a partner with California to find a solution to the concerns you raise.”
Monday’s letter was Weedmaps’ first public response to the Bureau of Cannabis Control’s allegation that the company was essentially “aiding and abetting in violations of state cannabis laws” by allowing unlicensed marijuana shops to advertise on its website.
The company’s president, Chris Beals, told The Times that he was “surprised” the state was going after Weedmaps since the state’s latest marijuana regulations only took effect Jan. 1.
“We were under the impression that the bureau would focus on getting people licensed before they moved on toward attempting enforcement,” he said.
The unexpected crackdown may be a result of Weedmaps’ success over the last decade coming into sharper focus as the legalization of recreational use of marijuana—and attempts to regulate the huge market— come into force.
“Weedmaps has done a really good job of branding their name across the country. It’s the Craigslist of pot, the Yelp of cannabis,” said Lauren Mendelsohn, a Northern California attorney who specializes in cannabis regulatory compliance.
“It’s been making its living, quite frankly, on illegal advertising,” Mendelsohn asserted.
She said the company’s claim that it’s protected under federal statutes is questionable.
Since 2007, Weedmaps has pointed millions of visitors a month to an online localized marijuana storefront, offering delivery service and doctors able to provide a medical recommendation. Over the years local, state and federal authorities have used its listings to identify unlicensed marijuana businesses and ordered them to shutter. Some businesses don’t list on the site to avoid detection.
In a letter to the company dated Feb. 16, the Bureau of Cannabis Control accused Weedmaps of not posting its own marijuana license number or those of its advertisers online and also allowing unlicensed businesses to advertise.
The company argues it is not a marijuana business subject to state regulations under the Medicinal and Adult-Use Cannabis Regulation and Safety Act and is instead protected under federal laws as an interactive computer service.
That many of the Weedmaps advertisements are for unlicensed marijuana businesses isn’t a sign the site is flouting state regulations but a symptom of the state’s broken licensing process, Beals said.
“It’s almost a complete failure of county and local governments to enact any sort of legalization to provide pathways for licensed businesses,” Beals said.
He estimated that there are nine unlicensed marijuana providers for every one that is licensed in California and suggested competing interests have fostered a regulatory bottleneck that’s providing a small number of businesses the lion’s share of the legal market.
Licensed or not, there’s simply too much money in the cannabis business for entrepreneurs to wait for the processes to catch up, Beals said. Cracking down on unlicensed businesses at this point in the fledgling legal market is a waste of state resources in the long run, he said.
“Scrubbing the internet of the reality of unlicensed operators that have created thousands of jobs over the last 20 years does nothing to fix the underlying issues,” Weedmaps’ letter to the state said. “It is simply opening a new face of regulatory ‘Whack-a-mole’ when the ultimate cause is broken policy that provides no opportunity for thousands of business owners who just want a chance to get a license and enter the legal market.”
California, Beals said, should look to other states with legalized marijuana for examples on better licensing processes.
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