September 19, 2019

Company Implementing Changes Requiring State License Number to Use Their Services

Weedmaps, an online directory and sales platform for cannabis retailers, announced in a recent press release, “Beginning later this year, US retail advertisers on Weedmaps will be required to provide a state license number on their listing.” It continued, “The company is also restricting the use of its point of sale, online orders, delivery logistics, and wholesale exchange software-as-a-service (SaaS) platforms to licensed operators exclusively. In addition, Weedmaps will explore ways to make it easier for patients and adult-use consumers to identify the license number on advertised listings.”

Although the announcement was situated near the end of a lengthy press release touting Weedmaps’ initiatives to support businesses that qualify as social equity and minority-run, it is a significant shift in California’s cannabis market. Since the opening of the Golden State’s licensed system, at the beginning of 2018, businesses that have gone through the processes of obtaining local and state permits have complained that unlicensed retailers and delivery services were allowed to advertise on Weedmaps. As a result, consumers could easily find illegal storefronts, which can frequently undercut licensed ones on price due to not paying taxes, fees, and other compliance costs.

California cannabis regulators responded positively to the news. According to a press release from the state Bureau of Cannabis Control (BCC), “Yesterday’s announcement by Weedmaps is a step forward for the legal California cannabis industry, which will aid consumers in identifying licensed cannabis businesses when looking to purchase safe cannabis. The Bureau is continuing enforcement activities against businesses not complying with cannabis advertising laws.”

When Weedmaps will actually cease to post advertisements for unlicensed businesses, in addition to delisting ones currently advertising on the site, remains unspecified. A report from the Los Angeles Times describes the reaction from operators in California’s legal industry as cautiously optimistic.

Presuming that Weedmaps does follow through with its recent announcement, however, cannabis consumers in California will likely have a significantly more difficult time locating illegal outlets. Such a development should push more of the state’s latent demand into the regulated market, especially in Los Angeles, where the issue of unlicensed sellers competing with licensed ones has been particularly acute.