Sometimes called Yelp for pot, the smartphone app Weedmaps enables users to locate dispensaries and delivery services selling the green stuff. The company has been among the breakout success stories of legalization thus far.
While federal illegality in the US makes it very difficult for a company to sell cannabis in more than one state, Weedmaps faces no such constraints. As it is a technology company, content posted on its site by users isn’t regulated – even if that content relates to illegal practices.
With customers on both US coasts, Canada and Spain, it’s one of very few international marijuana brands. When a visitor lands in Portland, Denver or San Francisco, they might not know the local dispensary or product names, but they know to check Weedmaps to find out.
However, Weedmaps recently came under fire from Lori Ajax, California’s marijuana regulator, who said the company could face civil or criminal charges if it doesn’t stop promoting 900 unlicensed dispensaries in the state. The move comes as part of Ajax’s effort to stamp out the state’s gray and black markets; of the roughly 13.5m pounds of weed grown in California in 2016, about 80% was consumed illegally out of state.
Responding to Ajax, Weedmaps did something almost unheard of for a cannabis company: it politely told the regulator to get lost.
Weedmaps’ Silicon Valley-style cockiness is unusual in an industry whose leaders have made an effort to be respectful of the state governments that allow them to operate, contrary to federal law. Cannabis companies have all kinds of gripes about how hard it is to do business, but they’ve generally realized there’s more to gain in the long term from playing nice.
The success of this approach can be seen in legal marijuana’s exponential growth, and in how steadfastly state governments have stood with the industry against the US attorney general, Jeff Sessions, who, like a killjoy dean in a college comedy, can’t wait for an excuse to crack down.
With the whole industry largely aligned on its priorities, there hasn’t been too much for companies to argue about. But the Weedmaps situation is different. As a business that has thrived on California’s grey market, the transition to legalization presents significant challenges.
Based near Los Angeles, the company was founded a decade ago, when the state’s cannabis market was more difficult for consumers to navigate than it is now and selling pot was a riskier occupation. Weedmaps enabled customers and buyers to find each other.
Dispensaries with limited advertising options came to depend on Weedmaps to get the word out. According to industry sources, dispensaries can pay more than $10,000 a month for prominent placement on Weedmaps and its rates have earned it the nickname “greed maps”. (Weedmaps declined to comment on its prices.)
As legalization gained traction, Weedmaps grew rapidly and gained a reputation for its tech-bro culture. It was also a pillar of the cannabis community: it donated to California’s legalization effort and has thrown cool events. The company says it now employs almost 300 California residents.
But there’s a real question about whether Weedmaps can adapt to a legal market where it has increasingly sophisticated competitors, and more of them. The core problem it first solved – connecting buyers and sellers – is not as pressing as it once was, at least in legal markets.
When California told Weedmaps to stop promoting 900 unlicensed in-state shops representing significant revenue to Weedmaps, the company responded that since it is a technology company, it can’t be regulated any more than, say, Google, which can also be used to locate dispensaries.
Weedmaps’ defense has an unsavory precedent notorious for protecting Backpage, a Craigslist-like site used by human traffickers. But a bill awaiting Donald Trump’s signature would make sites responsible if they intentionally facilitate sex trafficking. In theory, the bill could mean sites are broadly held accountable for user-posted content. Weedmaps, however, says the law would not affect its business. (Free speech advocates and major internet companies oppose the bill, which received overwhelming bipartisan support in Congress.)
Weedmaps’ position that it will continue to accept the business of unlicensed California shops is also a jab at dispensaries that have gone through the hassle and expense of getting licensed and don’t want to appear alongside companies that, at least so far, have avoided the ordeal, and as a result may be able to offer lower prices.
One manager of a licensed shop in Los Angeles wrote on condition of anonymity: “I believe [Weedmaps] pose a threat to the arduous and long lasting efforts for the legalization process of cannabis in America. They are a perfect excuse for the [Drug Enforcement Administration] to get back to work and start harassing businesses in the state since they have a national advertising platform for a schedule 1 drug.”
Chris Beals, the president of Weedmaps, says it is eager to work with California to support the legal market, and that taking down unlicensed shops won’t help the licensed ones until reduced backlogs and restrictions make it easier for dispensaries to get licensed. “This market is still in a transition state,” Beals said. “Removing this information from the internet has no effect on the unlicensed market.”
Either way, the controversy is an indication that the marijuana industry is becoming less monolithic in its thinking. Pot is associated with peace and love, but individual companies can be expected to fight for themselves as aggressively as any other special interest.