Weedmaps is under fire for advertising illegal or unlicensed cannabis retailers on its site in California. Several businesses have filed complaints that claim Weedmaps is working with these businesses despite their lack of legal backing.
These complaints were filed last month and in May with the California Department of Cannabis Control (DCC) and the U.S. Securities and Exchange Commission (SEC). They claim that Weedmaps is “allowing vast amounts of black market activity through their website, and they know about it but won’t do anything about it.”
These illegal businesses have long been an issue in California, and now, businesses are fed up that they are even getting a legal leg up with advertising despite their status. Those upset about it claim that the legal marketplace is being undermined by the massive cannabis advertising and content company.
If it is determined that Weedmaps is guilty of this, they could face serious fines, which would be a major blow, since they are traded in the stock exchange, but it’s not clear whether or not they will be found guilty. Four years ago, the company got in trouble for something similar regarding illegal ads, and successfully removed the ads from its website in 2020 before its parent company went public.
The new complaints from this year were filed by Canex Delivery, a Los Angeles-based cannabis company. The company claimed that they initially went to Weedmaps with their concerns, but no action was taken. CEO Jim Damask and Chief Financial Officer Joseph Bitzer provided documents and screenshots to back up these claims once they took legal action, and alleged that the ads promoted the illicit market.
The official SEC complaint reads that their company “suffered significant losses due to Weedmaps – quite possibly into the tens of millions (of dollars).”
They also claimed that Weedmaps is selling ads to these illegal companies to turn a profit, and wrote that “by allowing illegal operators to advertise on their site they are misleading investors by unethically increasing their revenue, which is being reported as legitimate in quarterly reports.”
In response, Weedmaps simply went on the record with MJBizDaily as saying “We have not received any communications from the DCC or SEC regarding complaints made by Jim Damask and/or (Joseph) Bitzer of Canex Delivery.”
The company declined to provide further comment, despite repeated requests from MJBizDaily.
A spokesperson for the DCC said California regulators are investigating, and the SEC declined to comment.
It also has been confirmed that as of June 28, Weedmaps had live web pages advertising for multiple illegal retailers and products. The nature of those ad deals, how this impacts the competition, and whether or not the official report will find the company at fault, has yet to be determined.
The ads were for Southern California delivery companies, but unlike Canex, they are not legally licensed businesses.
The ads also appear to violate California, and even Weedmaps, policies. They do things like claim illegally strong edibles, including 1,000 milligram brownies and gummies, and don’t show a state license number, or if they do, it’s a number that doesn’t match the business posting the ads. They also advertise illegal operating hours such as delivery until midnight or later.
Canex’s Bitzer and Damask filed the complaints with the California Department of Cannabis Control in late May and with the SEC on June 4.
A DCC spokesperson claimed that this is still an “open investigation,” saying, “Those dealing with unlicensed activity are immediately referred to our law enforcement division. DCC provides publicly accessible data, available to private companies like Weedmaps, so it is simple to follow the law by verifying whether a cannabis company is licensed in California.”
As this case continues, it will become clear whether or not Weedmaps will be held accountable for these ads and the impact they have on local businesses.