Is Weedmaps legal? Service lists unlicensed pot shops, raising questions that could touch many tech companies

It’s been eleven months since California cannabis officials told Weedmaps, the popular online directory that helps consumers find marijuana shops, to stop listing stores that aren’t licensed.

It’s also been about eleven months since Weedmaps essentially told the state to pound sand; that it would continue taking ads from all comers. And the ongoing difference of opinion between state and company could affect the cannabis industry — and other technology companies — going forward.

The squabble, indirectly, is also why Gary White feels hoodwinked.

White said his wife suffers from arthritis and other ailments but, because she also has just one kidney, she can’t take painkillers. So for Christmas White wanted to give her some CBD, a compound in cannabis that doesn’t make people high but has shown promise in alleviating chronic pain.

“Cannabis,” he said, “is really her only available thing for pain relief.”

Using Weedmaps, White found a shop near their Laguna Niguel home — Sacrament of Faith in Lake Forest. He assumed the shop was licensed and that the cannabis and CBD it sold passed all state regulations, including safety testing, and that product labeling was as trustworthy as what he’d find at a grocery.

Instead, White discovered that the product recommended by a worker at Sacrament of Faith had far less CBD than his wife needed. And another product he purchased at the store had a “1,000-milligram” dosage sticker covering an actual product label that read “300 milligrams.”

It was, he said, “bait and switch.”

No one at the shop returned his calls, White said. They also declined to speak for this story.

What White didn’t know was that Sacrament of Faith does not have a state license to sell cannabis products, or that marijuana shops are banned in Lake Forest. White couldn’t believe an “illegal operation” would have a storefront in plain sight, and would “advertise in the major place folks look for cannabis: Weedmaps.”

But taking ad money from all shops, legal and otherwise, is part of the business model at Irvine-based Weedmaps.

In February, officials at California’s Bureau of Cannabis Control sent Weedmaps a cease-and-desist letter, telling the company it was breaking state law by listing unlicensed shops.

Weedmaps’ leaders fought back. They wrote a three-page letter of their own that cited protections for technology companies, while critiquing cities and the state for making it hard for shops to get licensed.

So far, Weedmaps seems to be winning. Dozens of illicit marijuana shops are still listed on the company’s website, and no civil or criminal complaints have been filed as a result.

That’s left customers such as White in the dark about where to find regulated shops that sell lab-tested cannabis.

It’s also left many licensed shop owners fuming, since they’re being undercut by stores that haven’t spent hundreds of thousands of dollars to cover licensing fees, taxes and upgrades needed to comply with hundreds of pages of state regulations.

Weedmaps, which has offices and political influence around the world, still might face some repercussions.

There’s talk of the state Attorney General taking up a case against the company. There’s also a push for legislation that would penalize companies like Weedmaps that don’t make an effort to ensure their advertisers are complying with state cannabis laws.

But it’s a sticky debate, and one attorney Chris Hoo with Evergreen Law in Los Angeles says could have far-reaching implications.

“This … will truly test the limits of online ad content liability and the interactions between California and federal law in the years to come.”

State vs. Weedmaps

The letter sent last year by the Bureau of Cannabis Control argued that Weedmaps was guilty of two violations.

The first was that the company was breaking California cannabis laws, which say all marijuana businesses must include their state license numbers on any advertisements.

But Weedmaps argued that it isn’t a cannabis company, any more than Google is a news company because you can find Southern California News Group news sites through its search engine. As a result, Weedmaps said, the state’s cannabis regulators had no authority over it.

“I think Weedmaps is correct that it’s not under the jurisdiction of the BCC since it’s not a licensee,” said attorney Hilary Bricken with the Los Angeles firm Harris Bricken. “So I don’t think that BCC allegation holds any water.”

The bureau has essentially conceded this point.

“We’d done all we could do,” said Alex Traverso, spokesman for the Bureau of Cannabis Control. “They’re not a licensee, so we didn’t have any authority beyond what we’d already done.”

The state’s second claim was that Weedmaps was “aiding and abetting in violations of state cannabis laws.” And on those grounds, Bricken said, the state might be able to pursue criminal charges against Weedmaps.

The state’s case could be bolstered by the fact that last spring Weedmaps defended itself by noting many of the unlicensed shops listed on its site were operating as collectives under California’s long-loose medical marijuana laws, something that was legal at the time. But that argument is no longer valid, as legal protections for those businesses expired on Jan. 9, when all collectives in California were required to get licenses or end operations.

The Jan. 9 deadline came and went, and little seems to have changed on Weedmaps.

Company officials declined to be interviewed for this story, but Weedmaps spokesman Carl Filichio emailed this statement:

“We continue to engage in a constructive dialogue regarding this matter with state regulators and operators desperately trying to get access to licensing. And we look forward to working together to reduce the illegal market through effective setting of license density, tax rate, medical access and product variety.”

In a previous interview, Weedmaps President Christopher Beals argued his company is simply providing the same information about marijuana shops that’s available via Google, Yelp and other platforms.

“To sort of say, ‘Let’s pretend an illegal market doesn’t exist,’ or that people can’t just type ‘dispensary’ into Google and find this information… isn’t really realistic,” Beals said.

Some hope the state, under Gov. Gavin Newsom — who campaigned for marijuana legalization, in part, to reduce the underground market — will take a strong role in disciplining Weedmaps. And Traveso said he believed the Weedmaps issued had been “elevated” out of the BCC’s “jurisdiction,” indicating a potential case had been taken up by the Attorney General’s office.

Attorney General Xavier Becerra’s office didn’t respond to requests to discuss whether they were handling any case involving Weedmaps.

Implications for other tech platforms

Another argument Weedmaps makes to defend why it should be allowed to do business with unlicensed marijuana retailers is a claim under Section 230 of the federal Communications Decency Act — a claim that is fundamental to many businesses operating on the internet.

The statute, passed in 1996, says online platforms largely can’t be sued for the content posted by their users. Those protections are the crux of free speech online and have allowed the modern internet to flourish, according to Aaron Mackey, staff attorney with Electronic Freedom Foundation, a San Francisco-based nonprofit that advocates for free speech online.

“It creates this robust digital world that we all enjoy, and share, and connect in,” Mackey said of the statute.

By citing Section 230, Weedmaps is saying cannabis shops that supply content to its platform are responsible for complying with state law, and that it’s not their job to police illicit businesses.

“Taking a page right out of the playbook of content and ad giants Facebook and Google, Weedmaps is basically claiming a shield from liability for claims made by its clients and published on its website,” said Hoo of Evergreen Law.

The key will be how Weedmaps actually functions, according to Jack Lerner, a professor at UC Irvine who specializes in internet law.

If Weedmaps plays an active role in selecting and curating the listed shops, Lerner believes the company’s argument could be weak. But if the content is largely handled by the shops themselves, he believes Weedmaps might have a strong defense under federal law.

Section 230 is the same defense used for years by Backpage.com, which last year was found to commonly publish ads for sexual services that featured trafficked children.

In April, the federal government seized Backpage and the company’s CEO pleaded guilty to conspiracy to facilitate prostitution. Also in April, President Donald Trump signed legislation that carves out an exception to Section 230, giving states the power to go after computer platforms that promote content related to sex trafficking.

Lawmakers in California also have talked about rules that could make it easier to control Weedmaps.

In February, Assemblyman Jim Cooper introduced legislation that would have let the state fine any licensed or unlicensed cannabis-related business $10,000 if they ran an ad without listing their state license number. That bill died in committee, and Cooper’s press secretary didn’t respond to calls about plans to revive the bill this session.

Other attempts to pass state legislation limiting protections under Section 230 in the past have failed, Lerner said, since federal law supersedes state law.

Most online cannabis shop directories, such as Leafly.com, opted to stop listing unlicensed stores last spring. And state marijuana regulators haven’t sent cease-and-desist notices to any other technology companies, Traverso said.

Still, Weedmaps’ business could be altered in a different way.

The state said this year it will crack down on unlicensed cannabis businesses, after largely letting such businesses operate in 2018 as the licensing process was created. Such a crackdown could drain Weedmaps of at least some potential advertisers.

Mackey, the lawyer who advocates free speech on line, notes that any state crackdown might be made somewhat easier by Weedmaps, as regulators can use the site instead of the dark web to find locations of unlicensed shops. Indeed, Traverso said, many of the operators who’ve been targeted for enforcement were found via Weedmaps.

But the fact that these shops continue to list their addresses and product menus on Weedmaps shows how vital the online platform is to their bottom line.

Weedmaps did agree to remove what it called “internal Weedmaps identifier” numbers — which strongly resembled state license numbers — from appearing next to unlicensed shops listed on the site. Now, unlicensed shops have no posted ID numbers, while state license numbers for legal shops can be found by clicking a drop-down menu and scrolling to the bottom of store descriptions, beneath a list of their amenities.

As for White, he didn’t notice that the Lake Forest shop had no license number listed on Weedmaps, since he didn’t know to look for one.

He said he’s filing a complaint with the state about Sacrament of Faith, and he’s eager to warn other medical marijuana patients to be on the lookout for unlicensed operators.

Source: Orange County Register