 MJBizDaily has reported allegations of illegal black market advertisements on the incredibly popular website and app, Weedmaps.
The complaints against Weedmaps were filed with the California Department of Cannabis Control (DCC) and the U.S. Securities and Exchange Commission, alleging that Weedmaps has been carrying listings for and promoting advertisements for unlicensed cannabis retailers and illegal products. They go even further, though, and allege that this is not an accident, saying Weedmaps is, “allowing vast amounts of black market activity through their website, and they know about it but won’t do anything about it.” The complaints were lodged by executives from a licensed cannabis delivery service in California, based in Los Angeles, called Canex Delivery. Those executives, CEO Jim Damask and Chief Financial Officer Joseph Bitzer, said they repeatedly tried to reach out to Weedmaps directly, but felt Weedmaps took little to no action. So, they contact the authorities, and handed over nearly 50 documents and screenshots to back up their allegations which specifically include: • Posting advertisements for retailers with no license information. • Showing ads for products that are illegal in the state, such as edibles with more than 100 milligrams per package. • Not verifying the state licenses in many ads, which has led to both the selling of license usage and the theft of license numbers. Damask and Bitzer say that their actions in promoting illegal vendors and products directly harms licensed and legal businesses by undercutting the legal delivery operations and sales. The executives said their company had “suffered significant losses,” “quite possibly into the tens of millions (of dollars),” and that they had been paying Weedmaps roughly $1 Million a year to advertise on their site. The also state that Weedmaps actions are “misleading [their] investors by unethically increasing their revenue, which is being reported as legitimate in quarterly reports.” Bitzer said, “They want to show increased revenue,” and added, “They are intentionally accepting black-market revenue and using that to report – falsely – the revenue that they are making, to mislead their investors." Ultimately, Damask and Bitzer say what they really want is for the illegal ads to be removed. They said, “What we really want is for Weedmaps to just do the right thing, before suing anyone. And if they can do the right thing, then we’re happy.” But, they added that they will consider all options, though, including filing a civil lawsuit against Weedmaps if needed. MJBizDaily did their own investigative work on these allegations and they say they were able to confirm several of the allegations. Some were for multiple delivery companies who appeared to violate California state laws, such as promoting 1,000 milligram THC edibles, failing to display a company’s state license, displaying state license numbers that do not match the businesses posted, and illegal operating hours, such as deliveries available until midnight. They were also able to confirm that several companies said their license numbers had been stolen, while others were being used illegally in a franchise type situation. Some operators using other’s license numbers defended their ads. Drew Director is a manager at L.A.-based High Tide. The license number on his ad with Weedmaps is also being used on the site by delivery company DreamCali. Director said he has a “management agreement” with the license owner, who also runs similar contracts with other delivery services. He said, “My management agreement lets me use the license. I can name two other deliveries using the same license as me, “ but he declined to name them. A check with the Department of Cannabis Control’s database shows that the license in question belongs to Magnolia Extracts and is operated under the High Tide DBA (doing business as), but no mention of DreamCali or any other DBAs. The Department of Cannabis Control said in an email that, “Licenses are issued to a specific person – which may be an individual, corporation, partnership, or other entity – … and may not be assigned to another ‘person.” And an executive with the department’s predecessor, the California Bureau of Cannabis Control said it, “Seems obviously illegal to me.” “If one outfit doesn’t have their own license, the state isn’t going to allow any business to subcontract per se off that same license. It just seems like Weedmaps is using licensed businesses to shield the fact that they’re still advertising and profiting off the illegal market.” California’s Division of Cannabis Control confirmed the matter is currently under investigation and said, “Those dealing with unlicensed activity are immediately referred to our law enforcement division.” In 2018 Weedmaps was in a similar situation with California state regulators who sent them a cease-and-desist letter for similar advertising practices. In March of this year their Technology CEO Chris Beals told MJBizDaily they have a, “trust and safety team that reviews all business listings,” and Weedmaps “firmly puts itself … front and center of vetting who is on the marketplace.” Weedmaps has declined to comment on this latest complaint directly. Comments are closed.
|
RSS Feed