When you try to tax and (over)regulate a benevolent plant that grows like a … weed and you restrict mom & pop gardens from sharing their harvest with friends, family, or those in need by threat of Blackhawk helicopters and jackbooted soldiers, you sow the seeds for a resilient and resentful street market for years to come.
We recently reported on the latest offering from BDS Analytics/ArcView which revealed that the street market for cannabis in California is still nearly 3x as large as the taxed and regulated “legal” market. More importantly, the brains behind the information dump predicted that the street market will still be running neck and neck with the legal market five years from now.
With the average dispensary showcasing a 30-35% tax on midgrade weed that was (over)packaged months before it was purchased we have no doubt that the street market will continue to flourish but this week that “traditional” street weed market took a huge hit, and not the good kind.
The ultra-popular deal-seeker’s resource Weedmaps.com announced this week in an official press release that it has imminent plans to cut off its essential services to any companies that do not hold the proper permits and/or licenses from their state of operation.
In Cali, the state is spending hundreds of millions of dollars in an attempt to eradicate the backpack ballers and trunk hustlers currently reaping the rewards of staying out of the crippled legal market. But with every unpermitted farm they uproot and every unlicensed shop they shut down a handful more crop up in their place. That is how it has been for decades in the Wild Wild West of Weed.
Even in the grey days of prohibition, like just a few years ago, quasilegal brick & mortar weed retailers could be found with explicit green cross signage on their frontage but the tuned in toker has never had a need to drive around town hoping to spot a pot shop.
No, that information has been a click away for as long as most of us can remember at a website by the name of Weedmaps… but that is about to change a bit.
Weedmaps captured a massive audience of digitally influenced stoners immediately after its inception in July of 2008 giving us all a place online to talk to other like-minded weed aficionados with a freedom that was new and exciting. But the social aspect aside, the main function of Weedmaps can be found right in its name: Weedmaps provides users with an interactive map of their region showing pinpoints representing storefront cannabis dispensaries and weed delivery services.
One click on a pin reveals that company’s details, deals and menu along with pics and prices. Having your operation listed on Weedmaps came with a hefty monthly fee but their brilliant early monopolization of the market made it impossible for competing upstarts to, well, compete.
Listing your company name, phone number, and address on Weedmaps also put you on an easy publicly accessible database that any curious law enforcement officer could use as a to-do list to hit their monthly quotas. The sheer number of listings presented an overwhelming version of whack-a-mole for any agency who dared to try, and resources for such busts had all but dried up – until tax revenues from legal weed purchases refilled those coffers.
Those revenues, however, have been much lower than everyone expected – from policymakers to the licensees themselves. The fact that the street market is hauling in 3x the profits and paying none of the taxes has painted a huge target on it and has made odd bedfellows out of some licensed pot producers and the pigs they used to disparage. That’s a shame.
Until recently, Weedmaps was turning a blind eye to silly details like licenses and, ya know, laws, and was continuing to allow thousands of unpermitted shops and delivery services to openly advertise on their platform… as long as their cash payment arrived every month. Since trying to target the “black market” has always proven to be a fool’s errand, the crosshairs eventually began to shift onto Weedmaps’ back.
In February of 2018, the California Bureau of Cannabis Control (BCC) sent a cease and desist letter to Weedmaps regarding their promotion of unpermitted stores and services. A month later Weedmaps barely responded enough to basically say, “Nah, man.”
Belittled and publicly shamed by the weed website, the political gears began to turn and Assembly Bill 97 was drafted and appeared to be aimed at least in part at taking down Weedmaps if they don't change their business model. If it passes it promises to impose a $30,000 per day/per violation fine on anyone marketing unpermitted marijuana.
So, as stalwart as they have been up to this point, it appears that Weedmaps has caved in the face of potential fines in the tens or even hundreds of millions of dollars and you really can't blame them, that would certainly cripple if not kill the company.
You can read the full press release from Weedmaps HERE, but this is the key takeaway:
“Beginning later this year, US retail advertisers on Weedmaps will be required to provide a state license number on their listing. This requirement joins existing consumer information tools offered by the company, including surfacing lab data on product pages and a “Brand Verified” program that combats counterfeiting.”
The virtue signaling coming off the release is blinding as Weedmaps tries to divorce itself from its highly lucrative fence-sitting past by stating that this new era in their company ethos “underscores our commitment to working with lawmakers and regulators to foster a flourishing legal market.”
Is that it, or is it that you don’t want to bleed out $30k at a time?
Interestingly, there is no date set for the implementation of this new policy, only that it will happen “this year”.
This calendar year?
By August of next year?
The marketing minds at Weedmaps leave that detail just vague enough to milk countless more monthly payments from their soon-to-be ex-business-partners.
This should be a wakeup call to any cannabiz – licensed or otherwise – who is relying on Weedmaps to build their brand. If someone asks for your website and you send them to your WM listing you have nobody but yourself to blame when you login one day and the whole thing has gone up in smoke.