Weedmaps, as reported by MJ Biz Daily, has been ordered by the State of California to stop running ads on their website from unlicensed businesses. The news of the cease-and-desist letter from California’s Bureau of Cannabis Control rides in on the news from last week that Leafly would no longer list unlicensed cannabis businesses in California, and is another strong message from the State about how seriously it is taking its licensing and compliance mandates. Interestingly, in addition to the state, Weedmaps received a cease-and-desist letter from the city of Sacramento, hammering home the importance of having proper local and state-level compliance for all plant-touching businesses.

Not to be lost in the shock and awe of the letters themselves, is the fact that this situation very much represents the shifting market and evolution of the cannabis industry. Legalization and adoption of adult-recreation usage on January 1, 2018, as made clear by the layers of regulations and compliance that businesses must meet, has afforded businesses that meet and comply with those regulations access to new business opportunities, but also new taxes and associated fees that come with operating in a legal and regulated market. Plant-touching businesses operating outside of the legal market put compliant companies at a competitive disadvantage from a financial standpoint by evading the fees and taxes, to say nothing about the lack of quality control and regulation.

A Complex Evolution

Of course, even with the above being true, it is imperative to remember that these are the nascent days of legal cannabis for California. It is entirely likely that many of the “grey-market” companies that are unlicensed and advertising with Weedmaps have applied for their licenses and are simply working their way through the red tape of bureaucracy. The legalization process has been a monumental undertaking for the state and municipalities, and it hasn’t been any easier for the businesses that need to meet these new regulations. None of the complexity has simply changed or disappeared because the calendar rolled over from 2017 to 2018. This is a massive project and there are bound to be hiccups. Leafly, in an effort to address potential hiccups, when they announced that they were removing unlicensed businesses, made it clear that if a business felt they had been removed wrongly they should contact Leafly directly.

While it’s cold comfort for Weedmaps, which stands to lose a lot of money with the hit to their advertising revenue, these cease-and-desist letters are the sorts of associative growing pains that come when you legalize an entire industry. And Weedmaps is not alone, California’s Bureau of Cannabis Control has issued 900 cease-and-desist orders so far. A possible silver lining for Weedmaps’ bottom line? Many of the unlicensed companies that had been advertising are likely somewhere in the licensing pipeline with the state or their local municipality and can get right back to advertising once they’re cleared by the state.

California has made crystal clear already in these first few months of 2018 that compliance is the name of the game. If you have questions or concerns about if your plant-touching business is compliant, feel free to contact us.