NOVEMBER 2019 - Capitol Corner

New State Law Putting the Squeeze on Weedmaps

Last week, authorities confiscated $1.5 billion worth of illegal cannabis in the state. Recreational marijuana has been legal in California for almost two years, but that hasn’t curbed the unlicensed market. 

Cannabis directory Weedmaps laid off 100 employees or about a quarter of its workforce last month. The downsizing followed an announcement that the Irvine-based company would no longer feature unlicensed pot shops on its platform.

In 2018, the state sent Weedmaps a cease-and-desist letter because the site allows unlicensed sellers to advertise, which violates California's cannabis regulations that require advertisements to display license numbers. Weedmaps’ hand was forced. In October, Gov. Gavin Newsom signed AB 97, which codified the regulation, sites that advertise illicit dispensaries face fines of up to $30,000 per day.

But California’s black market is a behemoth and its absence has meant a loss of revenue for the company. There is now a very real question about Weedmaps’ future.

The State Goes Big and Suspends Hundreds of Cannabis Licenses

California’s legal marijuana market took a hit last week when the state suspended the licenses of 394 businesses, which represent a full 5% of the state’s legal cannabis commerce. The suspensions affected 63 retailers, 61 delivery services, 47 microbusinesses, and over 200 distributors, Marijuana Business Daily reports. According to the Bureau of Cannabis Control, they have failed to begin using the state’s track-and-trace system as required.

The businesses recently received letters warning them that they must become compliant by Nov. 1. On Oct. 31, Governor Newsom’s cannabis czar Nicole Elliot said she was “issuing a STRONG recommendation” to those companies “to put your Halloween plans on hold & do it now.” 

Despite the head’s up, the California Cannabis Industry Association has sharply criticized the state’s move. It says the suspensions are apt to make the black market problem worse.

“There’s a huge pause right now. And in a time when we’re trying to incentivize consumers to buy regulated, tested product … it’s minimizing their options,” Josh Drayton, Communications Director for the California Cannabis Industry Association, said. “We’re kind of incentivizing the illicit market, which is a much more affordable option right now (for consumers). What we really need to be focused on is access and affordability.”

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