Weedmaps was criticized for promoting unlicensed or illegal cannabis sellers on its California site. Many businesses filed complaints alleging that Weedmaps was working with them despite not having legal backing.

They were filed in May and last month with the California Department of Cannabis Control and U.S Securities and Exchange Commission. They claim that Weedmaps is “allowing vast amounts of black market activity through their website, and they know about it but won’t do anything about it.”

California has been plagued by illegal cannabis businesses for years. Now, these businesses feel the law is allowing them to advertise legally despite being in California. Some are upset that this is happening because the huge cannabis content and advertising company has weakened the legal market. 

If it is determined that Weedmaps is guilty of this, they could face serious fines, which would be a major blow, since they are traded in the stock exchange, but it’s not clear whether or not they will be found guilty. The company was in trouble four years back for illegal advertising. It removed those ads from the website in 2020, before the parent company became public. 

Canex Delivery, an LA-based cannabis delivery company filed the new complaints. They claimed they originally contacted Weedmaps to raise their concerns. But no action was taken. After pursuing legal action, CEO Jim Damask & Chief Financial Officer Joseph Bitzer presented screenshots and documents to support these claims. They also claimed that the advertisements promoted the illegal market. 

The official SEC complaint reads that their company “suffered significant losses due to Weedmaps – quite possibly into the tens of millions (of dollars).”

They also claimed that Weedmaps is selling ads to these illegal companies to turn a profit, and wrote that “by allowing illegal operators to advertise on their site they are misleading investors by unethically increasing their revenue, which is being reported as legitimate in quarterly reports.”

Weedmaps was quick to respond. MJBizDaily as saying  “We have not received any communications from the DCC or SEC regarding complaints made by Jim Damask and/or (Joseph) Bitzer of Canex Delivery.”

Despite repeated requests, the company refused to comment further. MJBizDaily.

According to a spokesperson for DCC, California regulators are currently investigating the matter. The SEC has not yet commented.

Weedmaps also confirmed the existence of live websites advertising multiple illegal sellers and products as of June 28. It is not yet clear what the nature of these ad deals were, how they impact the competition and whether the official report will find them guilty. 

These ads were posted for delivery services in Southern California, however, unlike Canex they aren’t legally licensed. 

These ads appear to be in violation of California and Weedmaps policies. They do things like claim illegally strong edibles, including 1,000 milligram brownies and gummies, and don’t show a state license number, or if they do, it’s a number that doesn’t match the business posting the ads. Advertise illegal hours of operation such as midnight delivery or earlier. 

Canex’s Bitzer and Damask filed the complaints with the California Department of Cannabis Control in late May and with the SEC on June 4.

A DCC spokesperson claimed that this is still an “open investigation,” saying, “Those dealing with unlicensed activity are immediately referred to our law enforcement division. DCC provides publicly accessible data, available to private companies like Weedmaps, so it is simple to follow the law by verifying whether a cannabis company is licensed in California.”

This case will continue and it will soon become apparent if Weedmaps is held responsible for the ads as well as their impact on local businesses.