The Curious Relationship between Weedmaps and Marijuana Dispensaries

The Curious Relationship between Weedmaps and Marijuana Dispensaries

weedmaps dispensaries

You Know She Isn’t Right for You But You Just Can’t End It

We have all been there before. We know this guy or gal isn’t the right one, but you just can’t seem to end the relationship. Why? The usual suspect is because the sex is great, but the rest of the relationship is not so hot.

Guess what?

The same thing is going on in the cannabis space between Weedmaps, the predominant mapping service for dispensaries, and licensed cannabis dispensaries around the world.

Licensed dispensaries around the world begrudgingly give Weedmaps their monthly fee for a high listing on their search results and map area. Why begrudgingly you may ask? Weedmaps also lists “illegal” cannabis services such as delivery services and unlicensed cannabis dispensaries. The licensed dispensaries, who have had to pay millions of dollars in legal fees, set up fees, licensing, and other costs to be a legal dispensary, are listed right next to “illegal” dispensaries, sometimes on the same street and even in the same building. Their startup costs for "illegal" dispensaries are pennies on the dollar for what legal and licensed establishments have had to pay to be licensed in different states, and they can sell the same product for 30% to 50% cheaper because of that fact.

So why would a licensed dispensary pay Weedmaps for a high-ranking spot on their map and in their search results if they are also supporting and listing illegal competitors right next to them?

The nookie.

The traffic and leads that Weedmaps can generate based on 20 years of internet articles, forums, and mapping dwarfs anyone else in the industry. So, even though they list knock-off competitors and fly-by-night services right next to listings for licensed dispensaries, the licensed dispensaries hold their noses, and pucker up for the Weedmaps’ kiss.

The California Cannabis Control Commission tried to get Weedmaps to stop listing “illegal” dispensaries a few months ago, citing new cannabis legalization and advertising bills that California passed. Weedmaps declined the request citing the common Supreme Court ruling that digital platforms cannot be held accountable for content generated by its users, so it isn’t really Weedmaps’ problem. The battle is not over but the future is certain, at some point, Weedmaps will be forced to remove unlicensed providers. The unlicensed deliveries and dispensaries aren’t just users creating content on the network, they are paying Weedmaps hefty sums to be listed in the top 10 of search results and to have bigger pins on the map.

Why wouldn’t Weedmaps just take down the unlicensed services such as deliveries and dispensaries if it pissed off their paying licensed dispensaries?

One word, money.

Most estimates and press snippets have Weedmaps doing between $20mil and $30mil in listings fees a month, putting the company value at close to $500mil, if not more.

We logged over 10,000 calls to dispensaries as we started out mapping at Cannabis.net and the feelings from licensed dispensary owners about Weedmaps come down to the following quotes.

“Hate them, please, someone take their place, here is my credit card.”

“Sleazy used car sales tactics, always pushing the upsell, non-stop harassment”

“Their bidding on placement is obnoxious and gross, they are an ugly part of doing business”

“I can’t stand them but I get 3,000 clicks a month from them, so yeah….”

The list goes on, but you get the point. So why hasn’t there been a disruption, and a new upstart take their market share? If everyone hates doing business with them in the industry, shouldn’t they all switch?

Size matters. Weedmaps is huge and has a long history in Google and mapping. They own the market for “dispensary near me” and “find a dispensary” in Google. The put up billboards for their app all over legal cannabis states to get new users to download and use their mapping and menu app. Leafly, their closest competitor and a leader in some Western states not named California, has over $50mil in funding to date. They are part of the Privateer Holdings' empire and are known for having the best strain guide and rankings for strains in the industry.

How have they done?

So so. They do well in some states but due to the sheer volume of traffic that Weedmaps can create through their sites, as well as the others sites they own such as Marijuana.com and Cannabis.com, they can deliver results for clicks and orders that Leafly can’t match. The new CEO of Leafly cut the sales staff by 80% once he got the job and hired more engineers to improve the app and digital space. Hence, they aren’t going heavy into getting dispensary listings and monthly fees.

The other element that creates a high moat for Weedmaps is the startup costs of mapping. To the outside user the mapping features look elementary. Get the address, put a pin on the map, add a menu, and bingo, you are there. Not so fast, that is just the beginning. What is important to dispensary owners is being able to update a menu in one location and have it update or synch at all the menu listings sites in the Internet. For example, Pete’s Dispensary doesn’t want to have to update 12 menus on the internet at the end of the day at 12 sites, he wants to update one menu and have it all synch. Weedmaps works closely with their own menu management software as well as MJ Freeway to synch menus.

The second element in mapping is daily specials and coupons. One of the best features of Weedmaps is the ability for a dispensary to publish a coupon or special and have it go out to their thousands of followers. These offers have to be approved by Weedmaps for some reason, but dispensaries say it is a big part of the allure and to reach to clients.

Imagine for a second being a legal dispensary owner, having put up millions of dollars in investment funds for licensing, lawyers, grow facilities, retail space, compliance, inventory, taxes and more, and then giving Weedmaps $10,000 a month to be listed as a top dispensary in say San Diego. (The top spot in Los Angeles was doing for $21,000 a month according to multiple sources awhile back). You pay them the monthly fee and then you come to see that the other pins on the map around you and in the search results are illegal deliveries and dispensaries that are under-cutting your prices by 40%, and had start costs in the thousands.

You would be irate! You would quit the service and tell them to get their act together.

Alas, they control so much mapping and search traffic, that you have no other choice but to go back, use their menu management, pay their fees, and hold your nose.

As Health Ledger says, “I just can’t quit you.”

In a “strange but true” story that shows the magnitude of Weedmaps power, an ex-employee went to the LA Times and reported a whistleblower story a year or two ago. He said almost all the reviews on Weedmaps are fake, and he presented the story to the LA Times showing the Weedmaps IP address that thousand of reviews came from one IP address in the Weedmaps office. Here is the funny part, because the fake reviews were all positive and gave dispensaries 5 out of 5 stars, none of the dispensaries were horrified or disturbed by the fake reviews and they all stayed with Weedmaps. Weedmaps did this to give dispensaries better reviews and listings, hence creating happier dispensaries, more recurring monthly payments, and higher prices paid for premium spots. It was completely fake, but a win-win for dispensaries and Weedmaps. The consumer was the only loser in the whole fake review scandal.

What could break the Weedmaps’ stranglehold on the industry?

Traffic. The reason Weedmaps gets away with how they treat businesses and how they thumb their noses up at legal dispensaries’ requests is that they have so much internet traffic. Take their traffic and they lose all pricing power and following.

The California Cannabis Control Commission – They could get serious and call in the Feds to take a look at Weedmaps and shut the site down. If you are taking funds from “illegal drug dealers” as the Federal government would see all unlicensed cannabis providers on the Weedmaps platform, you are now “aiding and abetting” illegal schedule 1 felony drug sales. The RICCO ACT, which has been invaluable for the US government in shutting down drug rings and money laundering could be used against the Weedmaps and their company, Ghost Group. The California Cannabis Control Commission could ask the Feds to shut the site down or take over the homepage with a big FBI sign as they investigate. If that happened the Google rankings for Weedmaps content would drop dramatically and could even be delisted by Google, that would be the end of Weedmaps.

Legal dispensaries could ban together and not use the Weedmaps platform while they list unlicensed dispensaries and deliveries. Their would-be short term pain for businesses desperate for more sales, but if they started to tell their customers not to use Weedmaps and use Leafly or Cannabis.net instead, over time the customers will follow the menu management and specials.

Force the Weedmaps’ Hand – The best way to get unlicensed providers off of Weedmaps is to turn their strength against them. Have either the California state police or FBI/DEA announce they are going to rid California of illegal suppliers of cannabis and they are going to use the Weedmaps’ listings and mapping to execute the raids. Anyone on Weedmaps’ map or search results that does not have a relevant state license to sell cannabis, is open to a sting and being arrested. How many illegal dispensaries and deliveries stay on Weedmaps if the DEA/FBI made this announcement? Every new client order or phone call could really be the FEDS.

Time will tell if Weedmaps can keep their stranglehold on dispensary mapping and menu management, but with new POS systems like Baker and IHEARTJANE integrating with up-and-coming traffic sites, dispensaries have more digital options for onilne orders opening up. The moat may be slowly crumbling.

Update 8/26/18

Interesting update crossing our universe as it appears the California Cannabis Control Burea has made a second enforcement action against an unlicensed dispensary, both articles site that the dispensaries were on Weedmaps.

weedmaps illegal dispensaries