Double standard: Google can list unlicensed stores, but Weedmaps can’t

Google and Yelp are getting away with something that cannabis platforms got criticized for: mapping unlicensed stores.

The issue recently reared its ugly head again when New York Governor Kathy Hochul asked Google and Yelp to stop doing it, but the big players say they have no intention of changing their ways.

“We display places that people can visit or interact with in the real world by using a variety of sources, including third-party information and feedback from our community,” a Google (NASDAQ: GOOG) spokesperson told Green Market Report. “If we can confirm that a business has closed for any reason – including license issues – we’ll reflect that it’s closed in the listing.”

Fighting the unlicensed market is an ongoing struggle for the state. While the Office of Cannabis Management can fine the operations, closing the stores has proven close to impossible. The businesses fight the fines in court and often open almost immediately after being cited and fined.

That means it will continue to appear on Google. That’s despite the spokesperson adding that the platform prohibits cannabis ads in New York.

Yelp also didn’t rush to help out the governor, saying it believes consumers have a First Amendment right to read and share information about all businesses, even if those businesses are unlicensed.

“Allowing users to contribute and see information (including complaints) about unlicensed businesses serves the public interest and provides a resource for regulators to determine whether any particular business has appropriate licenses,” Yelp told Green Market Report. “Yelp does not, however, permit any cannabis dispensaries to purchase Yelp Ads. If a regulator believes a dispensary, whether licensed or not, has purchased Yelp Ads, they may contact us using this form to let us know.”

Double standard

It’s a move that is certainly frustrating for cannabis dispensary mapping companies like WM Technology Inc. (Weedmaps) (NASDAQ: MAPS) and Leafly.

When Weedmaps was preparing to go public, it was making big money listing any and every cannabis operation – and that drove the numbers. Those big numbers led to a huge market valuation, which led to criticism about including unlicensed operations.

California, where Weedmaps is based, threatened fines, and there was even a rumored Federal investigation looking at the company’s books. Google and Apple also kicked Weedmaps out of the app store over the issue.

So, the company changed.

CEO Chris Beals told Green Market Report in 2020 that Weedmaps used enhanced verification to determine a store’s legal status. It cleaned up its platform and went all in on the licensed in California.

Unfortunately, the move hit the company’s financials.

In the third quarter of 2021, Weedmaps said on its earnings call that licensed density was not where it needed to be despite more licenses being issued. The company’s revenue has continued to decline, and the last estimate for the fourth quarter of 2023 is $47 million – flat sequentially. In 2022, the company  reported revenue of $215 million, and that has slipped to an expected $193 million in 2023.

Leafly said in its latest annual report that allowing unlicensed businesses to use their service could result in legal or regulatory enforcement and/or negative publicity. The company stated that its suppliers are contractually required to say they are operating within the legal confines of the states.

Leafly didn’t provide a comment for this story.

Why Google gets away with illegal listings

Google and Yelp don’t seem to have the same fears about enforcement. For example, the federal government isn’t asking Google or Yelp to see its books regarding illegal cannabis operations like it did with Weedmaps.

And for now, there doesn’t seem to be any appetite at the state level to pick a fight with Google or Yelp by threatening billions of dollars in fines.

Once again, cannabis operators are held to a different standard than its peers.

“A successful solution requires a partnership among lawmakers, regulators, cannabis operators, and platforms to ensure that consumers can efficiently access legal and licensed retailers,” a Weedmaps spokesperson said.

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