Federal Prosecutors Subpoena Weedmaps Amid Cannabis Probe

Weedmaps has found itself in hot water before, after listing dispensaries that did not follow California law.

A gavel and cannabis nugs on a raised stand sitting on top of an American flag Source: iStock

Weedmaps, a website and app that helps customers locate marijuana dispensaries and delivery services, has been issued a subpoena by the federal government.

The result, according to MarketWatch, is that the company has been asked to share information about its business, including who it does business with, and how it conducts that business.

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Multiple lawyers and former federal prosecutors who revealed the subpoena found the subpoena’s focus to be unclear, but expect the records request is to help the government glean information on how marijuana is purchased over the internet. It could also seek to determine whether those thirty companies have been complying with California’s cannabis regulations.

Most corporations don’t comment on ongoing litigation, and Weedmaps seems to be no different. However, the company did tell Wikileaf in a statement,

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“Given our role as the largest technology company in the cannabis sector, from time to time, Weedmaps receives requests for information from government agencies. We cooperate with these requests as we do with all lawful inquiries.

Our corporate policy is not to comment to the media about any specific legal matters or inquiries with respect to the company or any of its customers.”

Weedmaps is a subsidiary of Ghost Management Group, LLC. which is one of 30 companies listed on that subpoena from the Eastern District of California. The records demanded include those relating to staff, investors and accounting, and records regarding its ordering services.

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More specifically, the demand seeks records relating to any communications and payments made to local, state, and federal employees. It’s also taking aim at elected officials and any candidates vying for those positions.

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No stranger to legal issues

Weedmaps has found itself in hot water before, after listing dispensaries that did not follow California law. A cease and desist letter from the Bureau of Cannabis Control asserted the company’s website included advertisements offering cannabis and cannabis products from companies not licensed for commercial activity involving cannabis.

“Therefore,” the letter says, “You are aiding and abetting in violations of state cannabis law.”      

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The letter later states, “Weedmaps.com must immediately cease all activity that violates state cannabis laws. Please be advised that such violations may result in criminal and administrative penalties, as well as civil penalties for each violation.”

After that, the company pledged to require a state license number for new listings. That was supposed to be in effect at the start of 2020. The new subpoena, according to MarketWatch, says Weedmaps must turn over the publicly-released statement where the company promised to cease advertising for unlicensed companies. It also asks for customer records that could prove otherwise.

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The Justice Department does not fund the pursuit of marijuana cases, though marijuana is still considered Schedule I drug federally That puts it par with heroin, LSD, ecstasy, and peyote in the federal government’s eyes. The DEA defines those substances as “drugs with no currently accepted medical use and a high potential for abuse.”

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For context:

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  • The Schedule II grouping lumps cocaine, Vicodin, meth, Adderall, and Ritalin all together.
  • Schedule III lists things like testosterone, steroids, and ketamine, explaining the substances have “low potential for physical and psychological dependence. Schedule III drugs abuse potential is less than Schedule I and Schedule II drugs but more than Schedule IV.”
  • Schedule IV drugs are considered to have low potential for abuse and risk of dependence. The grouping includes Xanax, Ativan, Ambien, and a few others.
  •  By Schedule V, we reach medications like codeine and Lyrica. “Schedule V drugs are generally used for antidiarrheal, antitussive, and analgesic purposes,” says the DEA.

Other companies named in the subpoena

Also listed on the subpoena are Terra Tech Corp, which is now called Onyx Group Holdings. The company changed its name after a merger. The company describes itself as a vertically integrated agriculture company that focuses on high-quality medical cannabis, and features other agricultural products. Terra Tech Corp also cross-breeds cannabis, which it then delivers to registered medical marijuana dispensaries.

CannaCraft, one of the largest distributors in the state of California, was listed as well. CannaCraft helps produce a cannabis-infused sparkling water called Hi-Fi Hops with Lagunitas Brewing Co., a subsidiary of Heineken.

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One of the companies’ drinks claims to have an 18:1 CBD ratio, with zero calories and less than 2 mg of THC per bottle. The other has zero calories, 5 mg of THC, and 5 mg of CBD. The drinks are sold in dispensaries in California and Colorado.

“Hi-Fi Hops is a celebration of stereophonic combinations, from connecting the left and right speakers for the full range of sound, to the botanical relationship between hops and cannabis, to the unity of friends and neighbors Lagunitas and AbsoluteXtracts. It’s a transition from mono to stereo and the feeling and resonance of a high-fidelity, higher quality experience,” the company explains.

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The Eastern District of California announced in February 2020 that the office would make the eradication and prosecution of illegal growing sites a priority. Those facilities have been found to frequently use toxins. The subpoena also asked Weedmaps for documents and records about the use of agricultural chemicals and pesticides that might fall into the same categories the District is after.

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Lori Ajax, the Chief of the Bureau of Cannabis Control who signed off on the 2018 cease and desist letter, said the Medicinal and Adult-Use Cannabis Regulation and Safety Act mandates that “a technology platform shall not display an advertisement on an internet web page unless the advertisement displays the number of the licensee… The weedmaps.com-issued license number is not a valid license number as required by law, and weedmaps.com is in violation of Business and Professions Code section 26151.”

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It is unclear whether this subpoena is a continuation of the BCC’s 2018 investigation.

 

Federal Prosecutors Subpoena Weedmaps Amid Cannabis Probe was last modified: by