Major marijuana website bans advertisements from black-market companies in Michigan

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It doesn’t take advanced detective skills to find black-market marijuana in Michigan. Just run an internet search.

They advertise openly online. Within a few minutes, MLive was able to reach by phone three listed marijuana dispensaries in Detroit that do not have medical marijuana provisioning center licenses, according to the Michigan Marijuana Regulatory Agency website’s license search tool and active facility map.

Until late last month, an owner of one of those unlicensed marijuana businesses in Detroit said customers could place orders for delivery using Weedmaps.

Weedmaps is one part Craigslist, one part Uber Eats. It allows you to order marijuana with the click of a mouse and have various products -- marijuana flower, vaping cartridges, edibles, marijuana concentrate -- delivered to your front door, sometimes within a matter of minutes.

There are also options to place pickup orders or find an address to shop in person.

Weedmaps this week announced it’s no longer allowing businesses that can’t provide a verifiable Michigan marijuana business license number advertise on their website.

The company created an option that allows users to “flag” questionable, potentially unlicensed businesses and began removing unverified advertisers Dec. 31, Weedmaps spokesman Carl Fillichio said.

“We have just recently gotten kicked off Weedmaps,” said the unlicensed Detroit marijuana delivery service owner, who declined to give his name because of the effect it could have on his future license application.

“We’re going to build our own website,” he said. "We have a good customer base that call every day, once a week, twice a week.

“The difference is, now we’re not getting any new people.”

While this website and others like it have been a boon for marijuana business in general, many in Michigan’s newly licensed industry have taken issue with blatant advertising by unlicensed companies.

“A lot of (licensed) companies were like, how are we going through this licensing process but Weedmaps is still allowing anyone to advertise freely,” said Antonio Mansor, the Director of Retail Compliance for Pharmaco, a Southfield-based marijuana company with licensed stores across the state. “You can get a guy who delivers, who is a caregiver" and brings it right to your door.

Since an unlicensed seller doesn’t pay the additional 10% excise tax, likely the 6% sales tax, the $6,000 application processing fee, local applications fees, which range up to $5,000, the $25,000 initial licensing fee (really twice that much or more, since having a medical business license is the prerequisite to a recreational one), marijuana testing expenses or numerous other costs incurred by the licensed market and brick-and-mortar businesses, those who follow the regulations have a drastic disadvantage.

Stosh Wasik, co-owner of the Fire Station in Negaunee, the only licensed medical and recreational marijuana shop in Michigan’s Upper Peninsula, said black-market competition, especially through Weedmaps, hasn’t been “much of an issue" there.

His concern is the price misconception created with customers, who see low prices advertised online and expect the same rate in a licensed shop.

The average cost per ounce of marijuana in Michigan’s licensed recreational market was $507.30 in December. Numerous comments in online discussion groups about Michigan marijuana sources cite prices from delivery services or from caregivers, who can’t legally sell to someone who doesn’t possess a medical registry card and isn’t their registered patient, well under half that amount.

Marijuana Regulatory Agency Director Andrew Brisbo said it’s been a slow road to get Weedmaps to cooperate with the state’s goal of curbing the black market.

“The (Marijuana Regulatory Agency) has been advocating for Weedmaps to change their approach for the last two years,” Brisbo said. “As a prominent platform in the industry, it is critical that they are a good partner with regulators in promoting the licensed industry as the safest option for consumers. We applaud them taking this action.”

Weedmaps Vice President Bridget Hennessey said the policy change is part of an effort to help Michigan "grow as a model for safe and reliable access to legal cannabis.”

“In our ongoing effort to lead the technology industry in providing the most current, comprehensive and accurate online listing of medical and adult use cannabis businesses, we will require retail advertisers in Michigan to provide a license number in order to appear on our platform,” Hennessey said. “In addition, Michigan-based operators wishing to use our other platforms and solutions must provide licensing information and complete an updated application process.”

MLive randomly checked dozens of advertised businesses on Weedmaps following the announcement and confirmed each held a valid medical or recreational business license.

Stuart Carter, the owner of Utopia Gardens, a medical marijuana dispensary in Detroit, has been a staunch opponent of Weedmaps for more than a year. He said the black market has proliferated in Detroit and called Weedmaps the “gateway to the black market in Michigan."

“It looks like Weedmaps has finally come around and done the right thing,” Carter said Thursday.

The Weedmaps policy change may, however, do little to diminish the black market and its use of the internet. There are numerous other thriving cyber-nooks for them to relocate to, including Leafly or social media discussion groups on Reddit, Facebook, Discord and beyond.

While Leafly Vice President of Corporate Affairs Laura Morarity said the company “for many years" has banned advertising by unlicensed companies, MLive was able to identify some businesses that appear to be advertising on the site without a Michigan license.

Potguide, another website that advertises marijuana businesses, has a policy in place and employees hired to ensure unlicensed businesses aren’t advertised.

“Since our launch in 2013, we have always only listed licensed businesses,” said founder and CEO Jeremy Bamford. "We have a dedicated employee who cross checks licensing against the state supplied lists for 25 states and Canada every month.

“It is a lot of work but the only way we can ensure our audience that PotGuide is a trusted resource. Every day we receive a lot of inquiries from people asking us to list their business, but if we cannot validate licensing then we do not list them.”

Marijuana Regulatory Agency spokesman David Harns said the agency’s “message is consistent to all outlets as to the advertising of unlicensed services.” That message is to stop.

Brisbo and Michigan State Police, who’ve recently added black-market marijuana to their law enforcement platter, both announced increased efforts to combat the unlicensed market in 2020.

State police in recent weeks raided four businesses they said were selling marijuana and marijuana products without a license, including two in the Upper Peninsula’s Menominee and two in Flint. Two other Genesee County businesses, one in Mount Morris Township and another in Genesee Township, were raided for the same stated reason in December.

No criminal charges have been announced.

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