First, Weedmaps Took Over California's Medical-Marijuana Industry. Now, It's Going Global
Weedmaps CEO Doug Francis with company president and general counsel Chris Beals
The headquarters of Weedmaps, the most influential company in California's medical-marijuana industry, is hidden inside a gray, two-story office building at the intersection of Irvine Center Drive and Discovery in Irvine. Inside the green-accented lobby, the first hint that you've just entered a 420-friendly business is a faint trace of marijuana odor. At just after 10 a.m. on a recent Wednesday, the phone at the front desk is ringing incessantly, the office is hopping with vendors dropping off samples, and UPS has arrived with three large boxes.
Inside his first-floor office, Doug Francis, the company's newly appointed CEO, is proudly pointing at his fully stocked Vinotemp wine refrigerator, which has a few extra bottles standing on top of it. "Weed and wine are essential," he says. "Weed-and-wine Wednesdays are soon going to be a recurring event on our calendar."
Francis takes me on the tour of the monstrous 44,000-square-foot building. We round the corner of his office and walk past several offices on the left. "Those are the offices of our seven in-house lawyers," Francis explains. We walk a couple of feet farther, and to the right, people are setting up a catered lunch: deep silver catering pans filled with steaming pasta are lined up on the counters. Francis explains that Weedmaps provides daily lunches for its employees. He leads the way into a room that, from the outside, appears to be just another office. But inside, green screens and cameras are everywhere. "This is our video room," Francis says. "This is where our celebrities come and film if we're working on any branding things."
He leads the way up the stairs to the second floor. "We're opening up other locations on the Lower East Side of Manhattan and in Los Angeles pretty soon," says Francis, who goes on to list Weedmaps locations in Arizona, Washington, Toronto, New York, Barcelona and Austin.
As he continues to climb the stairs, he explains that the company has also collaborated with several renowned apparel brands in the surf, skate and snow industry. "A lot of the people who used to work with Volcom to LRG to you-name-it were doing a lot of our merchandise for us and collaborating with us in a lot of ways," he says. "They wanted to take advantage of the booming marijuana industry, so they've joined Weedmaps. . . . We're moving toward that kind of branding approach: If you wear a WM shirt, it signifies that you smoke."
On the second floor, we pass through cubicles housing the company's business-development group, account management and sales teams, seemingly all of whom are wearing headsets and glued to their computers, locked in the zone. The sour aroma of marijuana is a reminder that this isn't a typical office setting. Francis says that in his view, it's important to allow employees an opportunity to get away from the chaos for a few minutes during the day. "They need a place to escape from me yelling at them," he says, smiling.
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Weedmaps was forged in the ashes of the global economic meltdown of 2007. At the time, Francis, who graduated from Chapman University with a degree in business administration and management, was working as a mortgage-industry executive. Shortly after the housing crash cost him his job, he started Marijuana Medicine Evaluation Centers (MMEC), a website that allowed people to search and locate doctors who would write them a medical recommendation for marijuana.
In early 2008, Francis met Justin Hartfield, a UC Irvine grad with a degree in computer science and a struggling writer who wrote occasional marijuana-related opinion pieces for the Orange County Register. Hartfield went to work for Francis' MMEC to earn money while building his own website. Called Weedmaps, it would provide listings and patient reviews of marijuana collectives on a city-by-city basis. (Weedmaps refused to make Hartfield, who didn't respond to interview attempts via his LinkedIn account, available for this story.)
Within months, Francis says, he merged his company with Hartfield's, knowing the concept would revolutionize California's marijuana industry. Though listing cannabis collectives on the Internet wasn't exactly new, what Francis and Hartfield had working in their favor was their ability to create an interactive hybrid of Yelp and Google Maps that pinpointed exactly where dispensaries and doctors were located while also providing up-to-date information and customer reviews.
"There was really nowhere to go for information on where [marijuana] clubs were, what they were carrying, any kind of information about the process," Francis explains. Between Hartfield's innovative software and Francis' business savvy, they quickly established themselves as pioneers. "As the first movers in the space, we didn't have any competition for a while," he recalls.
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Francis: "It's not very often that life presents you with the chance to create a whole new industry."
It's difficult to overstate the critical role Weedmaps has played in the development of California's medical-marijuana industry. Although the federal government continues to treat marijuana as an illicit substance, with 24 states and the District of Columbia having legalized medicinal cannabis, the feds have recently begun backing away from enforcing the prohibition. On May 3, after years of legal battles, the feds finally dropped a lawsuit against California's largest dispensary, Harborside Health Center. Today, cannabis is the most socially accepted it has ever been, and for better or worse, Weedmaps is largely responsible for that.
Within a year of Weedmap's founding in 2008, the company's website was already bringing in $300,000 per month in advertising revenue—from storefront dispensaries, delivery services and doctor referral providers. By 2013, Weedmaps was generating $1.5 million per month. In 2014, the most recent year for which the company's financial data is available, Weedmaps was earning at least $30 million from listings.
The marijuana monolith is also a major player in California politics. Last year, Weedmaps provided $1 million to help fund a ballot measure to legalize the recreational use of marijuana statewide, the so-called Adult Use of Marijuana Act (AUMA), which is slated for the November ballot. The company paid a similar amount to fund a pro-legalization political-action committee. "Justin and I spend a large majority of our profit from Weedmaps on legalization," Francis says. "At the end of the day, we're activists. For us, this is our DNA, and we really care about this."
Francis believes that, unlike competitors such as Eaze, an online marijuana-delivery service, Weedmaps isn't just in the business for the money. "They're profiteers, while we are activists at the very core," he insists.
Eaze CEO Keith McCarty argues that any comparison between his company and Weedmaps is ill-considered, saying Eaze's mission is to provide cannabis patients with safe access to legal medical marijuana and only delivers product from city-licensed dispensaries. "We're trying to run a big business, and we are trying to do it in a responsible way and really look after the patients and work with regulators proactively," he says.
Weedmaps, on the other hand, has openly acknowledged that it accepts payment from collectives that, while arguably operating within the intent of the Compassionate Use Act, don't have city permits and are therefore considered illegal operations by law enforcement. Although the site gives patients information about what strains, storefronts and services are in their area, Weedmaps has generated controversy among dispensary operators because of the monopoly it has on online dispensary advertising: If a collective isn't prominently listed on Weedmaps, it will lose out to surrounding competition.
Appearing remotely on a large screen via Skype at the Weedmaps headquarters, Chris Beals acknowledges that any cannabis collective that wants to survive in the competitive marketplace of medical marijuana must reckon with Weedmaps. Before becoming the president and general counsel of Weedmaps, Beals worked as a lawyer in New York, specializing in mergers and acquisitions, tech and pharmaceutical law. "The Internet is about information and the exchange of free information," he says. "The gray market services [unlicensed dispensaries or delivery services] are in a Catch-22 because they [must] maintain their relevancy by appearing on Weedmaps, but [they] know that the police might come and potentially bring an enforcement action against them—and there's nothing we can do to prevent that from happening."
The only other option, Beals adds, is to "decide not to be on Weedmaps [and] become sort of irrelevant in the grand scheme of things."
With dispensaries opening, shutting and relocating according to the whims of landlords, law enforcement and legalization initiatives, it's all but impossible for Weedmaps to keep track of who's fully in compliance and who isn't, which services are still operating and which are being shut down, going out of business or changing owners. "It's really difficult all the way around," Francis says.
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In 2009, as Weedmaps began charging listing fees for storefronts and doctors, the company earned $300,000 so fast the bank froze its account because officials assumed the money was stolen. Weedmaps employees went two pay periods without receiving a paycheck as a result. "When we first started, [all of the dispensaries] were afraid they were going to get raided the next day," says Francis.
One longtime cannabis grower and former Orange County dispensary operator says that many unlicensed dispensaries—which have provided the bulk of Weedmaps' advertising revenue over the years—still resent the company. "I had some friends who had unlicensed shops listed on Weedmaps, and they were almost instantly raided as soon as they had their information put on the site," he says. "Social media offers a much safer place for the illegal spots than Weedmaps because social media allows for illegal places to run 'pop-up' locations a lot more easily than Weedmaps, making it harder for the police to track them down."
The fact that medical-marijuana dispensaries have no access to banking services because of the federal ban on pot poses another issue for Weedmaps. "Banking can really do a lot to move things forward in the industry. It wouldn't just make things easier for everyone, but it would also allow for an in-depth and legitimate regulatory system, too," Francis argues. "Starting a business and being an entrepreneur is difficult enough, but having to discover the legalities of a new industry while not getting anyone in trouble, keeping up with changes, studying the data and figuring out ways to move the industry forward is tough. Banking would create some guidelines that would help alleviate some challenges."
Getting clients to pay their bills on time is another challenge. "Those companies that operate in the gray area don't want to give us their addresses," Beals points out. "But how can you bill them if you don't have an address? You can't, obviously."
Over the years, however, Weedmaps has succeeded in tightening up its business operations, something that Francis says is what separates his company from its competitors. "Sometimes what defines you as a company is how you navigate through difficult waters in terms of figuring out what to do," he says. "Sometimes our competitors don't know how to do the little things, like collect—which isn't easy."
Despite those challenges, Weedmaps has already transformed itself into a global business, with 200 employees in six offices around the world. In 2015, the company opened its first office in Barcelona, Spain. "Europe overall is about eight years behind America in terms of legalization," explains Francis, adding that the company only has about 500 European advertisers so far. "We're working with France and Spain and helping them come up with policies that work for their countries."
As California appears to be heading toward statewide recreational-marijuana legalization in about six months, Weedmaps is growing its corporate structure. "After legalization, for the first time ever, it's going to be less about activism and more about [return on investment]," says Francis. "So at the moment, we're beefing up our specific director-level positions and getting technical people in here to execute on the higher-level marketing opportunities."
February marked a big step in the evolution of Weedmaps. Hartfield stepped down as CEO to take on the role of Chairman of the Board. "It's not very often that life presents you with the chance to create a whole new industry," Francis says, smiling. "We're literally writing the rules as we continue to move the marijuana business forward. It's definitely challenging at times, but this is exactly where we dreamt of being years ago."
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Fun fact: Beals commutes between New York and the company's OC headquarters every week
Weedmaps is a central and, to some, highly controversial player in the AUMA initiative, which would create California's first fully-regulated recreational-marijuana marketplace. According to the National Organization for the Reform of Marijuana Laws (NORML), the three basic elements in the elaborate, 62-page proposal are: allowing adults 21 years and older to possess up to 1 ounce of marijuana and cultivate up to six plants for personal use; regulating and taxing the production, manufacture and sale of marijuana for adult recreational use; and rewriting criminal penalties so as to reduce the most common marijuana felonies to misdemeanors and allow prior offenders to petition for reduced charges.
AUMA's critics contend that, because the initiative would allow cities to ban recreational pot shops—a right that has already been upheld by the California Supreme Court as it applies to medical-marijuana collectives—the proposal won't do anything to help low-income patients. "Because of the rolling dispensary bans caused by the [state Supreme Court] decision, accessing medical marijuana is impossible in more than 300 municipalities in California," says Deborah Tharp, an activist with the California Cannabis Coalition. "There are thousands of people across the state who have to drive extremely long distances to get to the closest point of access, which is fine if you're a recreational user; but if you need it for a medical condition, driving distances upward of 200 miles becomes extremely difficult."
Furthermore, argues Tharp, the punishment for possession under AUMA doesn't make sense. "The issue with this is that holding up to an ounce of marijuana is already decriminalized—you'll get a $100 ticket. Drinking in public and speeding fines cost more than carrying an ounce of marijuana. So making the possession of an ounce punishable for up to six months in county [jail] is a regression. We're literally going backward. . . . There are going to be so many consequences to this when the government tries to enforce the rules of AUMA. The whole thing is such a mess."
Although Weedmaps has much to gain if AUMA becomes law, the company would likely remain relatively unaffected if the ballot initiative fails. According to Francis, if voters pass a rival initiative, the company would support it. "We are fluid at the end of the day," he explains. "All initiatives move the industry forward, and that's what we want. We will be there to help make it as digestible and consumable as possible. We are an agnostic platform, so I guess we're lucky that we want everyone to do well—we will support anything that works. We just think AUMA has the best chance of getting through the onslaught of hurdles that is required in order to be qualified for a ballot initiative."
But some medical-marijuana activists remain skeptical about Weedmaps and its involvement in AUMA. "About five years ago, [NORML] started working on getting something passed in Santa Ana through the council, and we weren't successful," recalls Kandice Hawes-Lopez, the founder and president of NORML's Orange County chapter. "So we went out and talked to all the dispensaries and got a group together and approached Weedmaps and asked them if they wanted to be a part of our group. They told us no because they didn't want to get political."
That said, Weedmaps did allow OC NORML to hold its meetings at its office. Several months later, Hawes-Lopez discovered that Weedmaps had actually contributed cash to help gather support for a rival, city-supported initiative that eventually won at the polls. "Weedmaps paid $30,000 to the city's campaign instead of ours, which was shocking because we thought they were supporting us the whole time when, in fact, they jumped ship and went behind our backs, on top of still letting us have meetings there," she says. "We felt spied on." That experience soured many medical-marijuana activists about Weedmaps, making them suspicious of the company's motives for supporting AUMA, Hawes-Lopez explains. "I think that's what first ignited the passion and distrust that revolves around Weedmaps and why groups of people in the medical-marijuana industry believe that it's all some kind of conspiracy."
Online medical-marijuana discussion boards are filled with passionate arguments about the merits of AUMA, with many activists arguing that recreational marijuana will destroy all the gains made over the years on behalf of patients' rights. Given California's chaotic history of medical-marijuana politics, it's easy to see why some activists would be suspicious about any statewide proposal to regulate the industry. The state's first legalization measure, the Compassionate Use Act of 1996, also known as Proposition 215, allowed for any Californian with a doctor's note to grow and share medical marijuana with other individuals on a collective basis. Gradually, as capitalism inevitably took over, loose-knit collectives became storefront dispensaries, and now, some activists fear that AUMA will only further cement corporate control of the marijuana industry.
Beals acknowledges the suspicion about AUMA but says that most of it comes from lack of information. "When people get past the hyperbole of AUMA and sit down with someone who knows the ins and outs of it, a lot of people realize it's not as bad as people think it is," he says.
Indeed, despite her misgivings about Weedmaps, Hawes-Lopez admits it'd be nearly impossible for her to vote against the initiative. "At the end of the day, AUMA gives us legalization, which is what we've been working [toward] for so long. And although I have my differences with Weedmaps, I do appreciate what they're doing."
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