Some California Marijuana Businesses Struggle to Play by New Rules

If you type the numbers "420" into a Craigslist search, the site populates with scores of illegal marijuana delivery services. You get similar results by visiting Weedmaps.com, which is like Yelp for cannabis.

Under California’s legalization law, cannabis businesses must display a state license number on any public advertisement. The state of California has approved more than 4,000 marijuana businesses since Jan. 1, when the sale of recreational cannabis became legal. But many more are still operating without a license.

The state sent cease-and-desist letters to hundreds of businesses in February, telling them to get licensed or possibly face civil and criminal penalties.

Weedmaps also received a cease-and-desist letter, but the Irvine-based company refused to stop. It argues that its online marketplace isn’t subject to the same rules as the cannabis businesses that advertise there. The bureau says it went after Weedmaps because it’s the largest online marketplace for cannabis, and might crack down on Craigslist next.

“There's a lot of business models that don't quite work under the statute now. So I think it's working with these businesses to see how we can get people into compliance,” said Lori Ajax, chief of the state Bureau of Cannabis Control.

Ajax said the state hasn’t determined when it will begin levying fines.

Macai Polanksy is the president of the Cannabis Courier Association, a small trade group that represents Sacramento marijuana delivery companies. Several members of the group were advertising on Weedmaps — all of them are now working to become licensed. After he received a cease-and-desist letter, Polanksy and his partners shut down their medical marijuana delivery business. Polansky said he feels unfairly targeted because he’s trying to play by the rules.

“Most of the people in the industry got into it because they are passionate about the plant and not because they are super savvy business people,” he said.

Polanksy is developing a new business model, one he hopes will pass muster with the state. To get licensed under the new rules, he needs a storefront, security and ventilation systems, all of which cost tens of thousands of dollars.

That’s not the only challenge faced by businesses that are trying to become legitimate. Depending on the jurisdiction, the processing time for a local license takes up to nine months.

Meanwhile, Polanksy is losing money and living off his personal savings. Instead of making threats, he wishes government officials would do more to help people in his position.

He said if government officials “really were concerned about getting us into compliance, they would give us a path toward that.”

Alex Traverso, a spokesman for the bureau, said the state has tried to help businesses become permitted by holding workshops across California to raise awareness about the new law.

But the black market continues to thrive. Business owners like Polanksy are undercut by others who don’t care to follow the rules -- and who can still advertise on Weedmaps and Craigslist.