A week ago, the leading application for finding a retail outlet near you in Canada and the US announced that it had had to cut 100 jobs. While Weedmaps pleads restructuring, many see it as the beginning of the decline of the ganja geolocation company.
Weedmaps is the most widely used application in Canada and the United States for finding a weed dispensary or dealer. With just three clicks or taps of the smartphone, the Californian company offers you a list of weed distributors, by quality, variety, price and so on.
To sum up, and for those who were asleep ten years ago, Weedmaps is to ganja what Kijiji is to car sales in Canada: a must-have. However, on October 14, the American company announced that it had had to lay off almost 100 employees working at its Irwin headquarters, 200 km from San Francisco.
Observers attribute this decision to, among other things, an error of judgement on the part of the company’s directors, who had grossly overestimated the speed with which all US states would legalize cannabis consumption. Also at issue are questionable choices in terms of transparency and compliance with US legislation: – in 2008, when Weedmap has been launched, the start-up offered users of the application with addresses of dispensaries or outlets selling medical cannabis only.
A service offered before the passage of California’s Proposition 64 (which legalized cannabis consumption on January 1, 2016) . At the time, a large proportion of weed sales via Weedmaps were outside the medical, and therefore legal, framework. Repressive legislation meant that therapeutic weed often came from illegal growers. This structural paradox will continue to exist in Holland until 2018.
Once Proposition 64 was passed, and at a time when the supply of street-level producers is exploding in Canada, California and Colorado, Weedmaps continues to allow unlicensed vendors to supply the platform with ganja. Not a good idea at a time when the market is becoming increasingly regulated and monitored.
Unsurprisingly, in early 2018, the California Bureau of Cannabis Control sends a cease-and-desist letter to Weedmaps, stating that the company is violating existing law by advertising (for a fee) unlicensed growers… In July 2019, a new law providing for fines of up to $30,000 a day for each violation of selling weed grown by an unlicensed grower is passed. This makes the risks very real.
Not surprisingly either, Weedmaps has announced its intention to remove advertising paid for and made for black market suppliers.
The fatal attraction?
A severe setback to which must be added the extravagance of Weedmaps with its “Museum of Weed”, an attraction-museum of ganja, a huge immersive and flashy installation for weed babas, planted in the middle of the famous Hollywood boulevard. With its high-volume music, atmospheric lighting and spectacular staging, it’s a far cry from the Montreal Museum of Fine Arts or the Louvre.
An investment which, unlike the attraction, is one of the most serious: on Hollywood boulevard, whatever the product niche, you always pay the same exorbitant price for a seat.
A good stoner catch, yes, but one that is currently weighing heavily on Weedmaps’ finances. An overview here: https://themuseumofweed.com/
The timing of these redundancies is also bad in terms of image, as some Investors who were tempted to invest in cannabis-related startups are becoming more cautious. American figures for cannabis distribution and sales are not living up to expectations. If these figures ** do not This does not mean that the sector is in difficulty, but it will have dampened some of its momentum.
For Weedmaps, this means that the pool of external capital on which they have relied since 2008 is beginning to dry up, forcing the company to focus more on profitability.
The end of the crazy years?
Chris Beals, CEO of Weedmaps, has issued a statement in which he attempts to paint an optimistic picture of the company’s financial prospects and strives to position Weedmaps as a “cannabis-enabled technology company” rather than a “cannabis-producing company”.
Whatever its name, Weedmaps is going to have to be imaginative and creative over the coming months.
Both to make up for lost advertising revenue and to find sources of supply other than regular dispensaries.
With the disappearance of unlicensed independent producers, a large part of the choice offered by Weedmaps goes up in smoke.
And whatever people say about THC’s effects on memory or motivation, these are not the kind of details that ordinary smokers will overlook.
Alexis
