As legalization of marijuana grows, so too is the outlook of companies catering to the pot business. One such firm, WeedMaps.com, a website that allows users to rate and review medical marijuana dispensaries, expects to post $30 million in revenue this year and increase that by 20 percent next year. The company was started five years ago by Justin Hartfield, a pot smoker who also has a degree in computer science from the University of California at Irvine.
“I started it because I wanted to find where the medical marijuana dispensaries were in my area,” said Hartfield. “It was a very selfish thing for me and my friends, and it turned into a business.” WeedMaps makes money by charging dispensaries for access to certain information, the ability to respond to reviews and getting professional photos and videos posted. Hartfield said he expects sales of $30 million this year to grow at least another $6 million next year now that the company has rolled out a new Groupon-style “Deals” option.
“It’s different than Groupon. We’re not trying to take a cut of the deal,” he said, “we’re just offering our dispensaries premium access at the top of our ‘Deal’ page.” Marijuana, long a verboten product for legitimate businesses, is now challenging the business establishment itself. Last week, the Treasury Department’s Bank Secrecy Act Advisory Group met in Washington to discuss a topic important to Washington state. It’s debating when and how to allow banking for marijuana growers and retailers in that state, along with Colorado, since both of them have now legalized recreational marijuana.
Banking is considered the biggest challenge facing the traditionally all-cash pot industry. Banks usually won’t allow pot entrepreneurs to open accounts, since their profits are still considered illegal under federal law. The Seattle Times reported last week that Treasury Secretary Jack Lew acknowledged the urgency and “serious challenges” facing the industry, but no decision was made.
At the same time, pot-related businesses like WeedMaps.com, that don’t involve direct contact with marijuana—and therefore don’t violate federal law—continue to grow. Hartfield said he accepts cash payments from dispensaries, and he would even consider being paid in the virtual currency, bitcoin. “Why not?” WeedMaps not only provides locations and reviews of dispensaries, but also allows users to give detailed information on what strains they prefer. There’s even a section called, “What are YOU smoking right now?” One user named jmdemotivation wrote, “Starting my Friday the 13th with Sour Diesel and a medicated pretzel. Morning!”
Most of the dispensaries have very high marks, and it can be difficult to find any negative reviews, but Hartfield said they are there. Still, “In California, there’s a lot of competition, so a lot of the bad dispensaries are gone.” Currently WeedMaps provides information about dispensaries in a half dozen states: California, Washington, Colorado, Michigan, Nevada and Arizona. Next year it hopes to include Illinois and Oregon.
So where is the fastest growing market? “It may very well for 2014 be Canada, because the Canadian federal government has legalized medical marijuana,” Hartfield said. “There’s a tremendous amount of opportunity for Canadian entrepreneurs to get into this space.”
WeedMaps was once part of a small publicly traded company, but it went private last January. Eventually, Hartfield believes, the company could be acquired by a bigger player in the alcohol or tobacco industries. “I think federal legalization has to get there, first,” he said.
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