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Feds Launch Probe into California Companies Listed on Weedmaps

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According to a grand jury subpoena, federal prosecutors recently launched a probe into California cannabis companies listed on Weedmaps. The glory days of California’s murky grey area cannabis market are abruptly coming to an end.

MarketWatch reports that criminal prosecutors from the U.S. attorney’s office for the Eastern District of California ordered records from Ghost Management Group LLC, the parent company behind Weedmaps.

“To successfully prosecute a company under federal law, federal prosecutors must show the cannabis entity is not in compliance with California regulations,” Kumin told MarketWatch. “This fits what happened in Colorado shortly after legalization. The feds came in and made a point of going after companies that appeared to be violating state regulations in fundamental ways.”

The subpoena seeks documents about cannabis companies and ordering services listed on Weedmaps, as well as Weedmaps staff-related documents. The subpoena dates back to Sept. 19, 2019, and ordered a Weedmaps representative to report to a grand jury on Oct. 31, 2019.

The companies listed in the subpoena include Terra Tech Corp., now called Onyx Group Holdings and CannaCraft, one of California’s largest cannabis distributors. In total, there are about 30 companies that prosecutors are targeting for records and documents. Prosecutors also asked that Weedmaps furnish records about agricultural chemicals and pesticides such as pyrethrins and hyroxycarbouran, MarketWatch reports. Prosecutors are also taking a deeper look into payments to local, state and federal employees.

Anybody who is familiar with California’s cannabis market knows how illicit sales abound. While the sale of recreational cannabis began in 2018, the illicit market dominates as much as 70 percent of total retail cannabis sales, according to research from Canaccord Genuity.

U.S. Attorney McGregor Scott of California’s Eastern District indicated in an earlier statement that his office planned to take drastic measures to prosecute illegal cultivation sites that frequently use unapproved pesticides.