Yelp for pot web site Weedmaps.com is having a historic fourth quarter. The twelve-person Orange County concern just went public through a de facto reverse merger with LC Luxuries. Now renamed General Cannabis, CANA trades at $4.05 on the pink sheets and — unlike its publicly traded pot peer "Medical Marijuana Inc" — CANA has a business model and actual revenue to report.
"Medical Marijuana Inc. is a very dubious stock," said Weedmaps founder Justin Hartfield, now chief web officer of General Cannabis. "What we are trying to do is bring legitimate and real numbers. We're going to be reporting every quarter even though we're on the pink sheets and not required by law. We're going to do it anyway to build confidence in the company and build confidence within our shareholders. And the only reason we can do that is because we have real earnings. Weedmaps is generating profits — true profits."
Weedmaps grossed $400,000 off 50,000 paying users in September. Those users are a fraction of a national audience that reviews dispensaries, seeks specific strains in their area, and posts to the Weedmaps forums. Weedmaps.com is part of constellation of "thousands" of pot-themed URLs Hartfield has bought up. The Computer Science graduate from University of California, Irvine got the idea three years ago after his first trip to a dispensary.
"It's a lot like the first time you step into a coffee shop in Amsterdam," Hartfield said during a phone interview from that city, where he's on a business trip that includes the High Times Cannabis Cup. "There's not some sketchy drug dealer with a bunch of drugs coming over to my house. It's really safe, it's cheap enough, and it's quick and easy."
Hartfield used to run a search engine optimization company called Saddleback SEO, helping clients achieve higher rankings on Google. Hartfield partnered with friend Keith Hoerling to build out a Yelp for pot site in two weeks in 2008, and Hartfield used his knowledge of SEO to scoop up tons of search traffic.
"It was 100-percent search-engine-based," said Hartfield. "That was what I did in a previous life. And we based our business off of it. We love Google."
Most people use the site for free, but, like Craigslist and Yelp, Weedmaps charges dispensary owners for prime placement, review rebuttals, and advertising. User payments became so torrential, credit card processors assumed fraud. So Weedmaps created its own merchant-processing account to deal with payments, and spinoff Cannapay now does billing for two-dozen other businesses. It may become a credit union. Weedmaps' free iPhone app also gets seven hundred to eight hundred new downloads a day and has been downloaded more than half a million times.
In 2011, General Cannabis will use its digital footprint to launch more goods and services to a national market worth tens of billions of dollars. Weedmaps plans a dispensary deals section like a Groupon for weed, and they have something called Weedmaps TV — "a 24-7 content channel dedicated to marijuana," said Hartfield.
Weedmaps TV could nab advertisers shut out of traditional TV or radio, where FCC censure threatens stations who take pot club ads. Other potential advertisers include related industries like Chronic Tacos in Irvine. Said Hartfield: "We're going to reach across verticals and go into head shops, hydro stores, lawyers, and doctors."
The only barrier to growth Hartfield sees is a legal one. Though fifteen states now have legal medical pot, some newly elected state governors ran on anti-medical marijuana platforms.
"There's a lot of stigma, there's a lot of misinformation, what it really is is propaganda that the government has been feeding the citizens since the Marijuana Tax Act in the Thirties," said Hartfield. "Slowly but surely, people are learning for themselves."
General Cannabis has partnered with NORML to politicize Weedmaps' userbase as well as rapidly develop NORML's own online technology. Hartfield is anticipating a 2012 legalization effort in three states: Oregon, California, and Colorado. "I suspect at least one will pass."
Legalization will poll at 48.2 percent in California by 2012, he predicts, and a state pot tax law could pick up the last 2 percent.
However, Weedmaps' biggest haters often come from the medical pot community itself. Some perceive Hartfield's young, bold approach as a threat to hard-won patient rights. Weedmaps sites like WeedPorn.com and WeedorSkin.com don't exactly legitimize medical use. Arizona medical marijuana campaign manager Andrew Myers notes that national support for medical marijuana has peaked and begun to erode, even as full legalization's supporters grow.
"It's like a Stockholm Syndrome," said Hartfield. "The police have finally given a small loophole to these sick and dying patients. As a function of being sick and dying, you really care about where your medication is going to come from and making sure you have it tomorrow. So if anybody tries to claim the system you're using, the loophole you're using, is anything but a loophole, there could be feedback.
"I'm not saying we need to abandon medical marijuana. We need to keep medical marijuana and we also need to have legalized marijuana."
Weedmaps also drives down medical pot prices, he says. "There's always a backlash especially with a model as disruptive as Weedmaps," Hartfield continued. "We list everybody's prices. It's all searchable. You know which strains cost how much and where, and the people that want to keep their margins high could have a problem with that, if they don't understand that we're expanding the pie for everybody. There's always naysayers, right?"