A company that’s aiming to become a licensed cannabis business hub in West Sacramento, California, with ties to the online marijuana advertising site Weedmaps is poised to proceed – if the City Council gives its approval Sept. 4.
The development comes on the heels of Weedmaps’ announcement that it will cease advertising for unlicensed marijuana businesses sometime this year.
The situation could lead to a showdown between the company and California regulators if they believe Weedmaps’ dealings with illicit MJ operators since early 2018 is enough to warrant further scrutiny for at least one state business permit.
And if the company succeeds in getting a full annual permit, it could set a precedent for other cannabis business owners on how to avoid scrapes with industry overseers.
Here are the basics:
- On the schedule for West Sacramento’s meeting next week is the approval of an amended development agreement for West Coast Cure, a company that does business as WCC Management.
- The company’s stated goal is to “conduct wholesale cannabis logistics/distribution/transportation, cannabis manufacturing and commercial indoor cannabis cultivation” out of its West Sacramento headquarters.
- According to city records, WCC Management has merged with DICA Distribution, a limited liability corporation that was formed by Weedmaps CEO Doug Francis and general counsel Chris Beals.
- DICA was dissolved in June, according to state records, and now it’s not clear if Francis and Beals – who defied an order by state regulators in 2018 to cease advertising for illegal marijuana retailers before changing course last week – retained any ownership stakes in WCC.
However, it appears they potentially may still have stakes in the company.
“Our understanding is that all the DICA principals are now a part of WCC,” Paul Hosley, a spokesman for the city of West Sacramento, wrote in an email to Marijuana Business Daily.
And according to a letter sent by West Sacramento City Manager Aaron Laurel to WCC CEO Logan Wasserman, the merger “will not result in a change in the local management structure.
“All principals running the facility will remain unchanged in that all current principals were approved by the city” last year.
Representatives for WCC Management – along with Francis, Beals and Weedmaps spokespeople – did not respond to several MJBizDaily requests for comment.
But all state and local paperwork for WCC Management is now bereft of any mention of Francis, Beals or Weedmaps.
Rather, the principals of WCC Management are listed in West Sacramento city records as Logan Wasserman, Jerett Wasserman, Craig Wasserman and Blake Joseph.
Another executive, Ryan Brower, is listed as a point of contact by the state health department in its licensing database. Under the original business plan DICA filed with West Sacramento, Brower was listed as the operations director for DICA Distribution.
WCC has already obtained a manufacturing permit from the state health department, and the company has told the city of West Sacramento that its distribution provisional permit is pending with the Bureau of Cannabis Control (BCC).
WCC had a temporary distribution permit that was valid until July 26, according to the BCC’s records.
However, the plan as of last year was that WCC and DICA would operate essentially as partners, having received approval from West Sacramento to operate plant-touching businesses out of neighboring suites at 2505 Front St., with DICA in Suite A and WCC in Suite B.
That’s no longer the case, under the updated development agreement that’s on the West Sacramento City Council agenda for next week.
Some legal analysis
Omar Figueroa, a longtime California marijuana industry attorney, said he’d be surprised if Beals and Francis didn’t retain any ownership in the business venture they helped get off the ground.
When MJBizDaily reported that the city had approved DICA’s business plan – with Francis and Beals at the helm – the question that arose was whether the BCC would issue a business license to DICA since this was uncharted legal waters in California’s newly launched regulatory system.
At the time, Beals and Francis were still in defiance of a BCC cease-and-desist letter demanding that Weedmaps stop advertising for unlicensed MJ retailers.
But Beals and Francis did not submit an application to the state seeking a distribution permit for DICA, a BCC spokesman confirmed.
That makes sense, said Figueroa.
The two Weedmaps executives “have every incentive not to be forthright in their reporting,” Figueroa said.
“One, they don’t want to get denied (a state license) and two, they don’t want to become a licensee of the BCC” because that could make them subject to the same authority they flaunted last spring by defying the BCC’s cease-and-desist letter, Figueroa said.
“They want to have their cake and eat it, too,” he said.
John Schroyer can be reached at [email protected]