Photo: Canna Obscura/Shuttestock.com

A cannabis technology company that allows users to review and discuss cannabis strains announced plans to no longer host advertising for unlicensed retailers on the same day a law firm planned on filing a class action suit against it for its advertising policies.

The lawsuit would have been filed by the Los Angeles-based cannabis firm, Zuber Lawler & Del Duca, and would have sought relief under California's Unfair Competition Law. The law prohibits false advertising and illegal business practices.

"That law is a powerful tool in our state to go after false advertising and illegal business conduct," Manny Medrano, a partner at Zuber Lawler, said Thursday.

However, on Thursday morning Weedmaps announced that starting later this year it will be restricting the use of its point of sale, online orders, delivery logistics and wholesale exchange software-as-a-service platforms to licensed operators exclusively. Weedmaps, which is based in Irvine, California, also announced it will require U.S. retail advertisers to provide a state license number on their listings.

"Weedmaps always has and will continue to advocate for a flourishing, legal cannabis market, and taking action to address social equity is integral to making that a reality. Today's announcement reinforces that commitment and outlines the program we are implementing to support minority entrepreneurs in the cannabis industry," Weedmaps' CEO Chris Beals said in an emailed statement to Corporate Counsel.

Beals said in the emailed statement that the company will also be working to help those who have not been able to participate in the legal market on how to get licensed in California.

Josh Masur, a partner at Zuber Lawler in the firm's Silicon Valley office, said he suspects that word about the pending lawsuit had spread among the cannabis community. He said the firm did not contact Weedmaps about the suit.

"Our inference is that word was getting around to more than just the people we wanted to talk to," Masur said.

There is not a timeline for when Weedmaps will begin the process of requiring companies who advertise on their site to show license numbers. However, Masur and Medrano said Thursday that they will be watching to see that Weedmaps makes the changes it promised. They said they will be prepared to file the suit if the policy changes Weedmaps announced do not go into effect.

"Our clients are intensely interested because of what the legitimate, licensed cannabis market means," Masur said.

Masur and Medrano did not say how many plaintiffs signed on and declined to give their names. However, they did refer to their clients as "significant players in the cannabis industry."

Advertising policies for the cannabis industry are stringent. While the substance is still illegal on the federal level, different states have guidance for in-house counsel and their employers on how cannabis can be advertised. There are also guidelines for those who publish the advertising, which include making sure the advertisements are not making false claims or marketing to those under 21.

One bill making its way through the California Legislature, AB 1417, if passed, will require those who publish cannabis advertisements to disclose the licensee's license number.

Read More:

Due Diligence, Understanding of Laws Is Important for Publishing Cannabis Advertisements