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Federal Prosecutors Investigate California Marijuana Companies In Wide-Ranging Probe

Prosecutors have demanded Weedmaps turn over electronic information from their website, including customer records.

Eastern District of California seeks documents on roughly 30 companies from cannabis-retail listing service Weedmaps, according to grand-jury subpoena

Congress defunded Department of Justice investigations into medical-marijuana sales. This report previously stated the same protection had been provided to legal recreational sales. The story has been updated.

Federal prosecutors have launched a probe of cannabis companies in California, seeking a batch of records held by a startup that functions as a Yelp for marijuana dispensaries, according to a grand-jury subpoena reviewed by MarketWatch.

Criminal prosecutors in the U.S. attorney’s office for the Eastern District of California ordered the production of records from Ghost Management Group LLC, which owns a subsidiary called Weedmaps that provides an online directory of cannabis retailers. Weedmaps’ online services allow pot consumers to rate and compare stores, find deals and place orders for delivery.

The subpoena covers documents related to cannabis businesses listed on Weedmaps, and records related to its ordering service. The government also sought documents and other records kept by Weedmaps related to its own staff, investors and accounting, according to the subpoena issued late last year.

A spokeswoman for the Eastern District of California declined to comment.

In an emailed statement, a Weedmaps spokesman said, “Given our role as the largest technology company in the cannabis sector, from time to time, Weedmaps receives requests for information from government agencies. We cooperate with these requests as we do with all lawful inquiries. Our corporate policy is not to comment to the media about any specific legal matters or inquiries with respect to the company or any of its customers.”

The investigation’s focus was not immediately clear, according to several lawyers and two former federal prosecutors who reviewed the subpoena. One former U.S. attorney said the document is “thorough,” likely represents the early stages of the probe, and that an important component of the document request concerns a set of records that were related to the company’s services which facilitate buying marijuana over the internet.

To Read The Rest Of This Article By Max A. Cherney on MarketWatch

Published: March 03, 2020

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