Online marketplaces: illicit cannabis: reporting and liability.

Senator Wiener's legislation requires online cannabis and hemp marketplaces to implement new verification and reporting systems for sellers while establishing strict liability standards for platforms that facilitate illegal sales. The bill mandates that these marketplaces clearly disclose whether they verify seller licenses and creates mechanisms for users to report unlicensed cannabis sellers or intoxicating hemp products.

Online cannabis marketplaces must establish reporting systems allowing individuals to submit evidence of unlicensed sellers, with platforms required to confirm receipt within 36 hours and provide a final determination within 30 days. Marketplaces that do not verify licenses must display prominent warnings to consumers about the potential presence of unlicensed sellers. Similar requirements apply to hemp marketplaces regarding the reporting of intoxicating hemp products.

The legislation prohibits online marketplaces from engaging in paid advertising related to unlicensed cannabis sellers or intoxicating hemp products. Platforms that violate this prohibition face strict liability for damages caused by illegal products, with enhanced penalties when marketplaces knew or should have known about unlicensed sellers. The bill allows courts to award double damages in such cases, and triple damages when children are harmed. Marketplaces face civil penalties up to $10,000 per violation, with each day of non-compliance counted separately.

The measure responds to findings about the prevalence of unlicensed cannabis sellers operating through online platforms. According to data cited in the bill, only 384 of approximately 1,500 cannabis dispensaries in Los Angeles County held proper licenses as of 2022. The Department of Cannabis Control indicates that unlicensed sales exceed those in the legal market, with experts estimating that illicit marijuana comprises more than half of total sales in California.