L.A. Sues to Stop Mobile App Medical Marijuana Deliveries

Wednesday, December 03, 2014

Nestdrop, the mobile app that facilitates delivery of medical marijuana to your door, asks on its website, “Are you tired of being oppressed by 'The Man'? By the 'Wo-Man'? By your dog?”

The city of Los Angeles has posed a different question and directed it to a judge. Is this really legal?

City Attorney Mike Feuer filed a lawsuit Tuesday in Los Angeles Superior Court against the city’s first smartphone app for networked medical marijuana delivery. In a press release (pdf) celebrating 402 medical marijuana dispensary closures during his first 17 months in office, Feuer said:

Nestdrop is “a flagrant attempt to evade the restrictions on the unregulated and illegal delivery of marijuana by motor vehicles to homes and places of business throughout the City of Los Angeles, in blatant disregard of the strictures of Proposition D, enacted by the voters of the City in the Spring of 2013.”

The suit contends that the law only allows patients or their caregivers to secure pot by picking it up themselves. Nestdrop provides a one-stop shopping site for customers by contracting with a number of area dispensaries and delivery services. Just click on the site, scan in your prescription and place the order. 

Unlike similar ventures in other industries, like Uber and Airbnb, Nestdrop is an all-cash business. You can’t charge your purchase by phone. Despite state and local laws that recognize medical marijuana as legal, the federal government still considers it a felony to sell pot. That is good enough to keep most financial institutions from handling med pot money.

One of the app’s conveniences is a GPS locator that speeds up delivery by noting where the customer is. But Nestdrop said there is no chance the data will become part one’s permanent digital profile, sold far and wide on the Internet, because, “We promise we won’t use this to spy on you. Maybe.” LOL!

Los Angeles has a number of mobile marijuana dispensaries that deliver their own goods. Nestdrop networks them while, it says, remaining technically separate from the dispensaries. Eaze has been doing the same thing up in San Francisco for months and its website says it plans to expand to Los Angeles.

LA Weekly said last month that one of the local dispensaries, the popular Speed Weed, was planning on rolling out its own networking app, but so far that isn’t evident from their website. Speed Weed delivers its own product to Los Angeles, Orange County, Long Beach, South Bay and the San Fernando Valley, but warns, “Marijuana delivery is not available in some parts of Orange County due to increased law enforcement efforts.” Because Speed Weed is a dispensary, it could be even more vulnerable to prosecution than Nestdrop if it branched out.

Medical marijuana app companies run into double-barreled opposition from regulators and law enforcement types who have a problem with their business model as well as the products they sell. Unlike brick and mortar competitors, sharing-economy startups generally don’t assure customer safety, protect employee rights, set insurance standards or collect taxes.  

Eaze, whose motto is “Order in seconds, delivered in minutes,” acknowledges the pitfalls of running an under-the-regulatory-radar business and warns customers in its Terms and Conditions:

“You understand, therefore, that by using the application and the service, you may be exposed to a delivery service that is potentially dangerous, offensive, harmful to minors, unsafe or otherwise objectionable, and that you use the application and the service at your own risk.”

Eaze “will not assess the suitability, legality or ability of any third party delivery service providers” and renounces any liability for their actions. If someone screws up, Eaze insists on binding arbitration in all disputes, outside of small claims court.

Nestdrop started corporate life in June as an app for delivering alcohol and didn’t add marijuana until last month. Feuer is seeking an injunction against deliveries coordinated by the company and civil penalties of up to $2,500 a day for each day it has operated since November 12.

Like Uber―which claims it is not in the transportation business, it is just an app―the company claimed in a statement responding to the lawsuit, “As we’ve said from the beginning, Nestdrop is not a dispensary, collective, grower or even a delivery service.”

Or, in the words of Nestdrop co-founder Michael Pycher, “We’re not the beer and weed guys. We’re the regulated product guys.”

–Ken Broder


To Learn More:

L.A. City Hall Vows to Crack Down on “Uber for Weed” (by Gene Maddaus, LA Weekly)

LA City Attorney Sues to Block Pot Delivery App (by Robert Jablon, Associated Press)

L.A. City Attorney Asks Judge to Stop Smartphone App for Pot, Alcohol (by Soumya Karlamangla, Los Angeles Times)

The Uber of Medical Marijuana Motors into San Francisco (by Ken Broder, AllGov California)

City Attorney Feuer Announces Closure of over 400 Medical Marijuana Dispensaries (Los Angeles City Attorney’s Office) (pdf)

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