The Weedmaps Deception: Christopher Beals and the Numbers That Never Added Up

The corner office on the fourteenth floor of WM Technology’s Irvine headquarters had floor-to-ceiling windows that overlooked Orange County’s sprawling business parks and, on clear days, the Pacific Ocean beyond. It was from this vantage point that Christopher Beals presided over what Wall Street analysts called “the OpenTable of weed”—a digital marketplace connecting cannabis consumers with dispensaries across America’s rapidly legalizing landscape. By the spring of 2021, as SPAC mania gripped Wall Street and cannabis stocks soared on promises of federal decriminalization, Beals had engineered WM Technology’s public debut at a valuation approaching $1.5 billion.

But there was a problem with the numbers. A problem that would metastasize over the next eighteen months as Beals and his Chief Financial Officer, Arden Lee, repeatedly assured investors that the platform’s “monthly active users”—the metric Wall Street scrutinized most closely—remained robust and growing. The problem was simple, if devastating: the users were disappearing. And Beals and Lee, according to the Securities and Exchange Commission’s complaint filed in September 2024 in the Central District of California, knew it. Or at the very least, they should have known it. They had the data. They had the warnings. They had engineers and analysts raising red flags about the MAU calculations. And they reported the inflated numbers anyway.

This is the story of how two executives at the helm of a company riding the cannabis boom chose not to look too closely at the numbers their investors relied upon most—and how that willful blindness would ultimately cost them their positions, their reputations, and $1.5 million in penalties.

The Cannabis Tech Gold Rush

To understand how Christopher Beals arrived at that fourteenth-floor corner office, you need to understand the peculiar economics of the American cannabis industry circa 2020. After decades of prohibition, state-by-state legalization had created a gold rush unlike any since the dot-com boom. But this wasn’t just about dispensaries and grow operations. A parallel ecosystem of “ancillary” businesses—companies that served the cannabis industry without touching the plant itself—had emerged to navigate the treacherous gap between state legalization and federal prohibition.

WM Technology, doing business as Weedmaps, had positioned itself as the essential digital infrastructure for this new economy. Founded in 2008, the platform functioned as a directory and review site where consumers could find nearby dispensaries, browse menus, read strain reviews, and place orders for pickup or delivery. For dispensaries operating in a cash-heavy, marketing-restricted environment where traditional advertising channels remained largely closed, Weedmaps offered visibility and customer acquisition. For consumers navigating the bewildering variety of cannabis products flooding newly legal markets, it offered guidance.

By 2021, Weedmaps claimed to be the dominant player in cannabis technology, with a presence in legal markets across North America. The company’s pitch to investors was straightforward: as more states legalized cannabis and the industry matured, Weedmaps would become the category-defining platform—the Yelp, the OpenTable, the Google Maps of cannabis, all rolled into one.

Christopher Beals had joined WM Technology as Chief Executive Officer in 2016, bringing credentials from the technology sector and a mandate to professionalize what had been a scrappy startup. Under his leadership, the company had refined its business model, expanded its product offerings, and positioned itself for the public markets. By his side was Arden Lee, who had joined as Chief Financial Officer in 2018. Together, they would guide WM Technology through its transformation from private company to publicly traded entity.

The vehicle they chose was a Special Purpose Acquisition Company—a SPAC, or “blank check company”—called Silver Spike Acquisition Corp. In the SPAC boom of 2020 and 2021, these shell companies raised billions by promising investors they would find an attractive private company to merge with, providing a faster, less scrutinized path to public markets than a traditional IPO. For cannabis companies, which faced skepticism from traditional investment banks and underwriters wary of the federal prohibition, SPACs offered a particularly attractive route to Wall Street.

The merger was announced in May 2021 and closed that June. WM Technology began trading on the Nasdaq under the ticker MAPS. The implied enterprise value at closing was approximately $1.5 billion. Beals and Lee had pulled it off. They were now executives of a publicly traded company, subject to the full panoply of federal securities laws, SEC reporting requirements, and the scrutiny of institutional investors managing billions in assets.

There was just one problem: the users were leaving.

The Metric That Mattered

In the digital platform economy, few metrics matter more to investors than user engagement. Facebook reports daily and monthly active users. Netflix obsesses over subscriber counts. Uber tracks active riders. These numbers tell investors whether a platform is growing or shrinking, whether the business model is working, whether there’s a path to profitability.

For WM Technology, the headline metric was “monthly active users,” or MAU—defined as the number of unique users who visited the Weedmaps platform at least once during a given month. This wasn’t a vanity metric. It was the foundation of the company’s value proposition. More users meant more traffic to direct to dispensaries. More traffic meant dispensaries would pay more for premium listings and advertising. More revenue from dispensaries meant a path to profitability and a justification for that billion-dollar-plus valuation.

In the documents filed with the SEC in connection with the SPAC merger—the proxy statement investors relied upon to decide whether to approve the deal—WM Technology reported average MAU of 10.4 million for the first quarter of 2021. This represented an increase from prior periods and suggested a platform experiencing healthy growth alongside the expanding legal cannabis market.

But according to the SEC’s complaint filed in September 2024, those numbers were misleading. Worse, Beals and Lee had reason to know the numbers were misleading—or at the very least, had failed to exercise the reasonable care required of executives certifying public reports.

The problem began with how MAU was calculated. WM Technology’s engineers used a system that tracked unique user visits to the platform. But the system had flaws, and those flaws became apparent as the technical team dug deeper into the data. According to the SEC, employees responsible for analyzing user data had identified issues with the MAU calculations. They had raised concerns. They had questioned the accuracy of the reported numbers.

And then the users started to decline. Not gradually, but precipitously. The SEC complaint describes a company watching its user base erode even as it continued to report stable or growing MAU figures to investors. The decline wasn’t a secret inside WM Technology. Employees tracking user engagement could see it. Analysts preparing internal reports documented it. The question was whether Beals and Lee, perched at the top of the organization, would acknowledge it in the public reports they were required to certify.

They did not.

The Reports That Told the Wrong Story

After the SPAC merger closed in June 2021, WM Technology was subject to the quarterly and annual reporting requirements that govern all public companies. These reports—Forms 10-Q for quarterly results and Form 10-K for annual results—are filed with the SEC and distributed to investors. They must be accurate. They must be complete. And they must not omit material facts necessary to make the statements made, in light of the circumstances under which they were made, not misleading.

Most critically, both the CEO and CFO must certify these reports personally. The certification, mandated by the Sarbanes-Oxley Act in the wake of the Enron and WorldCom scandals, requires executives to affirm that they have reviewed the report, that it contains no material misstatements or omissions, and that the financial statements fairly present the company’s financial condition. It’s a personal attestation, carrying personal liability.

According to the SEC, WM Technology’s public reports during the second half of 2021 and into 2022 presented a misleading picture of user engagement. The company continued to report MAU figures that failed to account for the declining trends employees had identified. The numbers appeared stable when the underlying reality was deterioration.

The SEC’s theory of the case was not that Beals and Lee had engaged in intentional fraud—at least not in the criminal sense. The charges filed were not under the antifraud provisions that require proof of intentional deception, but rather under Sections 17(a)(2) and (a)(3) of the Securities Act of 1933, which prohibit negligent misrepresentations and omissions. The distinction matters. The SEC was alleging that Beals and Lee had been careless, not criminal. They had failed to follow up adequately on the warning signs. They had failed to ensure the MAU numbers were accurate before certifying reports containing those numbers. They had failed to exercise reasonable care.

In the Form 10-Q filed for the second quarter of 2021—the first quarterly report after the SPAC merger—WM Technology reported average MAU of 11.3 million, an increase from the first quarter figure included in the proxy statement. In the third quarter 10-Q, filed in November 2021, the company reported average MAU of 10.7 million. On the surface, these were small fluctuations, the kind of quarter-to-quarter variance investors expected.

But beneath the surface, according to the SEC, the picture was uglier. The company’s internal data showed more significant declines than were being disclosed. Employees who understood the user tracking systems had raised questions about whether the reported figures accurately reflected the platform’s actual user engagement. And crucially, Beals and Lee had not adequately investigated these concerns before certifying the public reports.

The pattern continued into 2022. In the Form 10-K filed for the full year 2021—the comprehensive annual report that would be scrutinized most closely by institutional investors—WM Technology reported full-year average MAU of 10.9 million. Again, the number suggested stability. Again, according to the SEC, it failed to reflect the declining user trends that were evident in the company’s internal data.

Beyond the MAU figures themselves, the SEC complaint also alleged violations of the proxy rules under Section 14(a) of the Securities Exchange Act. The proxy statement circulated to shareholders in connection with the SPAC merger—the document investors relied upon to decide whether to approve the transaction—had contained materially misleading statements and omitted material facts about user engagement. This was particularly significant because proxy statements are the primary disclosure document for transactions like SPAC mergers, where investors are being asked to approve a business combination that will determine the future direction of their investment.

The Red Flags They Ignored

The SEC’s case against Beals and Lee turned on a fundamental question: What did they know, and when did they know it?

In fraud cases involving intentional deception, this question is straightforward. Prosecutors must prove the defendant knew the statements were false when they made them. But in negligence cases like this one, the question is more subtle. The SEC needed to show not that Beals and Lee knew the MAU numbers were wrong, but that they had access to information that should have prompted them to investigate further—and that they failed to do so before certifying reports containing those numbers.

According to the SEC’s complaint, there were multiple red flags that Beals and Lee either ignored or failed to adequately pursue:

First, employees responsible for tracking and analyzing user data had identified problems with how MAU was calculated. These weren’t junior analysts offering hunches; these were technical employees with direct knowledge of the platform’s user tracking systems. Their concerns should have triggered a thorough investigation into whether the MAU figures being prepared for public disclosure were accurate.

Second, the company’s internal data showed declining user trends that were not being reflected in the public reports. This wasn’t hidden information locked away in a vault. It was available to management in the ordinary course of business. Beals and Lee, as CEO and CFO respectively, had a responsibility to understand the company’s key metrics and ensure they were being reported accurately.

Third, the cannabis industry itself was experiencing headwinds that should have prompted skepticism about reports of stable or growing user engagement. By late 2021 and early 2022, the initial euphoria surrounding cannabis legalization was giving way to a more sober reality. Federal legalization, once thought imminent, appeared increasingly unlikely. The market was becoming more competitive as larger, better-funded players entered the space. Cannabis stocks across the board were declining from their 2021 peaks. Against this backdrop, reports of stable MAU at Weedmaps should have prompted questions.

The SEC’s complaint alleged that Beals and Lee failed to follow up adequately on these warning signs. They certified quarterly and annual reports without conducting the level of investigation necessary to ensure the MAU figures were accurate. They allowed misleading numbers to be reported to investors who were making decisions about whether to buy, hold, or sell WM Technology stock based on those numbers.

This failure wasn’t cost-free. WM Technology’s stock price, which had opened above $15 per share following the SPAC merger in June 2021, began to decline as the market sensed trouble. By the time the company filed amended reports in 2023 acknowledging the MAU issues and restating prior figures, the stock was trading below $2 per share. Investors who had bought shares based on the original reports had suffered massive losses.

The Consequences

The SEC’s enforcement action, filed in the Central District of California in September 2024, sought to hold Beals, Lee, and WM Technology itself accountable for the misleading reports.

The charges were carefully calibrated. Against Beals and Lee, the SEC alleged violations of Sections 17(a)(2) and (a)(3) of the Securities Act—the negligence provisions. These charges carry civil, not criminal, penalties. There would be no prison time, no handcuffs, no perp walks. But the consequences were nonetheless significant.

Against WM Technology, the SEC alleged violations of a broader array of provisions governing corporate reporting: the proxy rules under Section 14(a), and various reporting and certification requirements under the Exchange Act. These included failures to file accurate quarterly and annual reports (Rules 13a-1 and 13a-13), failures to file accurate current reports on Form 8-K (Rule 13a-11), failures to maintain adequate internal controls (Rule 13a-15), and failures to include all material information necessary to make the reports not misleading (Rule 12b-20).

The settlement, announced simultaneously with the filing of the complaint, reflected the SEC’s view of the relative culpability of the parties:

WM Technology agreed to pay a $1.5 million civil penalty. The company also consented to a permanent injunction prohibiting future violations of the charged provisions—a standard feature of SEC settlements that gives the agency enhanced enforcement options if the company violates securities laws again.

Christopher Beals agreed to pay a $200,000 civil penalty and accepted an officer-and-director bar prohibiting him from serving as an officer or director of a public company for three years. This was the most significant individual consequence. The officer-and-director bar is the SEC’s tool for removing individuals who have demonstrated unfitness to hold positions of trust in public companies. For a career executive like Beals, three years on the sidelines represented a professional exile.

Arden Lee agreed to pay a $100,000 civil penalty and accepted a two-year officer-and-director bar. As CFO, Lee’s responsibility for the financial reporting was direct, but the SEC evidently viewed his culpability as somewhat less than Beals’s, reflected in the lighter penalty and shorter bar.

Neither Beals nor Lee admitted or denied the SEC’s allegations—a standard feature of civil settlements that allows defendants to resolve charges without formally conceding wrongdoing. But by agreeing to the penalties and injunctions, they accepted the practical consequences of the alleged misconduct.

The settlements also included cooperation provisions requiring Beals and Lee to cooperate with any future SEC investigation related to the matters covered by the complaint. This is significant because SEC investigations often uncover additional wrongdoing or involve additional individuals, and the cooperation of settled defendants can be crucial to expanding an enforcement action.

The Aftermath

For WM Technology, the settlement represented a painful but necessary step toward moving forward. The company had already taken remedial steps in 2023, filing amended reports that corrected the MAU figures and disclosed the issues with prior calculations. The company had also undertaken a review of its internal controls and made changes to its disclosure processes to prevent similar problems in the future.

But the damage to the company’s reputation and market value was severe. The stock price, which had already fallen substantially from its post-SPAC highs, continued to languish. Institutional investors who had bought shares based on the original disclosures had suffered massive losses. Some filed lawsuits seeking to recover their losses from the company and its executives. Others simply sold their shares and moved on, writing off their investments as another failed bet on the cannabis sector.

The cannabis industry more broadly had fallen on hard times by 2024. The promised federal legalization had not materialized. Many states had legalized, but the patchwork of differing state regulations made building national brands difficult. Competition had intensified, margins had compressed, and the initial wave of cannabis companies that had gone public in the 2020-2021 boom had largely disappointed investors.

For Weedmaps specifically, the user engagement problems reflected deeper challenges in the business model. As the cannabis market matured, dispensaries became more sophisticated in their marketing and customer acquisition. Some built their own customer databases and loyalty programs, reducing their dependence on third-party platforms like Weedmaps. Others found that direct search engine marketing or social media (despite platform restrictions on cannabis advertising) could be more cost-effective than paying for premium listings on Weedmaps.

The MAU decline, in other words, wasn’t just a measurement problem. It was a symptom of a business facing fundamental headwinds. And by failing to disclose those headwinds clearly and promptly, Beals and Lee had deprived investors of the information they needed to make informed decisions about the company’s prospects.

The Broader Pattern

The WM Technology case fits into a broader pattern of enforcement actions the SEC has pursued in recent years against companies and executives for misleading disclosures about user metrics and engagement.

In the digital platform economy, user numbers have become the coin of the realm. Investors value companies based on their ability to attract and retain users, even before those users translate into profits. This creates tremendous pressure on companies to show user growth, or at minimum, to avoid showing user decline.

That pressure, in turn, creates incentives to game the numbers. Some companies have inflated user counts by changing definitions to capture more users. Others have failed to adequately disclose factors that might cause users to leave the platform. Still others, like WM Technology according to the SEC’s allegations, have simply failed to exercise adequate care in ensuring that the user numbers being reported to investors accurately reflect reality.

The SEC has responded with a series of enforcement actions designed to send a message: user metrics must be calculated accurately, disclosed completely, and audited rigorously. When companies fall short—whether through intentional fraud or negligent misrepresentation—the agency will hold both the company and responsible executives accountable.

The WM Technology case is notable because it involved negligence charges rather than fraud charges. This reflected the SEC’s judgment about the evidence—that Beals and Lee had been careless rather than deliberately deceptive. But it also reflected a strategic choice by the agency. Negligence cases are easier to prove than fraud cases because they don’t require showing intentional deception. By bringing negligence charges, the SEC could achieve accountability without needing to meet the higher burden of proof that fraud charges would require.

For executives at other digital platform companies, the message is clear: you have a responsibility to understand your company’s key metrics, to investigate red flags when they arise, and to ensure that the numbers you certify in public reports are accurate. Ignorance is not a defense. Delegation is not a shield. If you sign the certification, you own the accuracy of what’s being reported.

The Human Element

Lost in the legal terminology and financial metrics is the human dimension of cases like this. Christopher Beals and Arden Lee were not cartoon villains or masterminds of elaborate fraud schemes. They were corporate executives who took positions of responsibility at a company operating in a rapidly evolving, legally complex industry. They made judgments—or failed to make judgments—about how to handle warnings about data accuracy. Those failures, according to the SEC, rose to the level of negligence that warranted civil penalties and bars from serving as officers or directors.

For Beals, the three-year bar represents a significant professional setback. He had spent years climbing the corporate ladder, building a reputation, and ultimately securing the CEO position at a company on the verge of going public. Now, regardless of whether he admits the allegations, he is barred from similar positions at any public company until 2027. He can work in the private sector, consult, or pursue other ventures. But the corner office at a publicly traded company is off limits.

For Lee, the two-year bar represents a similar, if somewhat shorter, exile. As CFO, his entire professional identity was tied to financial management and reporting at public companies. That door is now closed until 2026.

For the investors who bought WM Technology stock based on the original disclosures, the losses are measured in dollars but felt in disappointment and frustration. Some were retail investors who saw the cannabis boom as an opportunity to get in early on what they hoped would be the next major growth industry. Others were institutional investors managing pension funds and endowments, who conducted due diligence on the company’s public filings and made allocation decisions based on those filings. All were harmed when the reported user numbers turned out to be misleading.

The Technical Failure

At the heart of this case was a technical failure—a problem with how WM Technology calculated its monthly active users. The specifics of that failure are not fully detailed in the public SEC complaint, which describes the problem in general terms rather than drilling down into the technical minutiae.

But the broad outline is clear: the company was using a system to track unique users visiting the platform, and that system had flaws. Employees who understood the system recognized those flaws and raised concerns about whether the calculated MAU figures accurately reflected actual user engagement. Rather than pausing to investigate thoroughly and potentially revise the reported figures, the company continued to report numbers that made the platform’s user engagement appear more robust than it actually was.

This type of failure is not uncommon in technology companies, where metrics are often calculated using complex algorithms processing vast amounts of data. User tracking in particular is notoriously difficult. Users may access platforms from multiple devices, clear cookies, use VPNs, or otherwise obscure their identity, making it challenging to determine whether a given set of visits represents one user or several. Companies make judgment calls about how to handle these ambiguities, and those judgment calls can significantly impact the reported numbers.

The problem arises when companies don’t clearly disclose how they’re making these judgment calls, or when they become aware of problems with their calculations but fail to correct them promptly. Investors are entitled to know not just the headline MAU number, but also how that number is calculated and whether there are material uncertainties or changes in the methodology.

WM Technology’s failure, according to the SEC, was not adequately investigating and addressing the concerns employees raised about the MAU calculations, and continuing to report potentially misleading numbers in public filings that Beals and Lee certified as accurate.

The Regulatory Context

The WM Technology case also highlights the particular challenges of regulating companies in emerging industries like cannabis technology. These companies operate in a legal gray zone where state law permits activities that federal law still prohibits. That creates unique compliance challenges and puts regulators in a difficult position.

The SEC’s mandate is to protect investors and ensure accurate disclosure, regardless of what industry a company operates in. From the agency’s perspective, WM Technology was just another publicly traded company subject to the same reporting requirements as any other. The fact that it operated in the cannabis sector was irrelevant to whether its MAU disclosures were accurate.

But the cannabis context mattered in other ways. It meant that traditional institutional investors were more wary of the company, which may have reduced the level of sophisticated scrutiny the disclosures received. It meant that the company faced unique operational challenges that made projecting future performance more difficult. And it meant that industry headwinds could emerge suddenly as legal and regulatory developments shifted the landscape.

These challenges don’t excuse inaccurate disclosure. But they provide context for understanding how companies like WM Technology can find themselves struggling to manage investor expectations while navigating an uncertain business environment.

The Settlement Calculus

Why did Beals, Lee, and WM Technology agree to settle rather than fight the charges? Settlement calculations in SEC enforcement cases are complex, involving assessments of legal risk, reputational impact, and financial cost.

From a legal perspective, the defendants faced an uphill battle. The SEC had documented evidence of employee concerns about MAU calculations, declining user trends in internal data, and public reports that failed to reflect those trends. While Beals and Lee might argue they had relied on subordinates to ensure accuracy, the Sarbanes-Oxley certifications they signed required personal attestation. Proving they had exercised reasonable care in the face of documented red flags would be difficult.

From a reputational perspective, fighting the charges would prolong the controversy and keep the company and executives in the news for all the wrong reasons. Settlement allowed them to resolve the matter and move forward, even if it meant accepting penalties and bars.

From a financial perspective, the penalties—while significant—were manageable. The $1.5 million corporate penalty was substantial but not crippling for a company of WM Technology’s size. The individual penalties of $200,000 and $100,000 were painful but likely within the means of executives who had compensation packages befitting their positions.

The officer-and-director bars were perhaps the most significant consequences, effectively sidelining Beals and Lee from public company leadership for years. But even here, settlement had advantages. The bars were limited in time (three years for Beals, two for Lee) rather than permanent. And they applied only to public companies, leaving open opportunities in private equity, consulting, or other ventures.

Most importantly, by settling without admitting or denying the allegations, Beals and Lee avoided creating admissions that could be used against them in related litigation. Investors who had lost money on WM Technology stock might file securities class action lawsuits seeking damages, and any admission of wrongdoing in the SEC case could be used as evidence in those civil suits. By settling without admissions, the defendants preserved their ability to defend against such claims.

The Lasting Questions

The WM Technology case raises questions that extend beyond the specific facts of this enforcement action.

How should companies in emerging industries navigate the tension between putting their best foot forward for investors and ensuring that their disclosures don’t cross the line into misleading statements? Every company wants to present an optimistic case for its future, but that optimism must be grounded in accurate presentation of current facts.

How much investigation is enough when employees raise concerns about key metrics? Executives cannot personally verify every number in every report, but they also cannot ignore red flags. Where is the line between reasonable delegation and negligent failure to follow up?

How should investors evaluate user engagement metrics in an era when those metrics are both critically important and notoriously difficult to verify? The WM Technology case is a reminder that reported metrics are only as reliable as the systems and processes used to calculate them.

And finally, what does this case say about the SPAC boom of 2020-2021, when hundreds of companies went public through mergers with blank-check companies, often with less scrutiny than traditional IPOs would have required? WM Technology was hardly the only SPAC-era company to face post-merger challenges. The vehicle that was supposed to provide a streamlined path to public markets may have allowed companies to go public before they were truly ready for the disclosure obligations and investor scrutiny that status entails.

These questions don’t have easy answers. But they’re worth contemplating for anyone involved in the public markets—whether as an executive certifying reports, an investor relying on those reports, or a regulator working to ensure the markets operate with integrity.

Epilogue

By late 2024, WM Technology continued to operate, albeit with a substantially reduced market capitalization and a management team that had been reconstructed after the departures of Beals and Lee. The company’s stock traded around $1.50 per share, a far cry from the $15-plus levels of mid-2021 but stabilized from its lows.

Christopher Beals had moved on to other ventures, his LinkedIn profile carefully scrubbed of any reference to the SEC settlement. The officer-and-director bar would expire in 2027, at which point he would be eligible to return to public company leadership if anyone would have him. But the SEC settlement would follow him—a permanent entry in the commission’s enforcement database, a red flag for any board conducting due diligence on a potential executive hire.

Arden Lee similarly had exited the public company world, at least temporarily. His two-year bar, shorter than Beals’s, would expire in 2026. Like Beals, he would carry the SEC settlement as part of his professional record indefinitely.

For the investors who had lost money—both the institutions that had bought large blocks of shares and the retail investors who had bought a few hundred shares, hoping to profit from the cannabis boom—there was no settlement, no penalty payment that would make them whole. They had made investment decisions based on public disclosures that turned out to be misleading, and they had suffered losses as a result. Some might recover a portion of their losses if securities class action lawsuits against the company proved successful. Most would simply write off the investment as a painful lesson in the risks of buying into hyped sectors and newly public companies.

The case file in the Central District of California, case number 2:24-cv-08215, would remain open as the consent judgments were entered and the defendants complied with their obligations. Eventually, it would be closed and archived, another entry in the long history of securities enforcement—a reminder that in the public markets, the numbers must add up, and the executives who certify them must take care to ensure they do.