Eaze Faces Foreclosure Amid Legal Challenges

The largest cannabis delivery service in California hit some snags and now faces foreclosure.
Eaze
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Eaze—California’s largest cannabis delivery service, once valued at $700 million and backed by Snoop Dogg—now faces foreclosure.

SFGate reports that it follows an ownership battle in court for the once-mighty delivery service that’s dragged on for over a year. 

WeedWeek reports that the company defaulted on a loan issued by tech investor Jim Clark. Clark, who founded Netscape, among other entities, invested in Eaze and took over a role on the company’s board of directors since 2021. In August 2022, a shell company co-owned by him issued a $36.9 million loan to Eaze that gave Clark power to seize control of Eaze if it failed to meet monthly revenue requirements laid out by Clark’s company, according to a 2023 lawsuit filed by other Eaze investors.

Clark currently is foreclosing on the company and demanding all collateral owned by Eaze, according to the court filing. Cory Azzalino, Eaze’s CEO, told SFGate that the foreclosure is the result of a dispute among the company’s investors. The investors believed they could be losing their equity rights to the company. 

In another lawsuit, Clark allegedly misrepresented the company’s financial status to attract more investment in the company, but that lawsuit was dismissed by a San Francisco judge in November 2023.

But Azzalino clarified that the foreclosure would not affect the company’s immediate operations and said Eaze is still in a “healthy financial position.”

San Francisco-based Eaze launched in 2014 by Keith McCarty to deliver medical cannabis to patients across California. But two years later, as the company grew, McCarty stepped down from his position as CEO. Several spinoff companies launched such as EazeMD, a service that helps people get a recommendation for medical cannabis from a doctor, and Eaze Insights, a research company. Eaze Wellness, on the other hand, provides products infused with CBD.

“As California’s largest legal cannabis marketplace, we bring enjoyment and convenience to our customers, break down barriers to access, and cultivate community in everything we do,” the company states. “With nearly 8 million cannabis deliveries to-date, we are committed to creating a more diverse and sustainable industry through our Momentum business accelerator, Social Equity Partners and Eaze Compassion Programs.”

“Eaze’s mission is to deliver good with the goods,” the company states, describing its social equity values. “We believe the legal cannabis market can help address some of the biggest problems facing America and supports social and economic initiatives around key issues important to the cannabis community. Every day, we work to embody the values of increasing access, supporting patients, and addressing harm caused by the War on Drugs. 

In 2019, Eaze had to scale back ambitions after projecting it would sell $1 billion worth of cannabis in 2020 to less than $500 million in gross transaction value.

Strikes and Unionization at Eaze Mount Up

Unionization efforts have clashed with Eaze leadership. MJBizDaily reports that 500 of the company’s delivery drivers and depot employees in Los Angeles, Orange County, San Diego, and Northern California were ready to walk off the job after negotiations fell apart last March to secure the first labor contract between staffers and the San Francisco-based delivery company.

Last April, nearly 600 workers at 11 depot locations owned by Eaze, a cannabis-delivery company in southern and northern California, threatened to strike over pay and conditions.

United Food and Commercial Workers (UFCW) applauded the strike after members rejected Eaze’s final union contract offer. Former driver Ron Swallow and his co-workers unionized with near unanimous support in March 2023.

“They cut our mileage rate. We’d been hired at 56 cents a mile and then they cut it to 42 cents,” Swallow told The Guardian. “That cost drivers $300 to $700 a month on average, depending on how much you drive and that was pretty annoying. It was also the first time in my whole life I’ve ever come to a job and then been told I was going to get paid less.”

Swallow explain other issues he ran into while working for the company.

“They wanted to offer us 45 cents and we of course said no to that because it didn’t get us back up to where we started out. We’re very united,” said Swallow. “When you join with a union, you just become the union, the people working become that and that is one of the coolest things that I’ve seen, drivers come together just being supportive of each other and our staff as well, because our staff is underpaid, too.”

Eaze of Sacramento also joined the Teamsters. Last March, delivery drivers at Eaze in Sacramento voted unanimously to join Teamsters Local 150.

California’s cannabis industry as a whole has hit some major hurdles. MedMen, the largest cannabis distributor in California once worth billions of dollars, declared bankruptcy last month. In addition, dispensary chains have faced similar clashes with union memes.

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