California’s largest cannabis delivery company, which at one point was valued at $700 million and was dubbed the “Uber of weed,” is shutting down, according to a note from its CEO on Sunday.
Eaze is currently “winding down operations” with a “full closure” expected by Dec. 31, CEO Cory Azzalino said in a letter posted to his LinkedIn account. The company is laying off nearly 500 workers, according to Jim Araby, a vice president at United Food Commercial Workers International Union.
The failure of Eaze is only the latest high-flying California startup to fall during an economic collapse in the California market, following the likes of mega-retailer MedMen, which failed earlier this year, and Herbl, formerly the state’s largest distributor, which shut down in 2023.
Eaze was one of the early stars of the state’s legal cannabis market. Founded in 2014, it rapidly expanded in the heady days after California legalized recreational cannabis in 2018 and investors were giving sky-high valuations to legal pot companies. It became the biggest pot delivery service in the world but soon ran into trouble, including a former Eaze CEO pleading guilty to bank fraud in 2021.
Ownership of the company has also been tumultuous. Billionaire tech investor James Henry Clark, who co-founded Netscape and has a Stanford building named after him, invested in the company in 2021 and became embroiled in years of legal fights with other investors. Clark loaned the company $36.9 million in 2022 only to foreclose on the company this spring, according to federal court documents.
FoundersJT, a company owned by Clark, purchased Eaze for $54 million at auction in August, according to Green Market Report, pushing other investors out and giving him total control of the company. Eaze’s new owners are now shutting down the company while it decides how to proceed, according to Azzalino, Eaze’s current CEO.
“[Eaze] would be reopening under a new corporate structure potentially with new management, if it’s determined the new ownership group wants to keep it open,” Azzalino said in an email to SFGATE.
Araby said his union represents nearly 500 workers at Eaze and was told by the company that some workers may be rehired by the new ownership in 2025.
“We were told by the company that they are assessing which depots will reopen under new ownership and which will close permanently. We don’t have answers on that,” Araby said.
Araby said the failure of Eaze shows the “continuing dysfunction” in California’s legal market caused by high cannabis taxes and poor enforcement against the illegal marijuana industry, which competes against companies like Eaze by selling tax-free cannabis.
“This closure and the fact that almost 500 union jobs are going to be lost in the cannabis industry should be a wake up call to the state legislators and the government that more action needs to be taken,” Araby said.
The Newsom administration is likely aware of Eaze’s collapse. Nicole Elliott, the director of California’s Department of Cannabis Control and a Gavin Newsom appointee, liked Azzolino’s Sunday post to LinkedIn sharing the news of the company’s collapse.
H/T: www.sfgate.com
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