Authored by Cynthia Cai via The Epoch Times,
The largest cannabis delivery company in California will shut down by the end of the year, according to a letter from the chief executive officer Sunday, joining a growing number of marijuana businesses in the state that are going belly up.
In the note published on LinkedIn, Eaze CEO Cory Azzalino said that “ongoing challenges” in the state’s cannabis industry led to the foreclosure of company assets on Aug. 6.
He added that the San Francisco-based company is “winding down” current operations and is expected to fully close around Dec. 31.
Eaze’s management team is working with a group to transfer the assets under new ownership and to determine whether operations will reopen next year.
Around 500 workers could face layoffs as a result, according to United Food and Commercial Workers, the union representing those employees.
Founded in 2014, the company says on its website that it provides on-demand delivery to adults across California and Michigan. After California legalized recreational marijuana in 2018, the business rapidly grew to become one of the largest cannabis delivery companies in the state.
It was once valued at $700 million, but top executives have faced financial issues over the years. Former Eaze CEO James Patterson pleaded guilty in 2021 to conspiracy to commit bank fraud. His case was related to that of Hamid Akhavan, a consultant for the company, who was convicted of deceiving credit card companies into processing marijuana transactions, according to the U.S. Justice Department.
In that same year, tech investor and co-founder of Netscape James Henry Clark invested in the company but was embroiled in lawsuits with other investors in the following years. In 2022, he loaned Eaze $36.9 million but foreclosed on the company at the start of this year, according to federal court documents first reported by WeedWeek.
Then in August, Clark took ownership of Eaze after purchasing the company for $54 million at auction, but his plans for the company are currently unclear.
The Epoch Times reached out to Eaze and United Food and Commercial Workers for comment but did not hear back by deadline.
The delivery company joins a growing number of cannabis-related businesses in California that are closing. Five companies have downsized or closed since 2023. This includes MedMen, which faced financial difficulties earlier this year, leading the company to close all but two of its stores. Similarly, Herbl, a cannabis distribution business, closed at the end of 2023 due to a financial collapse. Flow Kana closed early last year. High Times sold some assets after failing to repay roughly $29 million in loans. GrassDoor also closed late last year after liquidating its assets.
A report by GreenWave Advisors found that marijuana companies owe California around $732 million in unpaid sales, excise, and cultivation taxes which include penalties and interest. However, 72 percent of those taxes are owed by businesses that are no longer in operation.
This comes as California Gov. Gavin Newsom last month proposed emergency regulations to ban THC from foods and drinks accessible by people under 21 years old. Meanwhile, he signed Assembly Bill 1775 last week to allow cannabis consumption lounges to operate statewide.
Loading…
