SAN FRANCISCO – Once known as “the Uber of Weed” and valued at $700 million, delivery-service-cum-multistate-dispensary-operator Eaze is winding down operations and will close by the end of the year. Nearly 500 workers will be displaced, according to the United Food and Commercial Workers International Union, which represents employees.
Founded in 2014 by Keith McCarty, Eaze began in a small San Francisco apartment with a team of just four employees. The goal: to deliver medical marijuana to patients across California. In 2015, the company secured $10 million in Series A funding from multiple venture capital groups, including Snoop Dogg’s Casa Verde Capital. The following year, Eaze raised an additional $16 million in Series B funding, positioning the company as one of the highest-funded startups in the cannabis industry. By 2017, Eaze operated in more than 100 California cities and had raised more than $52 million from a broad range of investors. In its annual report for the year, the company reported more than 300-percent year-over-year growth.
Serious signs of trouble came to light in 2019 when a competitor sued Eaze, alleging the company used European shell companies to misrepresent credit-card transactions and gain an unfair advantage in the marketplace. That case was dismissed after mediation.
However, federal investigators discovered Eaze consultants used fake online retailers and shell companies to disguise cannabis purchases as dog food, cosmetics, driving gear, and beverages, allowing the company to process about $100 million in fraudulent credit-card payments for cannabis.
The company’s massive valuation and meteoric rise came crashing down in 2021 when former Chief Executive Officer Jim Patterson, who had replaced McCarty in 2016, pleaded guilty to one count of conspiracy to commit bank fraud. Patterson, along with consultants Ruben Weigand and Hamid Akhaven, orchestrated the complex scheme to deceive financial institutions into approving cannabis transactions. Eaze relied on the scheme from 2016 to 2019, but after it was exposed in the lawsuit, the company was required to collect cash like all legal dispensaries.
Weigand was sentenced to 15 months in prison and a $50,000 fine. He also agreed to forfeit the $384,000 he earned for his role in the scheme. Akhavan was sentenced to two and a half years in prison and ordered to forfeit $17 million. He avoided a potential life sentence based on federal guidelines the judge called “irrational, silly, and ridiculous” after the defense introduced a “victimless crime” argument.
Eaze was never charged as part of the criminal conspiracy, but financial and leadership issues continued to plague the company. Netscape co-founder James Henry Clark started investing in the company in 2021 and faced a series of legal battles with other investors.
Eaze expanded operations into new markets in August 2021 with the acquisition of Green Dragon for an undisclosed sum.
“Green Dragon’s airtight operations in Colorado and expansion into Florida’s booming market add key operational capabilities to our national footprint and cement our leadership as California’s largest MSO,” Rogelio Choy, then Eaze’s CEO, said at the time of the acquisition. “Together, we are well-positioned to leverage the market’s explosive growth now and into the future.”
But the explosive growth wasn’t explosive enough.
The following August, Clark provided a $36.9 million loan to Eaze stipulating he could take control of the company if it failed to meet monthly revenue targets. Clark purchased Eaze at auction in August 2024 for $54 million.
The day Eaze hit the auction block, former Green Dragon owner and Eaze stockholder Andrew Levine filed a lawsuit seeking access to company records related to a security agreement, note purchase, and supposed take-under sale. Levine, his wife, and their son, taken together, composed the largest Eaze shareholder block, collectively holding 42.088 percent of the company’s shares. FoundersJT, the Clark-led holding company that assumed Eaze’s assets — but not liabilities — held 35.911 percent.
In its response and request to throw out the case, Eaze called the lawsuit “frivolous litigation” from a “serial litigator” designed to harm the company and force it to produce records Levine already possessed. Levine’s previous lawsuit against Eaze in 2023 was dismissed without prejudice.
According to court filings, Clark foreclosed on the company this spring. FoundersJT has not revealed its plans for the acquisition going forward.
“[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,” Eaze CEO Cory Azzalino told SFGATE in early October.
Union leaders were told the company is assessing which depots in California and Michigan, if any, will reopen, but no firm answers had been provided at press time.
Budtenders at the Eaze San Diego retail location told mg Magazine the shop expects to stay open for the foreseeable future.
