Cannabis delivery service Eaze Technologies, Inc., once celebrated as the “Uber of weed,” is winding down its operations. This decision, announced Sunday by CEO Cory Azzalino, seemingly marks the end of an era for the San Francisco-based company.
Founded in 2014, Eaze quickly became a household name in the cannabis industry for its delivery service. However, due to recent economic challenges in the California cannabis industry and changes in ownership, the company plans to shut down by the end of 2024.
Rise of Eaze in Cannabis Delivery
Eaze was founded in 2014 as a mobile app designed to revolutionize cannabis delivery. Once dubbed the “Uber of weed,” the company gained rapid popularity by offering consumers a convenient way to purchase and receive cannabis products.
With California’s legalization of recreational cannabis and the approval of Prop 64 in 2016, Eaze’s growth accelerated, reaching customers across Michigan and various California cities. At its peak, Eaze was valued at $700 million, becoming the largest cannabis delivery service globally.
Despite initial success, Eaze faced numerous legal challenges that would eventually contribute to its downfall. The company had to adapt to a new complex web of cannabis regulations across different states.
These regulations included strict licensing requirements, taxation, and restrictions on advertising, all of which posed significant operational challenges. In 2021, a former Eaze CEO pleaded guilty to bank fraud, further complicating the company’s legal standing.
Eaze’s ambitious expansion efforts led to financial strain. The company secured substantial investments from high-profile backers, including tech billionaire James Henry Clark. However, these investments came with risks.
In 2022, Clark loaned Eaze $36.9 million, and when monthly revenue targets weren’t met, he foreclosed on the company. This financial turmoil culminated in Eaze’s assets being auctioned off in August 2024, with Clark’s company, FoundersJT, acquiring them for $54 million.
Layoffs and Employee Uncertainty
The closure of Eaze could have significant implications for its workforce. Nearly 500 employees, represented by the United Food and Commercial Workers International Union (UFCW), face layoffs as the company winds down, as reported by SFGate.
Eaze’s management has stated that some workers may be rehired if operations resume under new ownership in 2025. However, the uncertainty surrounding the company’s future leaves many employees in limbo, highlighting the human cost of the shutdown.
In a LinkedIn post from Eaze’s current CEO, Cory Azzalino provided insight into a letter that was sent to the employees of Stachs LLC, which said that more information for employees should be available on November 15th.:
Dear Employees of Stachs LLC,
I write to inform you of a difficult decision that Stachs LLC has made. Due to the ongoing challenges of the California cannabis market, the company’s assets were foreclosed on by our lenders on August 6, 2024. Consequently, Stachs LLC will be winding down operations, with the full closure expected to take place on or around December 31, 2024.
We understand that this news is unfortunate, and we want to do everything we can to support you during this transition.
We are providing this advance notice of Stachs LLC’s intent to dissolve as we anticipate that it will take several months to prepare for the transfer of assets. As we proceed with the transfer of the company’s assets, we will provide more clarity on the timing of events. We anticipate being able to provide an update on next steps on or around November 15, 2024. For employees represented by UFCW, we have already provided the Union notice and expect to engage with them in bargaining discussions regarding the effects of the wind down.
We want to express our deepest gratitude for your hard work, dedication, and loyalty throughout your tenure at Stachs LLC. Your contributions have been invaluable. We understand that this news may be overwhelming, and we encourage you to reach out to your manager or HR representative if you have any questions or concerns. We will do our best to provide you with support and guidance.
Thank you for your understanding and cooperation, as well as your continued efforts in delivering a much needed and positive service to our customers.
Sincerely.
Cory Azzalino
Chief Executive Officer
California’s Cannabis Market Continues to be a Landscape of Challenges
California’s cannabis industry is no stranger to the failure of large corporations, as seen with the high-profile examples of MedMen and a . These companies, like Eaze, have struggled to navigate the complex regulatory landscape and economic pressures that define the state’s challenging market.
Eaze’s potential closure also highlights broader issues within California’s cannabis market. High taxes and fierce competition from the illicit marijuana industry have created a challenging business environment for legal operators.
The lack of enforcement against these illegal sellers, who offer tax-free cannabis, puts additional pressure on companies like Eaze. Jim Araby, UFCW Vice President, told SFGate in which he emphasized the need for state legislators to address these systemic issues to prevent further industry failures.
“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.
While Eaze’s story appears to be coming to an end, there is a possibility of rebirth. The new owners are considering reopening certain depots and rehiring workers under a new corporate structure in 2025.
If successful, this could mark a fresh start for the company and provide an opportunity to address past challenges. Eaze’s customer base and experience in the market could serve as valuable assets in its potential resurgence.
Eaze’s closure serves as a reminder of the complexities and uncertainties facing the cannabis industry. From its inception as a cannabis delivery service to its current challenges, Eaze’s journey reflects the broader dynamics of a rapidly evolving market.
