Financially challenged cannabis delivery company Eaze said it has raised $35 million in a Series D round and could raise an additional $20 million. The company closed on a $20 million investment led by Founders JT LLC, which joins a $15 million bridge round led by Eaze key stakeholders, Rose Capital, and DCM. Eaze also said it had secured the ability to raise up to an additional $20 million to fund the company’s pivot into plant-touching businesses. verticalization and brand strategy to expand access to safe, legal, and affordable cannabis products.
Eaze Chief Executive Officer Ro Choy said, “Verticalization is Eaze’s second act. Until now, we’ve invested in proving our market fit, building an enormous and loyal customer base, and becoming California’s biggest marketplace for legal cannabis delivery. Now, we’re proving we can make this business work in a more sustainable and profitable way, while continuing to grow Eaze’s existing services.”
Eaze Picks Up Former Rival’s Dispensary
In a strange twist to this move, Eaze acquired DionyMed Brand’s (OTC: DYME) rights to retail licensee Hometown Heart (HTH) depots in Oakland and San Francisco, and now has oversight of HTH’s day-to-day operations. It wasn’t long ago that some of Eaze’s top employees left the company to work at DionyMed in an attempt to create a new delivery service at that company called Chill. The effort failed and in the process, the two companies began a word of words against each other resulting in lawsuits.
Hometown Heart had been a big part of the Eaze volume business but then DionyMed, then acquired the dispensary Hometown Heart from Evan Tenenbaum (one of the former Eaze employees according to the Eaze lawsuit) for $6 million with a potential amount rising to $12 million. Eaze says it has “purchased DYME’s *share* of the licensee HTH (which is a separate entity from DYME and always has been).” The amount paid was not disclosed, however, the lawsuit from DionyMed has been dropped. The former Eaze employees were not included in the HTH purchase, although the company said that many of the other employees retained their jobs. A spokesperson said, “lots of great folks whose jobs were at risk that worked in the DYME depots were able to keep their jobs as part of the ongoing, larger business.”
In the coming weeks, Eaze said it will launch its own line of consumer brands in partnership with local licensees while continuing to support a broad array of independent, world-class California brands and independent licensed retailers across the state.
With regard to payment processing, Eaze said it doesn’t process payments (payment processors in partnership with licensed retailers do). “Eaze now has partial ownership in HTH non-storefront retail (this is a license type in CA).”
Last month a story in Tech Crunch suggested that the company was in dire financial trouble. The story said that Eaze had raised $166 million and the recent bridge round was literally to keep the lights on and make payroll. The company has laid off employees over the past year. According to the TC story, Eaze is claiming in its investor deck that the company has a valuation of $388 million. The story also states that Eaze “appears to only take payments via debit cards, ACH transfer and cash, not credit card.”
TC also said that in the presentation, that Eaze claimed that it makes $9.04 on an average sale of $85, which will go up to $18.31 if it successfully brings in “private label” products and has more depot control.