EXCLUSIVE: Eaze Cuts Staff in Half as CEO Steps Down

According to multiple sources, the 36 staff
let go today represent about half of Eaze’s overall workforce.

The announcement was sent out this afternoon
by new CEO, Rogelio Choy, who previously served as Eaze’s COO. Before his time
with Eaze, Choy was CEO at file-sharing behemoth BitTorrent. He officially
departed BitTorrent’s new parent company, Tron, last December; after their $126-million-dollar
acquisition of BitTorrent in Summer 2018.

Choy will be replacing Jim Patterson, who led
Eaze through the company’s transition to the legal market after founder Keith
McCarty stepped down in 2016.

In the statement, Choy noted that the cuts affected
every department within the company and were not a reflection of the work being
done by those leaving, but a need for realignment within the company. An all-hands
meeting will take place on Thursday at noon, where Choy will update staff on
the plan forward.

It’s been an action-packed month for Eaze, as their legal battle heats up with Canadian imports, DionyMed. As noted by Green Market Report, DionyMed used one of its dispensaries to claim Eaze was using shell accounts to create fraudulent charges and payment processing. DionyMed then terminated a three-year contract based on the allegation. But the problem some are seeing with that claim is Eaze doesn’t process payments in-house — it just facilitates the transaction between the consumer and dispensary.

Earlier this month, DionyMed explained the allegation in a statement, after beating Eaze’s attempt to dismiss their case.

“Herban’s complaint alleges that ‘to gain an unfair competitive advantage in the California cannabis delivery market, Eaze is directing, coordinating, and participating in a scheme to defraud credit card companies and financial institutions into processing cannabis transactions in violation of a host of criminal laws, including prohibitions against wire fraud and bank fraud,’” read the statement.

The statement also notes that since the San
Francisco Superior Court denied Eaze’s motions, DionyMed will now have the
opportunity to conduct discovery into Eaze’s alleged credit and debit card
fraud and bring the matter to trial.

“Eaze’s alleged decision to terminate online
card payments and cease working with EU Processing shortly after our complaint
was filed is a powerful admission of guilt, and an acknowledgment that the
allegations in our complaint are true. Those changes don’t go far enough,” said
DionyMed CEO Edward Fields. “We are pleased with the court’s decision to allow
our lawsuit to proceed. We will continue until the direct-to-consumer cannabis
delivery playing field is level for all market participants, and Eaze has
compensated DionyMed for the massive damages its conduct has caused our company
and shareholders. This result puts the boards of directors of cannabis
companies everywhere on notice that good governance and regulatory compliance
are table stakes for participation in the hyper-growth cannabis market.”

Eaze countered in their complaint that DionyMed and its subsidiaries “have resorted to unfair business practices to harm Eaze and beg, borrow, and steal Eaze’s partners and consumers for their alternative platform.”

The complaint also speaks of a wild meeting
with DionyMed where Eaze thought they were going to further the existing
relationship they already had a contract for.

“Shortly after DionyMed’s acquisition of Hometown Heart, DionyMed CEO Edward Fields met with Eaze’s executive leadership team in Las Vegas, Nevada. During that meeting — where Eaze intended to greet the new owner of its partner dispensary and plan for their success in business together — Fields began to behave erratically and with Eaze, and eventually vowing that he intended to compete with and destroy Eaze and to dominate the California market. Fields’ outbreak surprised the Eaze executives in attendance, who thought the meeting was intended to further a partnership, not to establish a rivalry.”

Eaze also pointed to the fact DionyMed has
poached a number of their employees in an effort to gain a foothold in the
delivery space.

Things will likely continue to heat up as the
case moves forward.

At the request of our source, here is the full
letter from new CEO Rogelio Choy to Eaze’s employees.

Team,
By now everyone is aware that we’re undergoing significant changes in our company.
Today we had to part ways with 36 of our friends and colleagues across all teams and offices. This was an incredibly hard decision to make, and of course is enormously difficult for our departing colleagues, who are among the best and hardest working in this industry. Their departure is not a reflection of their excellent work.
These changes are because we need to realign Eaze operations to match market realities. Today’s very difficult action will best allow Eaze to continue providing our services to customers, retailers, and brand partners across California and Oregon.
Also, as of today, Jim is stepping down as CEO and I will take over the CEO title and responsibilities effective immediately. I want to thank Jim for leading us through our formative years and the dawn of legal cannabis in California.
We will gather together for an all hands meeting at noon where I will provide additional company updates, fundraising news, outline our path forward, and answer any and all questions you have.
As of today, we have completed more than 4.65 million deliveries, and there is no question Eaze has an incredibly important role in serving customers and helping build a sustainable, legal cannabis market. It is also true that our entire industry is experiencing significant and unique shocks as we continue to emerge from prohibition and convince adults to choose legal cannabis over illicit options.
The Eaze team, and our network of extraordinary retail and brand partners, have endured and overcome enormous challenges together. And we have significant challenges ahead. But we also have a tremendous amount to be proud of and we will ultimately do our best to build a world class, legal cannabis market for the people of California, Oregon, and beyond.
I want to close by thanking each and every one of you for your hard work and commitment to Eaze’s mission. I see you and appreciate you.
Ro

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