*This article first appeared on SFGate.com
California’s largest pot delivery service is in financial trouble after it defaulted on a major loan and now faces foreclosure, according to a document filed in Delaware court earlier this month.
Eaze, which was founded in San Francisco in 2014 and was once valued at over $700 million, has defaulted on a loan issued by legendary tech investor Jim Clark. Clark is now foreclosing on the company and demanding all collateral owned by Eaze, according to the court filing, which was first reported by WeedWeek.
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It’s the latest move in an ownership battle that’s been playing out in court for nearly a year. Clark has been an investor in Eaze and has sat on its board of directors since at least 2021. In August 2022, a shell company co-owned by him issued a controversial $36.9 million loan to Eaze that gave Clark the right to seize control of Eaze if it failed to meet monthly revenue requirements laid out by Clark’s company, according to a 2023 lawsuit filed by other Eaze investors.
Those other investors alleged in their lawsuit that Clark had illegally misrepresented the company’s financial status to attract more investment in the company. That lawsuit was dismissed by a San Francisco judge in November 2023.
Cory Azzalino, Eaze’s CEO, told SFGATE via email Monday that the foreclosure is a dispute among the company’s investors, as it could result in Eaze investors aside from Clark losing their equity rights to the company. Azzalino maintained it would not affect the company’s operations and said the company was still in a “healthy financial position.”
Eaze employs over 600 drivers who deliver pot to customers around the state and is the largest pot delivery company in the United States, according to the Guardian.
Eaze’s financial troubles come as the entire California cannabis economy struggles to stay afloat. The largest pot distributor in California failed last year, and MedMen, a pot retailer once worth billions of dollars, declared bankruptcy last month. Hundreds of pot shops around the state are at risk of going out of business.
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Eaze itself has been no stranger to financial woes over the years: One of its former executives pleaded guilty in 2021 to a $100 million fraud scheme.
Clark is a billionaire tech investor who founded Netscape and has a building at Stanford named after him.
Azzalino said in an email to SFGATE that “there are multiple potential outcomes” from Clark’s move but reiterated that despite the foreclosure, the company continues to operate and pay its bills. “Eaze is one of the best payors in the industry,” Azzalino said.