Troubled cannabis delivery startup Eaze secured $35 million in funding, just weeks after reports the company was quickly running out of cash.

The $35 million comes from investors and existing stakeholders — $20 million from investors led by FoundersJT and a $15 million bridge round from stakeholders Rose Capital and DCM. The cannabis delivery company said in an announcement it intends to use the money for kicking off its pivot to "verticalization."

"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 CEO Ro Choy said in a statement.

The raise comes just weeks after a TechCrunch report revealed Eaze had been laying off employees and struggling to pay its bills and payroll as cash at the startup dwindled. Amid its financial difficulties, executives hatched a plan to pivot to a vertically integrated business. 

Now, in addition to online sales and delivery of third-party products, Eaze will work together with licensed cultivators and manufacturers to develop a portfolio of cannabis brands it will sell and distribute alongside those of its retail partners. Eaze said it will launch its line of consumer cannabis brands "in the coming weeks." Eaze also acquired rights to Canadian cannabis distributor DionyMed's Hometown Heart delivery service, which has depots in Oakland and San Francisco, in January and now has oversight over its day-to-day operations.

"Eaze's success in securing capital comes during a challenging time for the industry as a whole," a spokesperson for Rose Capital wrote in an email. "The new business strategy allows for the company to grow closer to its customer and branding experience, further solidifying it as a dominant cannabis retailer in California." 

Now bankrupt DionyMed Brands sued Eaze, alleging the delivery company used shell companies to disguise cannabis credit card transactions, according to the San Francisco Chronicle. Eaze then filed a countersuit, alleging anticompetitive and illegal practices, before ultimately acquiring parts of DionyMed's business. 

Eaze burst onto the scene in 2014 and quickly attracted investment from high profile investors like early-stage VC firm DCM Capital, Snoop Dogg's Casa Verde Capital, and Winklevoss Capital, which is run by Bitcoin twins Tyler and Cameron Winklevoss. In 2016, a $13 million Series B made the company the highest funded and fastest-growing cannabis startup at the time, Fortune reported. But the cannabis startup ran into trouble this fall on the back of poor performance in the California market, a market rout and capital crunch that sent shockwaves through the entire cannabis industry.

In spite of the challenges, Eaze reported growth in 2019. According to the company's "State of Cannabis Report," the company saw a 97 percent annual increase in new signups, a 74 percent annual increase in first-time deliveries and a 71 percent annual increase in overall deliveries.

Share:
More In Business
Michigan Judge Sentences Walmart Shoplifters to Wash Parking Lot Cars
A Michigan judge is putting sponges in the hands of shoplifters and ordering them to wash cars in a Walmart parking lot when spring weather arrives. Genesee County Judge Jeffrey Clothier hopes the unusual form of community service discourages people from stealing from Walmart. The judge also wants to reward shoppers with free car washes. Clothier says he began ordering “Walmart wash” sentences this week for shoplifting at the store in Grand Blanc Township. He believes 75 to 100 people eventually will be ordered to wash cars this spring. Clothier says he will be washing cars alongside them when the time comes.
State Department Halts Plan to buy $400M of Armored Tesla Vehicles
The State Department had been in talks with Elon Musk’s Tesla company to buy armored electric vehicles, but the plans have been put on hold by the Trump administration after reports emerged about a potential $400 million purchase. A State Department spokesperson said the electric car company owned by Musk was the only one that expressed interest back in May 2024. The deal with Tesla was only in its planning phases but it was forecast to be the largest contract of the year. It shows how some of his wealth has come and was still expected to come from taxpayers.
Goodyear Blimp at 100: ‘Floating Piece of Americana’ Still Thriving
At 100 years old, the Goodyear Blimp is an ageless star in the sky. The 246-foot-long airship will be in the background of the Daytona 500 — flying roughly 1,500 feet above Daytona International Speedway, actually — to celebrate its greatest anniversary tour. Even though remote camera technologies are improving regularly and changing the landscape of aerial footage, the blimp continues to carve out a niche. At Daytona, with the usual 40-car field racing around a 2½-mile superspeedway, views from the blimp aptly provide the scope of the event.
Is U.S. Restaurants’ Breakfast Boom Contributing to High Egg Prices?
It’s a chicken-and-egg problem: Restaurants are struggling with record-high U.S. egg prices, but their omelets, scrambles and huevos rancheros may be part of the problem. Breakfast is booming at U.S. eateries. First Watch, a restaurant chain that serves breakfast, brunch and lunch, nearly quadrupled its locations over the past decade to 570. Fast-food chains like Starbucks and Wendy's added more egg-filled breakfast items. In normal times, egg producers could meet the demand. But a bird flu outbreak that has forced them to slaughter their flocks is making supplies scarcer and pushing up prices. Some restaurants like Waffle House have added a surcharge to offset their costs.
Load More