Cannabis Delivery Company Faces Legal Battle: Allegations Of Fraud & Unlawful Operations

Online cannabis marketplace Eaze finds itself entangled in a legal quagmire as former owners of Green Dragon, a cannabis company operating in Colorado and Florida and acquired by Eaze in 2021, file serious allegations of fraud and misconduct.

Eaze, often compared to the "Amazon of weed," has marketed itself as a cannabis software platform and marketplace, connecting customers to vendors and providing delivery services. 

See Also: Eaze Cannabis Delivery To Acquire Green Dragon Creating The 'Nation's Largest MSO Delivery Operation'

About The Lawsuit

• The lawsuit contends that Eaze intentionally deceived investors about its financial health and violated California law by "renting" multiple cannabis licenses to conduct its business. 

• Additionally, the suit accuses Eaze of fostering a hostile work environment and engaging in gender discrimination, leading to the dismissal of Green Dragon's co-founders after the merger.

• The lawsuit also implicates Silicon Valley figures James Henry Clark and Thomas Jermoluk, alleging they have a shell company holding at least 35% of Eaze's stock and serve on the company's board without prior disclosure, reported Weed Week.

Green Dragon founders assert that Clark and Jermoluk spearheaded the merger, and a loan of $36.9 million granted them significant control over Eaze. 

Moreover, the lawsuit alleges that Clark and Jermoluk misled the Green Dragon founders about Eaze's financial strength, despite Eaze's CEO, Cory Azzalino, denying any cash flow issues.

See Also: 'Glaring Double Standard': Targeting California's Legal Cannabis Industry As Black Market Booms

The suit further alleges gender discrimination and a hostile work environment experienced by the co-founders of Green Dragon after the companies merged. Despite selling Green Dragon to Eaze for a 30% ownership stake and two board seats, the three founders were terminated in February, adding to the complexity of the legal battle, reported SFGate.

The legal battle comes amidst accusations from Canadian firm Herban Industries, alleging that Eaze disguised cannabis transactions to enable credit card payments, granting the company an estimated 300% sales advantage. 

Despite these challenges, Eaze maintains its stance, asserting that it operates lawfully and is in a 'healthy financial position'.

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Read Next: California Lawsuit Alleges Intentional Sabotage Of Cannabis Grow Operation: Report

Image Credits: JRByron, WilliamCho by Pixabay Edited By Benzinga