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Eaze was once a darling of cannabis and cannabis-curious investors.
In 2017, as California transitioned from a medical to adult-use market and other states seemed on the cusp of doing the same, venture capital firms and high net worth investors were trying to figure out how to bet on the potentially millions of new consumers getting access to a product that had been classified as a Schedule I drug for half a century.
Enter startups like Eaze, a cannabis delivery company, which used the promise of a cannabis boom to woo investors and grow their businesses.
Because cannabis is federally illegal in the US, many investors are barred from betting on companies that handle the plant itself. To them, Eaze was an attractive investment because, as a middleman, it handled cannabis transactions but didn’t derive any revenue from selling marijuana.
Today, Eaze is trying to become a vertically-integrated cannabis retailer, a move that Eaze CEO Rogelio Choy describes as the company’s “second act.” But back in 2017, the company’s business made money by charging dispensaries a technology fee and providing advertising space, data, and menu placement to brands, per a 2017 pitch deck reviewed by Business Insider. The drivers that delivered orders through the Eaze app were paid by the dispensaries or brands that partner with Eaze, rather than by Eaze itself.
Comparing Eaze in its early days to Eaze now “is a bit like apples to oranges,” an Eaze spokesperson told Business Insider.
“I think since the early exuberant days of 2015, 16, and 17, people have had to do a lot of reconciling between what they thought the market would look like and what the market actually supports,” the spokesperson said.
In its 2017 pitch deck, the company predicted massive scale, touted expansion plans into eight new states by the first half of 2019, and said it would handle $1 billion worth of cannabis transactions across multiple states by the end of 2020. In 2016, the company handled $24 million in cannabis sales.
Eaze’s 2020 pitch deck, which Business Insider has published in full, reveals a very different company than what Eaze envisioned in 2017. In the 2020 deck, Eaze says it hopes to sell $190 million worth of cannabis by the end of this year, generating $125 million in revenue.
In the past year, Eaze has laid off dozens of employees, churned through executives, and faced a lawsuit. It — like many others in the industry — has faced headwinds, the bursting of the cannabis bubble, and now the coronavirus pandemic, which has upended the US economy.
The startup’s ups and downs over the past three years provide insight into the wild ride that cannabis startups, investors, and employees have been on since US states began legalizing the drug.
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