The former owners of Green Dragon, a cannabis company operating in Colorado and Florida, allege in a lawsuit that California-based Eaze defrauded investors, is “close to insolvency” and is operating unlawfully.
Cory Azzalino, the CEO of Eaze, told SFGate the company is “in a healthy financial position” and is operating lawfully.
The lawsuit was first reported by WeedWeek.
Eaze, a privately held online marijuana marketplace and delivery service with operations in California and Michigan, acquired Green Dragon in 2021 for undisclosed terms.
According to SFGate, the former Green Dragon owners made many allegations in their lawsuit, including:
- Eaze’s board intentionally hid its financial condition before the companies’ merger.
- Eaze is “essentially ‘renting’ multiple cannabis licenses and operating their own business at the licensed premises” in violation of California law.
- James Henry Clark, the billionaire founder of Netscape, and his business partner Thomas Jermoluk have a shell company that owns at least 35% of Eaze’s stock and are on the company’s board – details which had not been disclosed by the delivery operator.
- Clark and Jermoluk misled Green Dragon’s founders about the financial health of Eaze.
- Green Dragon’s co-founders, Lisa Leder, Andrew Levine and Alexander Levine, were victims of gender discrimination and a hostile work environment after the companies merged.
Azzalino confirmed to SFGate that Clark and Jermoluk are investors but said they do not sit on the board.
Leder, Andrew Levine and Alexander Levine sold Green Dragon for a 30% ownership stake in Eaze and two seats on the company’s board, according to the lawsuit.
However, the three were fired in February.
Eaze was the subject of negative headlines in 2021, when a former CEO pleaded guilty to one count of conspiracy to commit bank fraud.