Tech firm behind MMJ delivery app raises $10 million as investors warm to cannabis

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By Tony C. Dreibus

Eaze, a technology company that helps facilitate medical marijuana deliveries to patients, has raised $10 million in venture capital funding that will allow the San Francisco-based business to expand geographically and improve its customer service.

The fundraising effort was led by venture capital firm DCM Ventures, which has more than $2.5 billion under management, with participation from Fresch VC, 500 Startups and other investors.

Eaze founder Keith McCarty told Marijuana Business Daily that the company’s goal is to move into every state where medical marijuana deliveries are legal, and someday into countries that allow sales of medical cannabis. The money also will be used for technology development, increased data analysis and customer service enhancements, including hiring more support staff and developing support procedures.

The Series A investment – a term used to indicate a company’s first major round of financing – is one of the largest venture capital deals involving a single cannabis company. It’s the second major investing announcement in the cannabis industry this month, serving as an indication that the marijuana sector is becoming more popular with investors.

“This is a testament … to the maturity of the cannabis industry as a whole,” McCarty said. “This means (traditional Silicon Valley investors) see the huge potential in the cannabis business and feel confident about the market potential.”

Emily Paxhia, the co-founder of Poseidon Asset Management LLC, said the funds raised by Eaze and the $75 million fundraising round private equity firm Privateer Holdings closed on early this month prove how attractive the cannabis industry is becoming to investors.

“It’s exciting,” she said. “It’s a sign that big things are happening and the smart money is moving into the space.”

The intersection of cannabis and technology will likely mean more big deals for marijuana companies in the future, Paxhia said.

Eaze started last July after McCarty, who was the fourth employee at social networking site Yammer before it was sold to Microsoft for $1.2 billion in 2012, saw a need for a medical marijuana delivery app in the Bay Area.

It works like this: Patients with medical marijuana cards go to the company’s website and enter the strain and amount of cannabis they’d like to purchase. Eaze contacts a local dispensary that dispatches an independent driver to deliver the marijuana, which in some cases arrives in 15 minutes or less.

Eaze never touches the marijuana and doesn’t employ anybody who does, McCarty said.

While that can offer some legal protection, companies that provide these types of delivery services have still run into problems with local laws.

Los Angeles-based Nestdrop, for instance, was ordered in December to shut down under Proposition D, which governs dispensaries in the city.

McCarty said he ensures the company works within the law and will continue to do so as it expands geographically. He often speaks with his elected legislators and only partners with dispensaries that are compliant with California law, he said. It also helps that Eaze is a “technology services provider,” which are common in the San Francisco area.

“It’s very important” to engage legislators, he said. “When writing regulations it’s difficult to think of every circumstance, so as innovation happens, educating city officials on what patients need is extremely important.”

Eaze has been called “the Uber of marijuana,” a comparison McCarty said he likes because of the ride-sharing service’s success. While both are on-demand services, which are extremely popular these days, McCarty pointed out several other similarities between Eaze and Uber.

The companies both started up with about $1.5 million seed money and both raised $10 million in funds some nine months after launch.

“We’re following the same trajectory,” as Uber in its early days, he said.

The increased public acceptance of legal marijuana offers opportunities “as the fast-moving technology and cannabis industries intersect,” said David Chao, the general partner with DCM Ventures.

While McCarty didn’t give an exact timeline as to when the company will expand into other states, he said it’ll be easy to take what Eaze has learned in San Francisco and apply it to other areas.

“The plan is to be everywhere patients need access to medicine – our mission is to be global,” he said. “From a technical perspective, it’s a matter of flipping switches. We can activate a market in Nevada tomorrow, so there are no limitations in terms of technology. The $10m will allow us to expand much faster than anyone else in the market today.”

Tony C. Dreibus can be reached at