Marijuana delivery rival sues Eaze over credit card payments – The Mercury News
It’s been called the “Uber of weed,” but a competitor’s new lawsuit alleges that Eaze became the marijuana delivery giant it is today by fraudulently hiding customers’ cannabis purchases when they use credit and debit cards.
The suit filed Tuesday claims payments for cannabis delivery on Eaze are routed through phony businesses to get around credit card companies’ rules against using their services to purchase pot, making it look like customers instead bought pet supplies or outdoor gear, not joints or edibles.
The practice allows the San Francisco-based company to offer the option to pay with plastic, while other marijuana delivery firms are cash-only, giving Eaze an unfair advantage, the lawsuit alleges.
Herban Industries — a subsidiary of the Canadian cannabis firm DionyMed, which runs the delivery service Chill — filed the civil lawsuit in San Francisco County Superior Court, claiming Eaze’s actions violate California’s unfair competition law and amount to criminal fraud.
Eaze rejected those allegations and said individual cannabis dispensaries, not Eaze itself, are responsible for handling customers’ payments. Spokeswoman Elizabeth Ashford said the lawsuit was an attempt by DionyMed “to gain an advantage through litigation, prop up their failing stock price and publicize their new delivery platform.”
“The allegations are false and their attempts to hide their true motives are obvious,” Ashford added.
Although California’s recreational marijuana market has been open for a year and a half, many banks and credit card companies don’t allow their services to be used for cannabis because the drug is still illegal under federal law — meaning many delivery service customers and those at dispensaries have to pay with cash. But Eaze gives its customers the option to pay using a Visa card.
Herban Industries says Eaze can only do that by committing fraud.
Several Eaze receipts included as exhibits in the lawsuit state that marijuana purchases will show up on customers’ billing statements as being from obscure websites that appear to have nothing to do with cannabis — the online retailers, with names like HappyPuppyBox.com, OutdoorMaxx.com and Fly2SkyShop.com, purport to sell everything from drone supplies to furniture. Those sites, which have bare-bones designs that in some cases are nearly identical, are fronts meant to disguise marijuana purchases, the lawsuit alleges.
The suit claims Eaze’s business has quadrupled since it began accepting payment by card, making it the biggest marijuana delivery service in the industry, while cash-only competitors such as Chill can’t compete with the convenience the scheme offers consumers.
Ashford, the Eaze spokeswoman, responded that while customers order through Eaze’s website and app, the company is not the actual retailer selling the marijuana, and doesn’t control how transactions are processed or appear on billing statements.
“Eaze is a technology platform that enables licensed cannabis retailers to fulfill on-demand delivery to consumers, and we believe we and our licensed retail partners are complaint with all (California) regulations,” Ashford wrote in an email.
A spokesman for California’s Bureau of Cannabis Control declined to comment on the lawsuit or whether the actions it alleges constitute violations of the state’s marijuana regulations. Visa did not respond to a request for comment.
This article originally appeared here in https://www.mercurynews.com/2019/06/08/marijuana-delivery-rival-sues-eaze-over-credit-card-payments/