Herban Industries has accused Eaze of wielding unfair advantage over other cannabis vendors by allegedly accepting credit card payment, in violation of federal and California law.
The suit also alleges Eaze is concealing card payments; due to federal restrictions on U.S. banks and payment services that do not allow cannabis-related transactions, most industry businesses are not able to access regular merchant services, like bank card payment processing.
The complaint read, in part, “… Eaze has obtained an unfair advantage over its competitors, including Herban, who have been harmed and continue to be harmed by Eaze’s ongoing criminal acts. Herban brings this lawsuit to enjoin Eaze from continuing this criminal activity on the grounds that Eaze’s deliberate and wanton acts of wire fraud, bank fraud, and criminal fraud constitute unfair competition under the California Unfair Competition Law.”
“Eaze is directing, coordinating, and participating in a conspiracy to subvert the policies of the Payment Card Companies,” the suit also stated. ”By making it appear as though the credit and debit card transactions submitted on the Eaze Platform were for goods and services that the Payment Card Companies’ policies would permit (collectively “Permitted Activities”), Eaze caused (and continues to cause) those companies to unwittingly provide services and money for Precluded Activities they would not have knowingly provided.”
Canadian cannabis brand distributor DionyMed is parent company of Herban Industries and new cannabis delivery service Chill, which is a competitor to Eaze. Herban’s case against Eaze went on to outline the difference in volume between the Ease and Chill platforms, with customers’ use of card payments unsurprisingly resulting in sales spikes for Eaze.
“Eaze’s experience bears out this preference, and shows the competitive value of accepting credit and debit cards: on information and belief, during periods in which the Eaze Platform has accepted credit and debit card payments, Eaze’s order volume has been approximately 300 percent higher than during periods in which Eaze—like Chill—only offered customers the option to pay with cash.” the suit read.
News of the suit was reported on Mashable.com, and quoted Eaze spokesperson Elizabeth Ashford, who said, “This lawsuit is a thinly-veiled attempt by publicly traded Canadian company 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.”