During the COVID-19 crisis, fundamental changes in consumer behavior, supply chains and channels of distribution occurred overnight. Industries hit the hardest have typically been those most reliant on densely packed congregational life—such as airlines, hotels, restaurants, stadiums, theaters or convention centers. On the other hand, companies with an eCommerce-based infrastructure have experienced an entirely different fate.
A prime example is Eaze, the leading cannabis delivery platform in the State of California providing adult consumers with licensed products. Launched in 2014 out of a San Francisco apartment with four employees, Eaze has grown to deliver cannabis products to over 6 million customers in more than 100 cities throughout California. Los Angeles alone is the second-largest legal cannabis market in the world—larger than Northern California, Oregon, Colorado and Washington state combined.
Immediately after the announcement of shelter-at-home policies, sales for cannabis dispensaries and delivery systems across California and elsewhere skyrocketed. Driven by people’s desire to avoid public exposure, sales shifted to online transactions—prompting retail stores to close. Positioned to ride a wave, Eaze’s technology and infrastructure has made it ultra-easy to order with delivery to your doorstep.
As consumers change how they shop—not just for cannabis, but in general—direct-to-consumer companies with a robust eCommerce-based infrastructure are bound to benefit from this change. During the first two quarters of 2020, Eaze posted a significant increase in sales compared to the first two quarters in 2019.
This could not have been possible without proper financing from the right investors. For the start-up with humble beginnings, the monthly burn was significant as Eaze developed its infrastructure and an expansive delivery network throughout California. But it’s been well worth it for investors as well as the company, which is now a dominant force in an incredibly promising industry—one immune from the disruption that COVID-19 caused.
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Seth Yakatan
Known for solutions that yield results, Seth Yakatan has completed or advised on acquisitions and corporate finance transactions totaling over $3 billion. He is CEO of Katan Associates International—a financial strategy and merchant banking firm specializing in commercialization and asset monetization—especially for the life-science and eCommerce sectors.