Prominent cannabis delivery app Eaze is facing a lawsuit over claims that it illegally processes credit card payments through foreign shell copmanies.
But, according to the lawsuit, Eaze’s biggest crime isn’t that it allegedly committed all kinds of credit card and international banking fraud. Their most significant infraction is that doing so put them at an unfair advantage over their law-abiding competitors.
Herban Industires, a California-based cannabis company which filed the lawsuit, claims that Eaze’s sales have increased 300% as a result of their illegal practices.
“Eaze conspires to disguise the cannabis transactions as transactions for dog toys, dive gear, carbonated drinks, drone components, and face creams, among other things, to obtain approval for these transactions,” read Herban’s complaint, which was filed with the San Francisco County Superior Court on Tuesday.
“To perpetrate these frauds, Eaze created or partnered with Cyprus- and U.K.- based shell corporations that purport to sell these seemingly innocuous products but in fact exist solely or primarily for the purpose of misrepresenting the nature of the underlying transactions.”
Herban, by the way, is not the most objective of parties, and in fact has a history with Eaze. They are owned by the international Toronto-based corporation DionyMed Brands, which also operates the rival cannabis delivery company Chill.
Until very recently, Herban DionyMed actually worked in partnership with Eaze. Earlier this year, they annulled thier relationship, and launched their own competing service.
In response to the complaint, Eaze issed a statement to the news site Mashable, basically claiming that Herban’s claim was bogus, that it does not process credit card payments and as far as it knows its partners are also compliant with California law.
“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,” said Eaze spokesperson Elizabeth Ashford.