Pubdate: Tue, 29 Jul 2014
Source: San Francisco Chronicle (CA)
Copyright: 2014 Hearst Communications Inc.
Contact: http://www.sfgate.com/chronicle/submissions/#1
Website: http://www.sfgate.com/chronicle/
Details: http://www.mapinc.org/media/388
Author: Carolyn Said

DELIVERING MEDICAL POT WITH EAZE

S.F. startup brings medical marijuana to clients' doorsteps. Tap your
smartphone to summon delivery of medical marijuana, arriving more
quickly than a Domino's pizza. Brant Ward / The Chronicle An Eaze
delivery person will arrive at a medical marijuana patient's door with
buds sealed in plastic bags.

That's the vision for a San Francisco startup launching Tuesday that
says it wants to be the "Uber of pot." Eaze (www.eazeup.com) says it
has relationships with an unspecified number of local dispensaries as
well as dozens of drivers piloting their own vehicles. Deliveries will
be free for patients, with driver fees and Eaze paid by dispensaries
in exchange for gaining new business.

"We're offering the revolution of on-demand services for medical
marijuana patients," said Eaze CEO and founder Keith McCarty, formerly
an executive at enterprise social network Yammer, which was acquired
by Microsoft for $1.2 billion.

As an early Yammer employee, "I had a good exit there and so I
bootstrapped Eaze, but we're seeking funding from angel investors and
thought leaders," he said. For now, the four-person startup is based
out of McCarty's Russian Hill apartment, where he was busily
assembling driver kits on Monday.

Each driver will start a shift by picking up a kit at a dispensary
preloaded with 8 ounces of pot - the legal limit they can carry.
Typical sales are one-eighth ounce, or 3.5 grams, which sells for about $50.

"Having (enough supply for) 64 deliveries on them means they can get
to patients in an average time of 10 minutes," McCarty said. "That's a
compelling value proposition."

Eaze will verify customers' legal rights to buy marijuana by reviewing
images of their doctors' notes and drivers' licenses, submitted online.

Drivers' cars will be unmarked - important because they must accept
cash for deliveries, due to strict federal rules regulating banks and
credit card companies.

The service will be in operation daily from 8 a.m. to midnight.
Drivers will make $10 per delivery. McCarty wouldn't say how much Eaze
would collect as a commission from dispensaries.

Marijuana delivery is nothing new. Hundreds of delivery companies,
including dozens in San Francisco, are listed on www.WeedMaps.com,
which acts as a Yelp for pot-industry companies. Many dispensaries
offer free delivery. A Washington state company called Canary, founded
by two students, also calls itself the "Uber of pot" because it uses a
smartphone app.

McCarty said those other services are analogous to the taxi industry,
as slower, less-reliable, older methods, versus Eaze's high-tech
approach. The company is launching with a mobile-friendly website. It
hopes that Apple will approve its iPhone app, which had to remove all
mentions of pricing and make other changes to conform to the company's
guidelines. An Android app is pending.

Expansion plans

After it works out the bugs in San Francisco, Eaze hopes to expand to
Southern California, Colorado and Washington state. It eventually may
offer delivery of recreational pot in states such as Colorado and
Washington where it's legal.

For now, Eaze will only deliver marijuana flowers until it has legal
resolution about consumables - marijuana brownies and soda, for
instance - oils and waxes, McCarty said.

Drivers - called "caregivers" by Eaze - must pass criminal and driving
background checks and must themselves be medical marijuana users so
they are legally allowed to carry 8 ounces.

"We want them to be able to relate to the patients," McCarty
said.

McCarty says they won't drive under the influence - and that the
company is considering some form of drug tests for employees.

"We don't have a protocol yet, but plan to do it," he
said.

According to McCarty, Eaze carries insurance in addition to the
drivers' personal policies, but the company did not respond to a
request for more details on the amount and type of its policies.

Popular services

Justin Hartfield, CEO of WeedMaps in Irvine, said delivery services
are very popular as many patients are homebound or don't have reliable
transportation. For a tech-enabled service, the biggest convenience
would be paying via a stored credit card, he said.

However, that is not possible for Eaze or any other company under
current federal laws for banks and credit cards.

"Most businesses that handle marijuana, including delivery services
and storefront dispensaries, have found it very, very difficult to get
a bank account because of federal laws," said Chris Walsh, editor of
Marijuana Business Daily in Rhode Island. "Banks take on huge risks
doing business with the industry, although some will do it under the
radar."

Accounts for marijuana-related businesses can easily be frozen by
federal authorities and have their assets seized. As a result, most
companies deal entirely in cash, which presents huge organizational
and security problems.

Eaze has a bank account because it positions itself as a technology
company, McCarty said, but it doesn't accept credit cards.

"We're not a delivery service; we're the technology that automates
connections between patients and dispensers," he said.

Marijuana remains classified as a Schedule I drug by the government,
but pot entrepreneurship is growing. So is legalization of marijuana -
currently 23 states and the District of Columbia allow medical pot
use.

'Green rush'

"I'm seeing a huge 'green rush,' " said Hartfield who has more than
4,000 companies listed on the site he founded in 2007, as well as more
than 500,000 registered users. "There are lots of opportunities for
pioneers in all aspects of business."

Smartphone delivery is a rational next-step considering the popularity
of existing delivery services, said Walsh. However, he was dubious
about the "Uber of pot" claim.

"We see a lot of companies compare themselves to a well-known brand to
gain buzz," he said. "The Costco of cannabis, the Walmart of weed -
you hear those terms thrown around all the time."  
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MAP posted-by: Jo-D