California Eaze cannabis workers ‘ready to strike’ on 4/20 over wages, mileage and benefits

Disgruntled California workers at Eaze Technologies and its cannabis delivery subsidiary, Stachs, reiterated plans to go on strike – just before the unofficial marijuana holiday of April 20 – for many of the reasons industry workers are unionizing nationwide.

“We just want to be treated like the valuable employees that we are,” Eaze driver Lori Riehle said during a Wednesday news conference at the United Food and Commercial Workers (UFCW) Local 770 headquarters.

Riehle delivered an impassioned speech in the Koreatown neighborhood of Los Angeles that highlighted the daily struggles many of her clients face and how much they rely on the cannabis delivery service to improve their health and wellness.

“We deserve better,” she said.

“We’re ready to do whatever is necessary. We’re ready to strike.”

Riehle, an Eaze employee for more than three years, is among 500 of the company’s delivery and depot workers in Los Angeles, Orange County, San Diego and Northern California who are ready to walk off the job after negotiations broke down in late March to secure the first labor contract between staffers and the San Francisco-based delivery company.

Another meeting between Eaze and union negotiators has been scheduled for April 15, as workers seek:

The timing of the potential strike on the biggest retail day of the year for the industry could lead to major sales and delivery disruptions throughout the state on 4/20, when product promotions, discounts and celebrations often lead to record sales.

California retailers generated millions of dollars in cannabis sales on April 20, 2023, according to Jane Technologies and other point-of-sale and e-commerce providers.

“Our CEO bragged last year that we made $3 million on 4/20,” said Christopher Wallace, an Eaze employee since 2021 at the company’s Venice depot, where workers pre-package cannabis orders and drivers pick them up for deliveries.

So, a strike “would be a huge hit to their bottom line,” Wallace added.

The mileage rate is perhaps the biggest area of contention.

Several Eaze workers told MJBizDaily that the company abruptly cut their mileage rate without warning in spring 2023 from 56 cents to 42 cents per mile.

“That costs me an average of $650 a month,” said Ron Swallow, a driver at Eaze’s depot in Van Nuys and a member of Local 770’s negotiating team.

“And we are not making a lot of money. We are basically making enough money to pay bills and rent and maybe put a little aside.”

Because Eaze workers are W-2 employees, they are prohibited from claiming the difference between 42 cents and 67 cents per mile on their federal tax returns, unlike 1099 independent contractors.

The high costs of living in coastal California and driving thousands of miles every month on some of the nation’s most congested freeways brings other tolls, including vehicle wear and frequent maintenance.

Eaze CEO Cory Azzalino said the company’s compensation packages are fair to workers.

“We pay our employees fair wages and have more than 1,500 recent applications for driver positions at our current wage, benefit and mileage structure,” Azzalino told MJBizDaily via email.

“We have no issue with turnover. All this indicates our existing compensation package is fair for the work performed.”

Swallow, who has driven for Eaze for more than two years, rejected an offer that would have paid him $18.75 per hour after three years, the typical time frame for union labor contracts.

“In three years, the minimum wage will be higher than what they offered us,” he told MJBizDaily in an interview.

Minimum wage is a hot-button issue in California, where fast-food workers now earn at least $20 per hour, thanks to a new law that went into effect April 1.

In November, voters will decide on a ballot measure to increase California’s minimum wage to $18 per hour for all employees by 2026 with annual adjustments for cost of living.

Swallow said Eaze eliminated armed security guards early last year at their marijuana depots.

Meanwhile, burglaries and robberies at licensed cannabis businesses are on the rise across California.

Los Angeles County accounted for more than 110 incidents in 2022 alone, according to California Department of Cannabis Control figures provided to MJBizDaily.

“We do a dangerous job,” Swallow said in an earlier interview, “and we need to stand up for our rights.”

Eaze also switched health care plans from preferred provider organizations (PPOs) to health maintenance organizations (HMOs), which are typically more budget-friendly but restrict provider access.

The company contributed less to the HMO plans, according to Swallow.

“It was more expensive for your out-of-pocket expenses on top of it costing more per month,” he said.

The trickle of diminished benefits ultimately led Swallow and his co-workers at Eaze’s Van Nuys distribution center to unionize about a year ago.

Shortened work hours also have a rippling effect on wages, according to Wallace.

“Our hours are getting cut, which impacts how much mileage reimbursement we get, and that impacts how much (in) tips we earn,” he told MJBizDaily before the news conference.

“We’re already on a tight budget, me and my family.”

Eaze is one of the largest marijuana delivery service companies in California and the United States with an online marketplace that’s served more than 2 million customers.

The company – among the most-funded in the industry – has raised more than $255 million, according to San Francisco-based TechCrunch, and burned through most of it.

Eaze has struggled along with hundreds of other operators in the world’s largest marijuana market.

“Cannabis businesses throughout California are failing, including Grassdoor, Emjay, Speedy Weedy, Herbl and MedMen,” Azallino said.

High taxes, licensing fees, regulations and a lack of enforcement on businesses circumventing the rules have made profitability elusive, he added.

Eaze has not turned a profit in its 10-year history.

Revenue at Eaze dipped 3% in 2022 and plummeted 14% in 2023, according to Azzalino.

The cash crunch has led to deep cost-cutting measures, including layoffs and salary reductions.

“We have cut corporate salary expenses by 70% since 2022 in order to stay in business,” Azzalino said.

“In addition, we made adjustments to reduce operating expenses, which included the reduction in security and other expenses.”

Planned labor strikes leading up to 4/20 last year led to significant changes in employee benefits at other cannabis companies.

Workers at Green Thumb Industries’ adult-use stores in the Chicago area initiated a nearly two-week strike on April 19, 2023 – the longest work stoppage in the U.S. marijuana industry to date.

The workers, represented by the International Brotherhood of Teamsters, negotiated a nearly 50% wage increase.

“We will not go quietly. We will fight for our rights, our pay and our dignity,” Swallow said.

“I hope that they see how strong and united we are and come to the table with something reasonable.”

Chris Casacchia can be reached at chris.casacchia@mjbizdaily.com.