TORONTO–(BUSINESS WIRE)–Herban Industries CA LLC (“Herban”), a subsidiary of DionyMed Brands Inc. (“DionyMed” or the “Company“) (CSE: DYME; OTCQB: DYMEF), a multi-state cannabis brands, direct-to-consumer and distribution platform, achieved a victory yesterday in its unfair competition lawsuit against Eaze Technologies, Inc. (“Eaze”) by defeating Eaze’s motion to dismiss Herban’s complaint.
On June 4, 2019, Herban filed suit in the California Superior Court for the County of San Francisco against Eaze seeking an injunction to halt Eaze’s processing of credit and debit cards through its website and mobile application. Herban’s complaint alleges that “to gain an unfair competitive advantage in the California cannabis delivery market, Eaze is directing, coordinating, and participating in a scheme to defraud credit card companies and financial institutions into processing cannabis transactions in violation of a host of criminal laws,” including prohibitions against wire fraud and bank fraud. The complaint alleges Eaze carries out this conspiracy using offshore payment processors and a series of shell companies to conceal the cannabis nature of card purchases made on its platform.
On July 5, 2019, Eaze moved to dismiss the lawsuit by filing a demurrer. Eaze claimed Herban’s complaint was moot, because Eaze had terminated all online credit and debit card payment processing and ceased working with its former vendor, EU Processing. Eaze also claimed Herban did not have standing to sue Eaze, that Herban failed to meet the technical pleading requirements for its unfair competition claim, and that the court should abstain from hearing the case because state and federal cannabis policy is in flux.
On September 10, 2019, the San Francisco Superior Court denied Eaze’s motion in all respects, rejecting each of its arguments. As a result, Herban will now have the opportunity to conduct discovery into Eaze’s alleged credit and debit card fraud and bring the matter to trial.
“Eaze’s alleged decision to terminate online card payments and cease working with EU Processing shortly after our complaint was filed is a powerful admission of guilt, and an acknowledgment that the allegations in our complaint are true. Those changes don’t go far enough,” said DionyMed CEO Edward Fields. “We are pleased with the court’s decision to allow our lawsuit to proceed. We will continue until the direct-to-consumer cannabis delivery playing field is level for all market participants, and Eaze has compensated DionyMed for the massive damages its conduct has caused our company and shareholders. This result puts the boards of directors of cannabis companies everywhere on notice that good governance and regulatory compliance are table stakes for participation in the hyper-growth cannabis market.”
Herban is represented in the lawsuit against Eaze by Buckley LLP, a premiere law firm specializing in financial services, government enforcement, and litigation.
Founded in 2017, DionyMed is a multi-state cannabis brands platform, supporting cultivators, manufacturers and award-winning brands in the medical and adult-use cannabis markets. DionyMed sells branded products in every category from flower to concentrates and edibles. DionyMed serves cannabis consumers through direct-to-consumer fulfillment and retail dispensary distribution with its growing portfolio of award-winning brands. Learn more at dyme.com and follow @DYME_Inc on Twitter and LinkedIn.
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