MassRoots Inc. went through a massive transition this week.
In a span of two days, the Denver-based marijuana tech and social media firm no longer had its founder at the helm and no longer had an acquisition valued at $12 million on the docket.
In two regulatory filings made public early Wednesday, MassRoots disclosed founder Isaac Dietrich had resigned from his position as chief executive and a deal to buy compliance software firm CannaRegs was nixed. By Wednesday afternoon, MassRoots officials announced the “planned transition” of Dietrich at the end of a press release about a new dispensary-finder service, with officials saying the executive change was far from sudden or unplanned.
Later that evening, the company announced a shareholder conference call scheduled for Thursday.
Dietrich will remain with MassRoots as a member of the board of directors, a role that suits his strengths as a “visionary,” interim CEO Scott Kveton told The Cannabist in an exclusive interview.
Early media reports — including Green Market Report, which first reported the CEO switch — described a company in crisis, a firm that was bleeding cash and one that quickly and unexpectedly shed the old guard. Dietrich tweeted on Oct. 16, “By far one of the toughest days of my life.”
By far one of the toughest days of my life
— Isaac Dietrich (@Isaac_Dietrich) October 17, 2017
Kveton joined MassRoots three months ago when his company Odava, a software firm focused on cannabis retail infrastructure, was acquired by Dietrich’s firm for $1.75 million. The new CEO shook off reports that MassRoots was in turmoil, adding that he remains quite bullish on the firm’s future prospects.
“I feel really good, and there is a lot of value we’re unlocking here in the business,” Kveton said in an interview. “And to me, that is super exciting.”
Isaac Dietrich, CEO of MassRoots, makes a call at his office in Denver on Jan. 22, 2015. (Denver Post file)
Dietrich could not be reached Wednesday for comment.
As for CannaRegs, Kveton described the failed deal as “unfortunate.”
“Ultimately, it just came down to the board wanting to maximize the deal for MassRoots’ shareholders, and we just couldn’t get there,” Kveton said, declining to disclose any proposed terms or specific details of the discussions.
CannaRegs pulled the plug on the planned acquisition on Tuesday, said company founder Amanda Ostrowitz. By that point, Marijuana Business Daily and other media outlets were fleshing out the details of Dietrich’s apparent ouster by the board of directors.
“There’s just too many unknowns right now,” Ostrowitz told The Cannabist.
The deal with MassRoots presented “infinite upside” for CannaRegs, which was looking for some added muscle in expanding its web-based rules and regulations platform to cannabis companies and municipalities throughout California and beyond, she said. MassRoots had a strong brand, good visibility and a robust marketing engine, she said.
But the company’s operations were also tumultuous and volatile enough to raise some red flags, she said, adding that the departure of Dietrich was the last straw.
“People were clearly on different pages throughout the company, with different goals and different objectives,” she said. “We didn’t realize the disjointedness of it until we were all the way in it.”
CannaRegs was able to make a clean break and back out of the deal without any financial penalties, she said.
Ostrowitz’s firm is not actively seeking another suitor, she said. The company returns to what it was doing before — pursuing steady adoption of its regulations platform and eventually expanding the guts of that technology to other emerging, highly regulated industries, she said.
“CannaRegs is prospering on its own,” she said. “I simply had to look at what was in the best interest of my company,” she said.
Watch an interview with CannaRegs founder Amanda Ostrowitz on The Cannabist Show: