The Denver Post
MassRoots’ founder resigns; planned $12M buy up in smoke
Tech and social media firm goes through big transition
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 that founder Isaac Dietrich had resigned from his position as CEO, and a deal to buy Denver compliance software firm CannaRegs was nixed.
By the afternoon, MassRoots officials announced the “planned transition” of Dietrich at the end of a news release about a new dispensary-finder service, with officials saying the executive change was far from sudden or unplanned.
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 said in an interview Wednesday.
MassRoots runs a cannabis social network and app with features such as a dispensary finder and product reviews. Its shares trade over the counter.
On Thursday, Kveton hosted a conference call with company shareholders. Dietrich, who spoke briefly on the call, said he would support the leadership in any way he could.
Kveton, who led the call, touted MassRoots’ current and future position, saying the company had a strong brand, diverse set of product offerings and the liquidity to pursue additional acquisitions. He said that his “No. 1 focus is how do we get to cash-flow positive as quickly as possible,”
adding that MassRoots was reining in its monthly cash burn rate.
Early media reports — including Green Market Report, which first reported the CEO switch — described a company in crisis, bleeding cash and shedding its old guard quickly and unexpectedly. Dietrich tweeted Monday, “By far one of the toughest days of my life.”
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 the interview. “And to me, that is super exciting.”
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.
Shares of MassRoots closed Thursday at 26 cents apiece. Since Monday, the stock fell more than 40 percent.
CannaRegs on Tuesday pulled the plug on the planned acquisition, said company founder Amanda Ostrowitz.
The deal with MassRoots presented “infinite upside” for CannaRegs, she said.
But the company’s operations were tumultuous and volatile enough to raise red flags, she said, adding that the departure of Dietrich was the last straw.