Waitr’s $90 million deal with cannabis dispensary software company goes up in smoke

Waitr will no longer acquire a software firm that specializes in serving cannabis dispensary retailers, but said it will continue to pursue a “potential business relationship” with the company.

The Lafayette-based delivery app’s parent company, Waitr Holdings Inc., announced in December that it had signed a non-binding letter of intent to buy Retail Innovation Labs Inc., which does business as Cova. Under the terms of the deal, Waitr would purchase Cova for $90 million in cash and stock. Cova specializes in software that streamlines the management and compliance process for marijuana dispensaries. Nearly 2,100 dispensaries use Cova software for sale, inventory and compliance purposes.

At the time the deal was announced, Carl Grimstad, Waitr CEO and board chair said the total value of cannabis transactions processed on Cova were estimated to be $2.3 billion.

But in a Securities and Exchange Commission filing Thursday, Waitr said both sides had “mutually agreed” to spike the acquisition. The filing did not give a reason for the deal’s collapse.

Waitr said it will look for ways to provide Cova customers with “access to third parties that provide payment processing solutions.”

“(Waitr) believes that such an arrangement can be mutually beneficial and will allow both parties to continue to execute their respective business strategies without affecting a business combination,” the SEC filing said. “These discussions remain preliminary and there can be no assurance that a definitive agreement with respect to this arrangement will be entered into or consummated in the near term or at all.”

The exact future of Waitr’s marijuana-related dealings isn’t exactly clear. Waitr announced last year it would team up with Flow Payments to create a legal delivery platform for cannabis dispensaries. It completed its purchase of Flow Payments and two other companies — ProMerchant and Cape Cod Merchant Services — in August 2021 to beef up its payment processing platforms.

Waitr’s SEC filing indicates the company wants to continue expanding its delivery offerings, though it does not mention cannabis specifically.

Grimstad said the business invested in product and engineering personnel and made additions to the technology management team, which should benefit Waitr as it planned to expand delivery services. 

A Waitr spokesman did not immediately return a request for comment Friday on the status of the company’s marijuana delivery business.

Waitr also announced Thursday that Pouyan Salehi has chosen to step down from the company’s board. Salehi, a serial tech entrepreneur, joined the board after Waitr bought BiteSquad in 2018.

The company’s SEC filing said Salehi is leaving on good terms. His tenure will end after Waitr’s stockholder meeting in June.

In January, Waitr announced its stock price had been too low for too long, which puts the company at risk for being delisted from Nasqad. Waitr has until July to raise its price. Its stock price closed at 46 cents on Friday.

Waitr announced Friday it pulled in $38.6 million in revenue in the fourth quarter of 2021, compared to $46.8 million for the same quarter in 2020. It posted a net loss of $8.1 million in the fourth quarter of 2021 after posting net income of $2.6 million for the same period a year earlier.

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