- REUTERS/Andres Stapff
- MassRoots was set to buy CannaRegs for a $12 million stock deal announced in August. The deal imploded after MassRoots’ CEO, Isaac Dietrich, was fired. CannaRegs’ CEO, Amanda Ostrowitz, said she pulled the plug on the deal to focus on what’s best for her company.
CannaRegs is pulling out of a deal with MassRoots after MassRoots’ CEO was abruptly fired by the company’s board on Tuesday, CannaRegs CEO Amanda Ostrowitz told Business Insider on Wednesday afternoon.
MassRoots, a technology platform for cannabis consumers, announced in August that it was buying CannaRegs, a subscription-based service that provides businesses access to all local, state, and federal cannabis regulations, for a $12 million stock deal.
The deal is now off after “turmoil” at MassRoots, Ostrowitz said. Isaac Dietrich, MassRoots’ CEO, was ousted by the company’s board on Tuesday while Ostrowitz was traveling in Italy.
“I had no idea what the hell was going on with the board,” Ostrowitz told Business Insider. “We’re pulling the plug.”
Business Insider has confirmed the deal cancellation with multiple sources close to the negotiations and reviewed a draft letter from Ostrowitz announcing that the deal was off.
Ostrowitz said she needed to do what was best for CannaRegs and “not be on a roller-coaster ride.”
- Ethan Miller/Getty
Ostrowitz, a lawyer by trade, said she had not spoken directly to members of MassRoots’ board and had instead received a confirmation of the withdrawal directly from the company’s lawyers.
“This was a deal we absolutely intended to do,” Ostrowitz said. “We were in the due diligence, paperwork phase. We did everything we needed to do.”
Ostrowitz also praised Dietrich, saying he has a “huge heart” and that she wants “what’s best for him.”
Adding to the confusion, Ostrowitz said she hadn’t intended to sell CannaRegs before she was approached by MassRoots. At the time, she was raising funding for CannaRegs after fending off another attempt to purchase the company.
“We’re still on good terms with MassRoots,” Ostrowitz said. “But Isaac shouldn’t be out of the picture.”
Ostrowitz declined to comment on the drama at MassRoots – she instead said CannaRegs was cash-flow positive and debt-free but would need to raise funds to achieve a higher growth rate.
Scott Kveton, the new interim CEO of Massroots, told Business Insider in an email that the “transition” had been planned for “some time.”
“Its unfortunate we couldn’t get there with CannaRegs, and Amanda has built a great business, but ultimately the board wanted to maximize the deal for the MassRoots shareholders and we just couldn’t get there,” Kveton said.
Ostrowitz said she was handling the canceled deal while in Italy on a working vacation, which she said had been more work than vacation.
“I need to go eat some pasta,” she said.
This post has been updated with a comment from Scott Kveton, Massroots’ new CEO