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- Civilized Worldwide, a cannabis media startup, raised $7 million to create the “premium lifestyle and media brand” for cannabis consumers around the globe.
- With investments from high-profile backers like the comedian and author Chelsea Handler and Canopy Rivers, the venture arm of Canopy Growth, Civilized and its husband-and-wife founders were soaring as cannabis legalization looked poised to sweep the US a few years ago.
- But after a series of layoffs and business pivots, as well as a failed takeover attempt, Civilized has let go of all of its staff and suspended operations.
- Civilized’s management team told Business Insider they were in negotiations to restructure their debt and bring on new investors for a relaunch.
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On September 20, 2018, Derek Riedle, then the CEO of Civilized Worldwide, a cannabis media startup, was set to embark on a tour.
He had just boarded a jet with the comedian Chelsea Handler at Van Nuys Airport in Los Angeles, a popular spot for celebrities and wealthy executives.
The pair were heading to Calgary, Alberta, the first stop on a tour of seven Canadian cities where Riedle and Handler held town-hall-style events with thousands of people. Canada had just legalized cannabis, and the excitement was palpable.
Riedle, along with his wife, Terri Riedle, had built Civilized into one of the more successful media-and-events brands in the burgeoning cannabis industry. The company attracted a slew of writers and videographers who wanted to document what many viewed as one of the greatest social and policy transformations of the 21st century.
The excitement helped the company pull in $7 million from prominent investors like Canopy Rivers, the venture arm of the biggest cannabis company, and celebrities like Handler. By spring 2018, former employees said the company had even taken steps to go public and touted its ability to reach over 2 million people per month.
But a little more than a year after the Riedles toured Canada with Handler, they were closing up shop at Civilized.
By December 2, Civilized had laid off all of its employees and suspended operations after the startup ran out of runway. A deal to sell the company and resume publishing was beginning to unravel too.
While the layoffs have been made public, Business Insider is the first to report on the collapse of Civilized’s deal with New Frontier Data, as well as its negotiations to restructure its debt. This story is based on conversations with five former employees and four freelancers, as well as email threads and internal memos obtained by Business Insider.
Civilized found itself at the intersection of two collapsing bubbles: cannabis and digital media. In both cases, early hype convinced investors to pour in cash, but growth didn’t materialize as quickly as investors had hoped.
“The last year or so in the world of digital media and cannabis has been unbelievably challenging, to say the least,” Terri Riedle said in an email after Business Insider sent a detailed list of questions outlining the issues former employees and freelancers had with Civilized. Riedle said Civilized was still working to resume publishing.
In some ways, Civilized is emblematic of the cannabis industry’s struggles — the coronavirus notwithstanding — over the past few months, where the outsize ambitions on the part of investors and management don’t reflect what is feasible for a startup to do.
Former employees of Civilized told Business Insider that the tour with Handler symbolized the startup’s troubles. The Riedles had big plans for Civilized but often lacked the resources, time, and skills to see them through.
The tour, for instance, was successful in terms of ticket sales but expensive to produce — especially with the fees that a high-profile celebrity like Handler commanded. And it didn’t become the content opportunity Derek Riedle had hoped for, as the startup did not end up with much usable footage to turn into a documentary for a platform like Netflix or a video blog series for YouTube, former employees said.
“Derek was trying to build up his celebrity, which was sort of foolish,” a former senior employee who worked at Civilized from 2016 to 2019 said. There was a constant “blurry line” between Derek Riedle wanting to be an influencer, palling around with celebrities, and doing the work he needed to do as CEO, the employee said.
The beginnings of Civilized
Derek and Terri Riedle started Civilized in 2015, shortly after Colorado became the first US state to legalize marijuana for recreational use. Investors and entrepreneurs hoped Colorado’s move would catalyze a multibillion-dollar industry.
The digital-media startup had ambitions to be the “premium lifestyle and media brand” for modern cannabis consumers. Think High Times for the upwardly mobile professional, those that enjoy a toke or two after long days of working at a tech startup or in a creative job.
The business model in the early days was simple: Civilized would post original and branded content and sell ads to cannabis companies.
The Riedles also ran Revolution Strategy, a marketing firm, and had enough business acumen to see early on that legal cannabis could be huge — and that as a media company, they could avoid some of the challenges facing companies that sell and cultivate marijuana. (The Riedles left Revolution Strategy in January after the company was taken over.)
On top of digital content, Civilized also has an events business, which includes the Civilized Games, an athletic competition where athletes compete while high, and the yearly World Cannabis Congress. It also bought the Moonlight Bazaar, an art and music festival in Saint John, New Brunswick.
Fresh investment and new hires
By the middle of 2018, the Riedles had become mainstays of the cannabis-conference circuit and courted favorable press. Derek Riedle had appeared on stage with celebrities like Handler and Martha Stewart, as well as cannabis execs like Bruce Linton, the founder of Canopy Growth, the largest cannabis company by market value.
The company received fresh investment from Canopy Rivers in April 2018. That year, Civilized hired a lot of people, creating excitement in its home city of Saint John, a Maritime town desperately in need of jobs and tax-revenue-generating companies, James McClure, a former Civilized employee who was laid off last July, told Business Insider.
Former employees estimated the company peaked in mid-2018 with more than 30 employees, though there was constant turnover, as is typical for growing startups.
Civilized also tried to make a string of acquisitions in 2018 and 2019, including the 420 Games, an athletic-events company that combines sports with marijuana, and Business of Cannabis, an online news, events, and analysis platform for the Canadian cannabis industry. The Business of Cannabis deal didn’t end up closing.
McClure worked on the editorial side of Civilized from August 2015 to July 2019, first as an associate editor and then as head of the content team in Canada.
He said his tenure at Civilized started out well. McClure said he felt he and his team had the autonomy to work on important stories, and the Riedles showed they cared about him as a person, a sentiment that many former employees shared.
By mid-2018, McClure said Civilized had taken steps to go public — including talking to investment bankers and conducting internal audits — in an effort to join a wave of cannabis companies that rushed into the public markets in late 2018 and early 2019. Many employees hoped their stock options would pay off, he said.
The company never filed to go public, Terri Riedle said.
Handler invested in March 2019, a few months after she joined Derek Riedle on the Civilized tour. At the time, Handler said in a press release that Civilized was “more than just a media company, it’s a movement. And one I’m proud to be a part of.”
She didn’t respond to a request for comment.
Signs of trouble surface for Civilized
Shortly after Handler’s investment, signs of trouble surfaced.
The company underwent two rounds of layoffs in April and July 2019. Some of its cannabis-company advertisers had been unable to deliver on payments and feared running afoul of Canada’s strict regulations around advertising marijuana products, former employees said. CBC has also reported on Civilized’s trouble with advertisers.
2019 was the year that outsize hopes for the cannabis industry came back down to earth, more broadly. By the end of that year, California and 11 other states had legalized cannabis for adult use, as had Canada.
But the rapid spread of cannabis legalization did not play out in the way many entrepreneurs and investors had planned for. Slow-moving legislation and a lack of growth capital from mainstream venture capitalists and other investors gummed up the progress. Cannabis stocks slumped as much as 90% last year.
Employees and freelancers say Civilized owes them money
By late 2019, Civilized was sometimes weeks late with payments to both workers and freelancers, the former employees said. One freelancer, Danielle Guercio, said she hadn’t been paid more than 20 weeks after two stories she wrote were published. Aaron Genuth, a freelance writer, said he hasn’t been paid for two articles he wrote last summer.
Terri Riedle said her goal was to settle “much of” Civilized’s debts to creditors, including freelancers, in the coming weeks.
It was hard-nosed capitalism one day and a family the next. It’s a hard thing to describe.
McClure said he was paid on time until the last month of his employment. That month the payment arrived a few days late.
He said he and his team — along with six freelance contributors — were laid off on July 29.
“Derek and Terri told me that they were under pressure to make some big cuts and they couldn’t make money off of the site’s editorial content, so they had to let us go,” McClure said.
McClure said the timing of the July layoffs surprised him, since the company had successfully put on its World Cannabis Congress a month earlier.
“It was hard-nosed capitalism one day and a family the next,” McClure said. “It’s a hard thing to describe.”
‘It’s hard to take advertiser money from an industry you cover’
Over his four years at Civilized, McClure said priorities seemed to change quickly for both management and employees — typical of working in a growing startup.
In one example, he said Civilized encouraged its writers to “make everything into a listicle.” Then when listicles started going out of fashion as social-media giants like Facebook tweaked their algorithms, the directive was to write anything but a listicle. Former employees said it felt like the Riedles were sometimes out of their depth in managing these shifts.
And in cannabis, there was a need for strong journalism as the industry struggled, with investors losing money and companies laying off employees. McClure said Civilized turned into more of a public-relations company for the industry than a media company covering it.
“The people who were paying us to write good news didn’t want their content placed next to bad news,” he said. “Things got really, really tense towards the end,” he added.
He said this caused conflict between the editorial operation and teams working on advertising and sales who were trying to drum up new business.
As money at the company got tight toward the end of his tenure, some of the decisions the Riedles made weren’t “nearly as kind” as their personal conduct toward him, he said, with demands for sponsored content overwhelming employees.
As Civilized tried to pivot toward live events and video production for YouTube instead of written content, two former employees said they weren’t given enough resources to produce high-quality videos and that there wasn’t enough money to pay more staff and buy equipment.
After McClure left the company, three former employees said things got worse. Derek Riedle, who was the CEO at the time, would often come into the office for only a few hours at a time, leave at noon, and wouldn’t be seen for the rest of the day.
A deal with New Frontier breaks down
On December 2, just after the Thanksgiving holiday, Derek Riedle told Civilized’s remaining staff in the Los Angeles office — about seven people — that they would be laid off, three former employees who were in the office that day said.
The former employees said the layoffs didn’t come as a surprise, as Derek Riedle had been open about the financial trouble Civilized was in.
Four employees who were part of that round of layoffs said they were still owed money from Civilized and did not receive severance pay. Business Insider reviewed a section of a former employee’s contract that shows employees who are fired are owed severance.
One former sales employee, who said she was still owed money, said she and three other former employees have spoken to a California labor attorney about filing a suit over the payments. That employee, who joined the company in May 2019 and was laid off in December, said she was paid weeks late on three separate occasions in 2019, with one paycheck coming in nearly a month late.
At the time of the layoffs, Civilized was working on a deal to be acquired by New Frontier Data, a cannabis-analytics and business-intelligence startup. On December 3, a day after employees were laid off, New Frontier put out a press release saying that it would move forward with the acquisition. The statement didn’t say how much money New Frontier would pay.
The press release characterized the December layoffs as “temporary” and said the company would resume operations in January.
A few days later, a group of former employees got on the phone with Derek Riedle, who told them the deal hadn’t gone through. When employees asked about severance pay and other issues, Riedle hung up, two people who were on the call said.
‘Stumbled right out of the gate’
By March 18, the deal with New Frontier was effectively dead, according to a letter sent to Civilized shareholders and employees obtained by Business Insider. In the letter, the Riedles said the term sheet with New Frontier had expired.
“From the outset of the legal regime in Canada, the cannabis industry has been in continual turmoil which has made it incredibly difficult for teammates, partners, content-creators, suppliers, shareholders and fans of Civilized. We are built to serve an industry that not only has failed to soar, it has stumbled right out of the gate,” the letter said.
“Both parties tried to get this done, but it has been difficult to fund the transaction in the current climate. Although they continue to fundraise to complete the merger, we are no longer in a period of exclusivity and have opened multiple new discussions,” it added.
New Frontier CEO Giadha DeCarcer told Business Insider that after the company’s diligence process with Civilized, “disagreements on value could not be overcome despite ongoing negotiations that continued into May.”
The economic fallout from the coronavirus pandemic also poses a challenge to digital-media companies like Civilized. Companies have slashed marketing budgets, which has affected publisher revenue, Business Insider’s Lucia Moses has reported. Many digital-media companies, including behemoths like BuzzFeed and Vice, have been forced to institute pay cuts, lay off employees, or fold entirely.
Without the deal, the Riedles said they wouldn’t be able to resume operations or hire any employees back.
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A new plan to restructure debt and bring in investors
They also said in the March 18 email that they had shown Canopy Rivers a plan to “return to skeletal operations” and refine a new business model. As part of that plan, Terri Riedle would assume the role of CEO, and Derek Riedle would step aside.
“The first plank in that plan is securing short term funding and beginning to settle the payables Civilized has been carrying,” the Riedles said.
Terri Riedle told Business Insider that Civilized had set a plan with Canopy Rivers to restructure the company’s debt to bring in new investors. She said the company would soon share its plans to restructure and relaunch. A Canopy Rivers spokesperson told Business Insider that “our conversations with Civilized remain focused on the existing debt instrument we have with them.”
“The company has secured fresh capital, and we will be reaching out to all of Civilized’s stakeholders, including investors and creditors to share the restructure/relaunch plans and deal with all other outstanding issues,” including settling debts with former employees and freelancers, Terri Riedle told Business Insider earlier this month.
She did not identify the sources of new capital or say how much money the startup would raise.
On June 19, Civilized posted its first official statement in months, which was focused on the Black Lives Matter movement. The statement added that Civilized was “almost ready” to relaunch.
For their part, employees aren’t crossing their fingers that they’ll be going back to work at Civilized. McClure, the former Canadian head of content, said he was still in touch with some of his former colleagues.
“Everyone talks about Civilized in the past tense,” McClure said. “Everyone has moved on to other things.”
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