Seems like chronic pot smoking was the core issue of his behavior.
Marijuana used infrequently is harmless, but because it has zero negative physiological side effects, besides red eyes, it can become easy to start using it everyday which will cause emotional detachment from real world events, hence the bad moods and outbursts out of nowhere.
Anyway, cool story bro, I can't speak to to dealing with bad employees because I've never been an employer. But what I can speak to as being an employee who has walked out of several jobs without notice is that bad employees will deliberately chase good employees away. Maybe they're trying to eliminate what they see as competition.
Most employers pay market value for their labor, AKA competitive wages. The problem with paying your employees competitive wages is that you will have competition for their labor from other employers, and it only takes literally one incident where the boss or one of his senior employees offends the sensibilities of a good employee for them to quit and jump ship to your competition. Smart employers would rather not have to repeatedly focus on interviewing and training applicants to replace employees who quit and so they pay their employees well above market value for their labor.
I've had to deal with employers, who all told me I was a valued asset mind you, do ridiculous shit like track my bathroom breaks, write me up for being 10 seconds late, or even make vague threats like, "I'm gonna get you, you'll see." I've even had one supervisor, who was always very vocal about what a good Christian he is, threaten me when I mentioned in casual conversation that I sleep in on Sundays. This is the culture of a bad employer.
Here's the deal with that: The employer/employee relationship is fundamentally antagonistic in that the employee wants money but doesn't want to work while the employer wants to maximize the value of the labor force but doesn't want to pay them. The two parties come to a compromise and settle on specific job responsibilities and pay. Bad employees will slack off, show up late, and cause trouble because working sucks, while bad employers tend to try to rig the work culture so they can get away with paying lower wages to their labor staff. One of the most common things a bad employer will do is try to convince a good employee that he is in trouble and that he has to prove himself by accepting 'not getting in trouble with the boss' in lieu of money as payment for his labor. This inevitably leads to companies having high turnover rates because employees can't pay their rent and buy food with notes from their boss saying what good boys they have been. They need money to live, no other form of payment will do.
You seem like the kind of business owner that has his head on straight in terms of how you negotiate with your workers. The majority of employers absolutely suck and will try to play narcissistic games with their workers to get an edge. In the future, when you higher an experienced guy who has long work history you have to realize that he is going to have a prejudice towards you as being someone who plays mind games, so one of your first priorities should be to convince your new hires that you're not like their previous bosses and that you intend to treat them fairly.