It ain’t easy in the weed world, for both small and large operators. Less than a quarter reported making a profit last year according to cannabis research company Whitney. So what’s the deal with lawsuits against one of the biggest private operators, Cookies, over corrupt practices? Is the company really guilty of bad behavior, or is it getting targeted, because it does well?
What’s Cookies?
Part of what makes this story interesting, is the background of the brand, and the accomplishments of its leader, Gilbert Milam Jr.; who goes by the name Berner. Berner is a rap artist and marijuana provider, who started out in much more humble beginnings 25 years ago.
Prior to his success with Cookies, Berner was working in dispensaries like The Hemp Center. It was there that he began writing the music that made him famous in the rap world. As he gained prominence, he used the fame from his rap work, to begin his own weed enterprise. To this day, Berner sits as CEO of the company, and oversees every aspect of business.
According to Berner, via Insider, his company is now worth $1+ billion. If this is true, it makes it the first legal cannabis business to cross the billion dollar line. According to Berner, “Based on revenue, and growth, and potential growth, we’re definitely a billion-dollar company.” Whether it actually crossed this line officially or not, there’s no doubt that Cookies does very well.
The company operates in California, where it runs 49 dispensaries. The company also made a name for itself with a corresponding Cookies clothing line, which is sold throughout the world. Apparel is carried in US clothing store chains, as well as the company’s three flagship stores. Plus, its regularly advertised by Berner in his own music videos. The clothing line brings in a good amount of revenue, accounting for $50 million a couple years back, according to Berner via a podcast in late 2021.
Cookies’ growth
Cookies started out as a hoodie line. Before the company was a thing, Berner began wearing the trademark hoodie with blue strings and matching logo. This led to a deal to use the logo on a storefront in San Jose in 2010. Eight years later, the first Cookies retail location opened. The company then proceeded to open all 49 locations, within a four-year period. Add onto that the three clothing stores in San Francisco, LA, and New York City; and Cookies is a full-on weed empire.
Part of what drives the success of the man and the brand, is that Berner comes from this culture; he’s not a corporate guy looking to take advantage of an industry. He’s got long-time connections, and a sort of street cred that makes him an authentic personality, within a sea of corporate neckties. Through these connections, and his experience; he created an award-winning collection of gene strains, and repeatedly creates high-value products.
Berner even moved on from just California, something not easy to do in the weed industry. Cookies products launched in Massachusetts in 2021, and New Jersey in 2022. While he works on setting up dispensaries in New York City, Berner opened a third flagship clothing store in the city in late 2022. That year, Cookies opened the largest medical dispensary in Israel, as well.
Cookies is a privately held company, and Berner so far refused to sell. Allegedly he was offered $800 million by a publicly traded Canadian company, which he turned down. He knows his importance to the company, and that it could fail in the wrong hands. He said “I wanna live forever through my work. I don’t think money’s gonna determine when I retire.” Cookies is one of the independent weed enterprises to really make it big, in what is otherwise a growing corporate world.
Is Cookies corrupt? 1st lawsuit
In April of 2023, it was reported that Berner was up to some shady tactics. Although whether this is true, or indicative of what happens to a mom and pop that grows and does well amid a corporate landscape of failure, is hard to say. It was reported in the LA Times that Berner was forcing other companies to pay him kickbacks to continue doing business together.
The accusations came from two lawsuits that were filed in LA County court. The suits allege threats of physical violence, or social media slandering if payments were not made on time; along with the inability to do business with the company if its demands were not met.
The first suit was filed in January by Cookies Retail Products (totally different company), which said Cookies forced it to use Cookies suppliers, and received pressure from Cookies executives to increase orders, despite manufacturing delays beyond the company’s control. This claim changed, however, in April when the suit went public. Cookies Retail Products withdrew its case, and its complaints, saying, via CEO Paul Rock, “certain third parties influenced us to file suit based upon allegations that we learned were not true.”
Cookies Retail Products filed the suit initially after a deal with Cookies to sell Cookies’ CBD products. CRP said it received pressure to increase orders, and up its use of affiliates and suppliers during this time. CRP then claimed it found out Cookies was taking third party kickbacks after CRP had invested millions, and inflating costs to pass these kickbacks through. In April it went back on all of this.
The 2nd lawsuit against Cookies
The second suit was filed on February 8th, by legal counsel for a group of investors claiming “Defendants’ pervasive wrongdoing has caused their own pockets to be lined while causing massive losses to Cookies and its shareholders.” The lawsuit gives an example of Berner taking $1 million in jewels as a 3rd-party kickback to do business with a company. It also mentions houses and cash that were traded, saying that Berner accepted all this to fund an extravagant lifestyle. The claim is partly based on the idea that some of these deals were not beneficial to the whole company.
The suit goes into Berner using Cookies to promote his musical career, and using company money for personal expenses. It also calls out Cookies President Parker Berling, with claims that Berling similarly used company money for personal uses, as well as trading off contract promises for investments in his other companies. According to the suit, via LA Times, “Often, third parties that refused were threatened. In some instances, Defendants even threatened to, or did, cause property and bodily injury.”
The lawsuit doesn’t point to examples of physical threats, but claims they were used to steal intellectual property from 3rd parties, including cannabis strains. The investors wanted Cookies to do its own investigation into Berling and Berner, but as of the April writing, Cookies refused to investigate its top tier. Cookies shot back that most of the claims don’t have a legal basis, and that the plaintiffs already filed with the American Arbitration Association. Cookies claims the investors are using the lawsuit to get around their own case; in which the investors did not want to provide evidence to arbitrators.
Berner addressed this in an Instagram post, claiming there were predatory investors who were trying to oust him and other top executives. “These guys have made extremely false, damaging claims about myself that are completely just untrue, and I really look forward to the day in court that we can prove that these claims are false. They’re trying to remove me [and] current leadership from Cookies.”
A 3rd lawsuit
One lawsuit was retracted, and the other ongoing. Amid this, Cookie was hit by a 3rd lawsuit, filed by marijuana breeding company SeedJunky, as per SFGate. According to the suit, the two companies were in business together from 2019, under the name Minntz. SeedJunky alleges that Cookies executives cooked the books of Minntz, at SeedJunky’s expense.
The lawsuit also claims that Cookies sold stains of cannabis that were stolen from SeedJunky, but without credit to SeedJunky. The products are sold only under the Cookies name. Further to all this, the suit alleges Cookies gave SeedJunky’s staff falsified financial data concerning the operations of the two companies.
According to Berner in an Instagram post, the lawsuit is false, and SeedJunky is upset over the failure of itself. The post video is no longer up, but apparently Berner quite brashly stated, per SFGate, “Dude’s been crying like a little b**** on Instagram for a long time, throwing subliminals. … You failed, bro, you failed. Seed Junky did not pop.” The case is set to have a hearing on September 15th in LA. The previous case, involving the investors, is set for a hearing on July 26th.
Conclusion
It’s hard to say if Cookies was really up to no good, or if this is what happens when you’re one of the only guys to do well in an industry filled with corporations tanking out. While other companies fail so badly that they’re being kicked off stock exchanges; and governments (Canada, Santa Barbara) are going after them to pay taxes; Cookies is thriving. Maybe that says a lot in the end. No one likes the winner, when they’re losing.
On the other hand, if the accusations are true, its a very clear indication that this is absolutely a non-functional market. If the companies actually doing well must resort to such tactics, it means things are pretty bad. California recently reported a desire to root out corruption in the industry. But maybe we wouldn’t be talking as much about corruption, if governments set up workable systems.
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