Cookies, one of the largest and most popular cannabis brands in the U.S. and beyond, has been hit with two separate lawsuits filed by current investors and a one-time business partner. The lawsuits accuse the company of using threats, violence and financial kickbacks to enrich themselves at the expense of shareholders.
The first lawsuit, filed by a group of Cookies investors in February in Los Angeles Superior Court, alleges that brand executives were “self-dealing” and using the brand to “bully others into paying them millions of dollars in personal benefits and kickbacks.” An expanded version of the suit was filed March 9.
This suit also names Cookies CEO Berner, President Parker Berling, CFO Ian Habenicht, board member Lesjai Peronnet Chang and employees Michael Roberts and Omar Ortiz, saying they all “use the popularity of the Cookies brand to engage in pervasive self-dealing … and to strongarm and bully others into paying them millions of dollars in personal benefits and kickbacks.”
BR CO I LLC and Nedco I LLC filed the suit and claim to own a 10% stake in the company. In the lawsuit, the companies claim that Cookies board members directed contracts and deals to outside companies they wholly owned and controlled. These include a Cookies-owned tech firm, Mesh Ventures, which the suit claims Cookies pays “hundreds of thousands of dollars in ‘software development fees’ for no discernible benefit,” along with a construction company owned by Berling’s brother.
The suit claims that anyone licensing Cookies is instructed to use Seth Berling’s construction firm GCI even though it’s more costly than other outfits so Berling can “take kickbacks from GCI for his own personal benefit,” according to the suit. Additionally, it states that anyone who resists is “threatened, including with physical violence and slanderous blasts on social media.” It also claims that Berner and Berling use Cookies company cash and resources as “lifestyle slush funds” and seeks unspecified damages.
Additionally, it seeks the removal of Berner and Berling from the company board. The next hearing is scheduled for June 28 in Los Angeles.
The second lawsuit was filed in early January by Cookies Retail Products (CRP) and claims that Cookies executives negotiated kickbacks on the sale of millions of dollars of delta-8 THC vape pens. In the suit, CRP Chief Executive Paul Rock claims that Cookies executives sabotaged developing deals, stole product and forced CRP to use preferred suppliers, selected by Cookies, proceeding to threaten revoking CRP’s license to use the company branding.
Specifically, CRP says in the lawsuit that Cookies pressured the company to buy vape pens and other supplies from vendors with “grave conflict of interest,” resulting in Cookies employees gaining personal compensation for the orders without the knowledge of CRP.
The suit seeks more than $38.5 million in damages, alleging that the contracts failed to deliver orders on time and delivered defective vape products with leakage issues, ultimately costing CRP $200 million in lost orders. It also alleges that Cookies used CRP inventory as a personal piggy bank of products,” leaving the company with millions of dollars of unsold “vape cartridges, blunts, hemp smokes, 1gram Vaporizers, Gummies, and Dab Liquids.”
The suit names two Cookies Cookies, Berling and other Cookies C-suite executives, but Berner was not named. The next hearing is scheduled for June 22 in Los Angeles.
On April 19, Berner responded to the claims in an Instagram video, calling them “bullshit” and claiming that they are attempts to take away his company as he deals with his recent stage 3 colon cancer diagnosis in the public eye. He specifically said that a “group of predatory investors” saw the opportunity to “make a move” on him and Cookies leadership after he got sick.
He called the relationship between Cookies and investors a “loan-to-own” situation, further claiming that the investors are “trying to starve [Cookies] out.”
“This playbook has been run on other people in this space, and it’s worked. But it’s not going to work here,” he said.
UPDATED: CRP released a statement dismissing all suits/claims against Cookies.
