Another cannabis-related lawsuit has sprung up in New York, though this time the industry and regulators aren’t the ones being targeted. Rather, the suit is centered around the famed multi-state cannabis operator Cookies.
A longtime company partner is suing the California-based brand in the Empire State, alleging that Cookies broke an “exclusive” agreement surrounding the opening of a Cookies-branded store, MJBizDaily reports.
New York-licensed cannabis store Culture House recently opened in the former location of a Cookies-branded clothing and CBD outlet in Manhattan’s Herald Square, and while Cookies-branded cannabis is not sold at the store, the building still has familiar Cookies branding—namely the specific shade of light blue used by the brand and its “C” logo on the face of the building.
Berner’s Cookies Under Fire
The lawsuit, filed in state court Jan. 24, alleges that Cookies violated an “exclusive right to open the first Cookies-branded retail marijuana stores” by allowing a New York-based recreational license holder to proceed with opening a Cookies-branded cannabis store at the location. The lawsuit also alleged that the licensee attempted the same feat last year.
It’s a somewhat sticky situation, as the overarching Cookies umbrella across the U.S. and the stores it encompasses are not one united entity. Rather, the broad network of stores are legally distinct companies, owned and operated by corporate entities separate from the family of companies launched by Cookies Co-founder Berner.
Newport Beach, California-based Cookies Retail, is a Cookies retail partner whose principal is Brandom Johnson—the co-founder and CEO of TRP which operates a number of retail dispensaries throughout the country, including several Cookies-branded stores.
According to court records, this company sued Berner’s Cookie SF and related corporate entities in the New York suit, claiming that Cookies Retail “invested over $100 million into expanding the Cookies brand … throughout the United States,” in part because of an “exclusivity” agreement with Berner’s Cookies company.
Johnson claims that Cookies Retail was negotiating the opening of a Cookies-branded recreational store with Berner’s company where Culture House opened in an affidavit. The suit claims that Berner’s company went with another partner. Berner is not mentioned in the suit.
Additionally, the lawsuit is now seeking a court order to clarify the specifics of the agreement between the two parties while blocking other companies from using Cookies branding on licensed cannabis stores in New York.
Rights to Cookies-Branded Cannabis Retail in New York
Cookies Retail says it had signed a deal with Cookies in 2019, granting it “exclusive right to open the first Cookies-branded retail marijuana stores in ‘new markets,’” though New York was not specifically mentioned. The lawsuit, however, argues that the exclusive right extends to New York.
Prior to recently settled litigation, out-of-state entities like TRP and Cookies Retail would have been ineligible to apply for adult-use licensure, and that situation only recently shifted.
The suit claims that the exclusive right was only valid for a “reasonable period of time,” defined as “12 months from the date of first new licenses.” The lawsuit also claims that the deal was further codified and clarified in a letter from May 2022.
However, the suit also alleged that Berner’s company allowed a second business in New York to use Cookies branding in the budding recreational market in 2023. The company and defendant in the suit, GMJT LLC, was awarded a conditional adult-use recreational dispensary (CAURD) permit in November 2022.
While Cookies Retail didn’t claim to have been awarded a license, an affidavit entered in the case says that the company could enter the market through a partnership with a CAURD licensee.
The suit alleges that Cookies and GMJT pressed ahead to open a Cookies-branded store, despite rejections from community board officials and the earlier deal with Cookies Retail. Cookies and GMJT proceeded to enter an agreement granting GMJT “the right to use specific, enumerated Cookies’ marks and to sell certain proprietary strains of cannabis” at the Herald Square location.
In reply to a cease-and-desist letter from Dec. 2023, defendants claim that the Cookies Retail deal didn’t cover New York because the state first issued medical cannabis licenses in 2015, years prior to the 2019 Cookies Retail agreement. Therefore, they argue it’s not a “new” market.
A hearing on the case is scheduled for March 1.
One of Several Recent Cookies Suits
It’s not the first instance of its kind as it pertains to Cookies companies allegedly breaking agreements.
Two separate groups of Cookies investors sued the company last year. The first lawsuit claimed that the company had spent their money and missed a key valuation target due to “self-dealing” and using the brand to “bully others into paying them millions of dollars in personal benefits and kickbacks.”
Berner was named in this lawsuit, along with a number of other employees, saying that they had all used “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.”
Another lawsuit filed earlier in the year by Cookies Retail Products 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.
