Last year as he publicly fought colon cancer, he revealed that he was also privately fighting for his company.
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“When I got sick, I think that a group of predatory investors saw a good opportunity to make a move on me and the leadership over at Cookies,” he said from his Couch Locked Network studio. “They have attempted to sabotage my name and everything I represent and spent all these years building.”
Berner founded Cookies in 2010 with grower Jai. In the decade since it’s grown to be widely recognized as the world’s best known cannabis brand. It has opened shops in Israel and Thailand as well as in many states and Canada. The company’s rapid growth owes in part to a strategy of licensing its brand IP to operators rather than owning the licenses themselves. Last year Berner, born Gilbert Milam, was the first weed executive to appear on the cover of Forbes.
Now in an effort to remove him and his team, Berner says his opponents have “made extremely false, harmful damaging claims about me [that are] completely not true.”
“I’m looking forward to the day in court that we can prove that these claims are false,” he said. “They’re fucking bullshit.”
Without naming any people or organizations, he describes himself as being squeezed by a “loan to own model.” “These guys are trying to put me and my company in the corner and starve us out.”
“It’s not going to work.” Berner said, thanking investors who are still with him. “Shame on the people that claim they’re legacy cannabis guys, that are for this plant…that are cooperating with and empowering this group.”
“We’re ready to fight this shit. We’re ready to kick ass.”
Cookies declined to comment further for this story. The other parties didn’t respond to requests for comment.
“Pervasive self-dealing”
In February, Cookies investors BR CO and Nedco sued Berner, as well as several Cookies executives and employees and outside investment vehicles associated with the company. The first amended complaint, filed in March in California court, alleges breach of fiduciary duty, unjust enrichment and other claims.
Legal research supported by Unicourt.
The suit alleges that Berner and other defendants leverage the Cookies brand “to engage in pervasive self-dealing without regard to…conflicts of interest, and to strongarm and bully others into paying them millions of dollars in personal benefits and kickbacks.”
Their “pervasive wrongdoing,” it further alleges “has lined their own pockets while causing massive losses to [privately held] Cookies and its shareholders.”
Third parties “that dare to stand up to these demands or refuse to play defendants’ game are threatened, including with … slanderous blasts on social media, and are refused opportunities to work with Cookies (often to Cookies detriment,)” the suit alleges.
Together the plaintiffs say they hold more than 10% of Cookies’ outstanding shares and the defendants hold the majority of outstanding shares.
In one example, the lawsuit alleges, Berner accepted more than $1M in diamond jewelry “as a kickback for allowing [the giver] to do business with Cookies — despite the relationship being against Cookies’ best interests.”
It further alleges:
Berner uses Cookies resources to promote his personal interests outside the company.
President and board member Parker Berling, Berner and CFO Ian Habenicht “improperly used their company [named defendant] Mesh Ventures to cause Cookies to enter into affiliate transactions with Mesh Ventures’ portfolio companies for their own personal gain.”
Berling “insists” that Cookies and all licensors use his brother’s construction company GCI… “even though GCI often costs more than double…so that he can take kickbacks.” (GCI sued a Cookies-affiliated company last year alleging $328,000 in unpaid bills.)
“If a licensor refuses to use GCI, Berling in turn refuses to allow Cookies to sign licensing agreements or do business with them.”
Berner and Berling sent employees “to ‘negotiate’ with third parties by telling third parties that they needed to pay [defendants] kickbacks or give them other personal benefits in order to do business with Cookies…These tactics were used to steal cannabis strains and other intellectual property from third parties.”
The plaintiffs claim that they have asked for “an independent investigation to determine the extent of the self-dealing and conflicts of interest,” but allege the defendants have refused.
The BR and NedCo lawsuit cites another California lawsuit Cookies is facing, this one filed in January for $38M. The plaintiff is an unconnected Florida-based company called Cookies Retail Products (CRP). In December 2021, CRP claims it entered an exclusive license agreement to sell Cookies-branded Delta-8 products nationwide.
CRP alleges, as summarized in the BR suit, “that defendants forced CRP to use only suppliers that were affiliates of defendants…so that defandants could take kickbacks from their affiliate suppliers.” When CRP pushed back: “Defendants harassed CRP and threatened to take the license away, and then purposefully tanked CRP’s business, defamed CRP and stole CRP’s trade secrets.”
As tensions climbed between CRP and Cookies, CRP’s suit alleges that one named defendant, its primary contact at Cookies, had the bar codes stripped off $1M worth of products. Upon asking the defendant to fix the issue, the suit alleges the defendant told CRP’s CEO to “eat a bowl of dicks,” in a group text, copying CRP employees.
(Read the CRP complaint. Legal research supported by Unicourt. )
“We’ve got a big fight”
It’s not certain that Berner was referring to the BR/Nedco lawsuit in his video. He describes himself as facing a “loan to own” situation; in their filing, BR and NedCo say they are equity holders in Cookies, not lenders.
However, they do want him gone. The plaintiffs demands include that Berner, Berling and another director be removed from the four person board. Their other demands include an “order imposing a constructive trust on all funds or gains that defendants have and/or will otherwise unjustly obtain at the expense of Cookies.”
In the video, Berner said he’s not going anywhere. “We’ve got a big fight ahead of us, and I’m not scared of it.”
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