San Francisco, CA--Cannabis brand Cookies, founded by the San Francisco-based rapper Berner (Gilbert Milam Jr.), faces a series of lawsuits from multiple investor groups. Allegations include severe mismanagement of funds, self-dealing, and kickbacks that benefitted the company's founders at the expense of investors.
According to a news report, the most recent lawsuit, initiated by Red Tech Holdings and Gron Ventures Fund, accuses the company of burning through its $15.5 million investment.
The plaintiffs claim Cookies squandered these funds through multi-million dollar kickbacks and ran out of money last summer. Court documents reveal that Cookies allegedly missed a significant valuation and depleted most of the additional $23 million raised earlier in the year.
Similar allegations against Cookies have been made in two other legal matters filed earlier this year. One of these lawsuits has been settled, while the other remains pending.
Executive-Level Misconduct Alleged
Berner, the public face and CEO of Cookies, is at the center of these legal controversies. He is accused of using strong-arm and bullying tactics to run the business and forcing other companies to pay millions of dollars in kickbacks to conduct business with Cookies.
The company has vehemently denied these accusations, labeling them false claims made by investors to "exert undue influence" in the business.
Potential Impact on Company Operations
The company's future seems shaky as its investors request court intervention and restraining orders against the executives to prevent further damage to Cookies. It has pushed back against these measures, with Cookies' president, Parker Berling, arguing that many of the lawsuit's allegations are false and a restraining order could cause irreparable harm by halting business operations.
Previous Legal Woes
In another twist to the saga, Cookies Retail Products (CRP) withdrew its lawsuit against the company earlier this year, despite having previously accused Cookies of pressuring it to use their suppliers and increase order volumes, leading to inflated costs, as suggested in a report by Los Angeles Times.
In response to allegations of kickbacks and strong-arm tactics, Milam alleges that these legal maneuvers are part of a strategy by investors to seize control of his company. He insists he will fight these lawsuits in court, declaring, "Well, that’s not going to happen."
The cannabis industry watches closely as Cookies battles these multiple legal challenges, which could have significant ramifications for the company's future and potentially the broader sector.