rewrite this title and make it good for SEOCookies wins $22.7 million from retail cannabis partner in arbitration

Cookies, one of the most recognizable brands in the cannabis space, is set to collect $22.7 million from a nationwide retail partner that failed to pay agreed-upon royalties and misused the brand’s recognizable intellectual property to raise capital, according to a final arbitration ruling.

But that partner – a company called Cookies Retail, which owns and operates several dozen Cookies-branded marijuana stores throughout the United States – is attempting to undo the ruling in court, documents show.

The June 2 final award from retired San Francisco Superior Court judge David Garcia follows an initial, Feb. 14 ruling that awarded Cookies $18 million.

The final award includes $17.8 million in damages plus $4.8 million in costs and fees.

In his ruling, Garcia found that “Cookies has proven both liability and damages by its requisite burdens on its fee and misuse of trademarks claims.”

Cookies is the asset-light, San Francisco Bay Area-based company – partially owned by Gilbert Milam,  an entrepreneur and musician better known as Berner – that also developed the brand’s iconic “C” and light-blue color scheme along with highly recognizable cannabis strains.

In January 2020, Cookies signed a deal with Southern California-based Cookies Retail (CRE) to open Cookies-branded marijuana stores in California, Colorado, Florida, Massachusetts, Oklahoma and Oregon.

CRE’s principal is Brandon Johnson, also the CEO and co-founder of Los Angeles-headquartered TRP Co. Garcia determined in his Feb. 14 ruling that Cookies Retail is actually an alter ego of TRP.

As part of the 2020 arrangement, Cookies was to supply those stores with its proprietary cannabis strains and promote them through Berner’s massive Instagram following.

In return, Johnson’s company was to pay agreed-upon royalties, but those payments largely stopped in 2021, according to claims made in arbitration.

Cookies ‘very pleased’ with ruling

In an emailed statement to MJBizDaily, Cookies President Parker Berling said the company “has been eager to be heard on this matter for some time and is very pleased with the judge’s decision to increase the final award to $22.7mm in damages and fees.”

The situation raises questions about the future of Cookies-branded stores still in TRP’s portfolio – some of which Cookies indicated last year it intended to acquire.

Thomas O’Connell, CRE’s attorney of record, declined to comment to MJBizDaily.

Brandon Johnson did not return an MJBizDaily message seeking comment.

Meanwhile, CRE is asking a second judge to overturn the arbitration ruling, claiming that Garcia overstepped his authority and alleging “corruption, fraud, or undue means,” according to court filings dated June 6.

Most legal experts agree that binding arbitration awards are rarely overturned in California and, when they are, it’s typically under extreme circumstances.

Anatomy of the dispute

According to Garcia’s ruling, Johnson helped arrange a “joint venture” in 2019 with Gron Ventures Fund, a venture capital firm affiliated with tech billionaire Vinny Smith’s Toba Capital.

Cookies had a 20% stake in the new entity, with the rest held by Johnson and his partners in Gron.

According to Garcia’s ruling, “The plan was for the stores to be run day-to-day by existing owner-operators (or co-owner operators) subject to a ‘Retail License Agreement’ under which the stores would sell Cookies-branded cannabis products alongside other brands on a non-exclusive basis.”

The judge added that, “in exchange, Cookies would receive (a) a royalty (license fee) on the sale of Cookies-branded products from the stores, and (b) the contractual right to acquire, or ‘roll up’, each Cookies-branded retail store in the future if permissible under applicable law.”

The first such agreement was signed in January 2020.

However, Garcia noted, Johnson and his partners “changed course” in 2021 and created TRP.

That same year, CRE stopped paying royalty fees despite communications confirming they were owed.

According to the arbitration ruling, CRE quit paying Cookies’ agreed-upon royalties when the cannabis retail market softened in 2021 but CRE/TRP used Cookies’ intellectual property to raise separate capital without proper permission.

Tying up loose ends

Garcia also ordered CRE to return to Cookies a trove of documents it had acquired from Freddy Cameron, who took the documents with him when he left Cookies.

Cameron was a key witness in a separate but related attempt by CRE to convince a judge that Cookies was operating as an unregistered franchise, in violation of California business law.

That was part of a litigation campaign that CRE launched last year after Cookies filed for arbitration:

Those legal gambits failed, according to court documents: A judge dismissed the claim regarding the New York City store, and the Orange County franchising case was transferred to San Francisco, where the parties were bound to Garcia’s arbitration ruling.

It’s unclear what the ruling means for the future of TRP-owned and  -operated stores that use Cookies’ iconic intellectual property.

Those would include 16 stores in Florida that Cookies Florida, a TRP affiliate, operates under a single vertically integrated medical marijuana treatment center (MMTC) license that allows for unlimited retail locations.

In May 2024, Cookies announced its intent to acquire those assets from TRP.

The status of that proposed transaction is not known.

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.