CEO of Cookies pot brand accused of kickbacks, strong-arm tactics (2024)

The San Francisco-area rapper who founded Cookies is being accused of using strong-arm and bullying tactics to run the popular cannabis brand, and forcing other companies to pay him and top executives millions of dollars in kickbacks to do business.

Those who refuse to pay up, according to a pair of lawsuits that were filed in Los Angeles County court, face threats of physical violence or “slanderous blasts on social media,” as well as the inability to do business with Cookies, which has sprung up more than 30 stores across the U.S.

“Defendants’ pervasive wrongdoing has caused their own pockets to be lined while causing massive losses to Cookies and its shareholders,” lawyers for a group of investors allege in a lawsuit filed Feb. 8.

In one example, Berner, whose real name is Gilbert Milam Jr., took diamond jewelry valued at more than $1 million as a kickback from a third party in order for the company to do business with Cookies, according to the lawsuit.

The second lawsuit was filed in January by Cookies Retail Products. The company had alleged, among other things, that it was “shoehorned” into using Cookies’ suppliers and pressured by executives to repeatedly increase the number of orders despite manufacturing delays, defects and other problems.

But on Friday, in a sudden turn of events just days after news of the lawsuits became public, Cookies Retail Products announced it was withdrawing its suit and issued a statement walking back its allegations against the company and Berner.

In a statement, Cookies Retail Products CEO Paul Rock said “certain third parties influenced us to file suit based upon allegations that we learned were not true.”

Prior to the January suit’s withdrawal, Milam denied all allegations, and said in an Instagram post addressing the lawsuits that a group of “predatory investors” were attempting to remove him and other top leadership from Cookies, which has quickly grown to a half-billion-dollar company, according to Forbes.

“These guys have made extremely false, damaging claims about myself that are completely just untrue, and I really look forward to the day in court that we can prove that these claims are false,” Milam said in the video. “They’re trying to remove me [and] current leadership from Cookies.”

Cookies Retail Products, or CRP, had filed its suit against Milam’s company over a 2021 agreement for CRP to sell Cookies-branded products containing CBD, a non-psychoactive compound in cannabis.

CRP claimed at the time that it was pressured by Cookies to increase orders and to use its suppliers and affiliates.

After investing millions of dollars in the deal, CRP learned executives at Cookies “had been collecting ‘kickbacks’ and other additional ‘fees’ that were passed through as inflated costs to CRP,” according to the lawsuit.

“[Cookies] employees did not want to lose their kickbacks by operation of CRP using alternative suppliers,” the lawsuit claimed.

But in a statement issued Friday, CRP’s chief executive issued a statement announcing the company was dismissing the lawsuit, and that he had “the utmost confidence in Parker, Berner, and the Cookies leadership team and their partners.”

“We at CRP consider this mischaracterization of our own closed legal action to be shameful and opportunistic,” Rock said. “We continue to do business with Cookies.”

A second lawsuit filed Feb. 8 also contained allegations that executives were receiving kickbacks for deals, including diamond jewelry, housing and cash that Milam allegedly accepted to fund a “lavish lifestyle,” even when the deals weren’t profitable for the company.

Investors also alleged Milam used company resources for personal reasons, such as using Cookies resources to promote his music career and using the company’s bus for personal travel.

Cookies President Parker Berling also used company resources for other ventures and promised contracts with Cookies in exchange for investments in his other companies, the lawsuit alleges.

“Often, third parties that refused were threatened,” the suit says. “In some instances, Defendants even threatened to, or did, cause property and bodily injury.”

The lawsuits did not provide specific examples of physical threats made by top executives but alleged the threats were used to steal cannabis strains and other intellectual property from third-party companies.

Investors asked Cookies to launch an investigation, including full disclosures of financial interests of top executives such as Milam and Berling, but no investigation has been launched so far, according to the suit.

The lawsuit alleges breach of fiduciary duty.

Attorneys for Cookies, Milam and Berling responded in court Wednesday to the February lawsuit, saying the investors had no legal right to sue on most of the claims, and that the suit was a legal tactic to circumvent a similar complaint that plaintiffs had already filed with the American Arbitration Assn. in December. The investors’ concerns, attorneys for Cookies argued, should be handled with the arbitrator instead of in a lawsuit.

Attorneys for the cannabis company in court records claimed that, despite allegations of “fraud” and “self-dealing,” the investors’ group declined to provide evidence to its board or arbitrators.

According to court records, Cookies told the group that it would respond to the investors’ concerns “consistent with its legal obligation” but that it would not conduct an investigation into the financial dealings of its top executives without proof. Lawyers called the allegations “vague” and said an investigation “would have required an undue use of company resources and been prohibitively expensive.”

Cookies also claimed that it had found “ample evidence” during its review that undermined the investors’ credibility, “including documents that appeared to disprove certain material allegations.”

A spokesperson for Cookies declined to comment for this article and referred to Wednesday’s court records filed by the company.

In his Instagram video, Milam said the investors were using the lawsuits as a means to take control of his company. The rapper alleged they tried to take advantage last year, when he was being treated for stage 3 colon cancer.

“I was literally fighting for my life,” Milam said in the video. “What made that fight a lot more difficult and challenging was the fact that I was forced to fight for my business at the same time.”

Milam did not address allegations of kickbacks in the video but said he planned to fight the lawsuits in court.

“These guys are throwing a fit and trying to put me and my company in a corner and starve us out,” he said. “Well, that’s not going to happen.”