A longtime retail partner of marijuana company Cookies is suing the California-based brand in New York state, alleging the multistate operator broke an “exclusive” agreement for a branded adult-use outlet in the year-old market.
Earlier this week, a New York-licensed cannabis store called Culture House opened in the former location of a Cookies-branded clothing and CBD outlet in Manhattan’s Herald Square.
Though no Cookies-branded cannabis is sold there, according to an online menu, the store is painted the familiar Cookies shade of light blue and sports the familiar “C” logo on the building’s façade.
But by allowing a New York-based adult-use license holder to proceed with opening a Cookies-branded cannabis store at the location – as they attempted to do last year, the lawsuit alleges – Cookies violated an “exclusive right to open the first Cookies-branded retail marijuana stores” in New York, a lawsuit filed in state court in Manhattan on Jan. 24 alleges.
Cookies versus Cookies
While the public has come to know “Cookies,” the California-based brand co-founded by San Francisco entrepreneur Berner, as a singular entity, the familiar blue “C” in fact represents a network of legally distinct companies.
Most Cookies-branded retail cannabis stores in the United States are owned and operated by a corporate entity separate from the family of companies launched by Berner, whose legal name is Gilbert Milam.
Last year, Milam, who graced the cover of an issue of Forbes, publicly claimed that Cookies is worth $1 billion, the lawsuit notes.
The business publication pegged the company’s value at closer to $150 million.
One such cannabis retail partner is Newport Beach, California-based Cookies Retail, whose principal is Brandon Johnson.
Johnson is co-founder and CEO of TRP, which operates retail marijuana dispensaries in 14 states, including several under the Cookies brand.
Cookies Retail claims to have “invested over $100 million into expanding the Cookies brand … throughout the United States,” due in part to its “exclusivity” agreement with Milam’s Cookies company, according to the suit.
It was Johnson’s Cookies Retail company that sued Milam’s Cookies SF and related corporate entities in New York City on Jan. 24, court records show.
In an affidavit, Johnson claims that Cookies Retail was negotiating with Milam’s Cookies to open up a Cookies-branded adult-use cannabis store at the location of the Herald Square clothing store.
Instead, the suit claims, Milam’s Cookies went with another partner that had received one of the few adult-use marijuana store licenses granted in the contentious rollout of New York’s legal market.
Milam is not named in the suit, which seeks a court order clarifying exactly what the two parties’ agreement says as well as a further order blocking other companies from using Cookies branding on licensed cannabis stores in New York.
Johnson and his counsel in the case, attorney Thomas O’Connell, did not immediately respond to a request for comment sent Thursday.
Through a spokesperson, Cookies declined to comment.
More lawsuits
The lawsuit is the latest in a string of actions brought against Milam-connected Cookies companies, alleging broken agreements or other corporate wrongdoing, court records show.
Last year, two separate groups of Cookies investors sued the company, alleging that it burned through their cash and missed a key valuation target, in part because of “multimillion dollar kickbacks and other self-dealing” that benefited Milam and Cookies President Parker Berling.
Cookies has denied the allegations.
According to court records, the defendants in the New York suit are:
- Cookies SF.
- Cookies Creative Consulting & Promotions LLC.
- Cookies Creative Consulting & Promotions Inc.
- New York-based GMJT LLC and Gabriel Marin, who holds a New York State retail license.
- New York-based JTRE Holdings and Jack Terzi, an owner or officer of GMJT, according to the suit.
Latest retail allegations
In its complaint, Cookies Retail claims it inked a deal with Cookies in September 2019 for the “exclusive right to open the first Cookies-branded retail marijuana stores in ‘new markets.'”
Though New York was not specifically mentioned in the 2019 agreement, the lawsuit claims that the exclusive right extended to New York.
In New York, under contentious regulations that were later challenged in court, out-of-state entities such as TRP and Cookies Retail would have been ineligible to apply for an adult-use license.
That situation changed only recently, after a settlement in litigation this past fall.
In any case, the lawsuit claims, the exclusive right was only valid for “reasonable period of time” defined as “12 months from the date the first new licenses … first becomes ‘Viable,’” according to the suit.
That deal was further codified and clarified in a subsequent letter dated May 31, 2022, the lawsuit claims.
However, in spring 2023, Milam’s companies allowed a second business in New York that was awarded a New York state dispensary license to use the Cookies branding to enter the adult-use market, the lawsuit alleges.
This company, GMJT LLC, is allegedly headed by Garbriel Marin, who is a defendant in the lawsuit and to whom state regulators had awarded a conditional adult-use recreational dispensary (CAURD) permit in November 2022.
Cookies Retail did not claim to be awarded a license.
Other legal challenges have since been leveled against New York’s licensing process, which Gov. Kathy Hochul recently called a “disaster.”
However, according to an affidavit entered in the case in court by Brandon Kurtzman, a partner at law firm Vicente, Cookies Retail could enter the market through a partnership with a CAURD licensee.
Going forward
Marin also is involved at the retail location in Herald Square, where Culture House opened for business, the suit claims.
According to social media posts, Culture House displays cannabis under jars with light blue lids – in a fashion similar to other Cookies-branded marijuana stores across the U.S.
The Culture House location is also where Cookies operated a clothing store that, in addition to the brand’s familiar and popular line of hooded sweatshirts, t-shirts and other items, it sold Cookies-branded hemp-derived CBD products, the suit claims.
At a June 2023 Manhattan Community Board meeting, GMJT told local officials that it would be operating a Cookies cannabis retail store at the location, according to the suit.
Though community board officials rejected requests for the GMJT-operated, Cookies-branded marijuana store to operate at the prime Herald Square location, Cookies and GMJT continued to “move forward” to sell cannabis there in violation of Cookies’s earlier deal with Cookies Retail, the suit claims.
In July 2023, Cookies and GMJT entered into a further agreement that granted GMJT “the right to use specific, enumerated Cookies’ marks and to sell certain proprietary strains of cannabis” at the Herald Square location.
Cookies Retail sent Cookies and GMJT a cease-and-desist letter in December 2023.
In its reply, the defendants claimed that the deal with Cookies Retail did not cover New York because the state first started issuing medical marijuana business licenses in 2015, years before the 2019 agreement with Cookies Retail, meaning it was not a “new” market.
Cookies is represented by law firm Harris Beach, according to public records.
A hearing in the case before state Supreme Court Judge Jennifer Schechter is scheduled for March 1.
Chris Roberts can be reached at chris.roberts@mjbizdaily.com.
