$38M suit alleging kickbacks, ‘sabotage’ at cannabis firm Cookies is abruptly dropped

May 1, 2023 · MJ Biz Daily

The legal controversy swirling around prominent cannabis brand Cookies has taken an abrupt and unusual turn, with one of the litigants who sued the company earlier this year dropping a lawsuit and walking back sworn statements made in court.

In a lawsuit and subsequent filings in Los Angeles County Superior Court, Paul Rock, CEO of a Florida-based company called Cookies Retail Products, claimed that Cookies executives tried to “sabotage” a multimillion-dollar deal in which CRP would license the Cookies brand and sell delta-8 THC and CBD products.

Rock claimed that Cookies executives took kickbacks from arrangements with third-party vendors, similar to allegations made in a separate lawsuit brought by Cookies investors that’s still pending.

Rock also claimed that Cookies executives, including company President Parker Berling and Chief Financial Officer Ian Habenicht, meddled in purchase orders with those vendors, leading to lengthy delays that left CRP stuck with “millions of dollars in spoiling vape cartridges” and other unsold cannabis products.

When Rock brought his concerns to executives at California-based Cookies, one of them, Michael Roberts, disparagingly dismissed his claims in a text message, the suit alleged.

Rock’s original suit claimed $38 million in damages.

Suit ‘voluntarily dismissed’

Late Friday, public relations representatives for Cookies pointed MJBizDaily to a statement purportedly from Rock in which he said he “voluntarily dismissed all suits” and that the original suit was brought only on the urging of an unidentified third party.

“Certain third parties influenced us to file suit based upon allegations that we learned were not true, so we took immediate steps to rectify the mistake by dismissing the suit,” according to the statement attributed to Rock.

The CRP chief executive went on to blame the media for covering the issue.

“(I)t is a shame that our dismissed suit was used in such a manner and find the timing is suspect given recent positive growth for the brand and our company,” Rock said, according to the statement.

“We at CRP consider this mischaracterization of our own closed legal action to be shameful and opportunistic.”

According to a Los Angeles County Superior Court docket viewed Monday by MJBizDaily, Rock’s lawsuit against Cookies is still pending.

Reached briefly on his cellphone Monday, Rock said he was “in the shower” and could not comment.

Fadi Rasheed, Rock’s lawyer at the El Segundo office of national law firm Leech-Tishman Fuscaldo & Lamp, did not respond to an MJBizDaily email seeking comment.

A message left at the office was not returned.

Contacted via Denver-based cannabis marketing firm Grasslands, Cookies did not immediately comment to MJBizDaily.

CRP’s lawsuit did not name Gilbert Milam Jr., better known as Berner, Cookies’ charismatic co-founder and CEO, who commands a significant social media presence and is one of the industry’s most powerful influencers.

Second lawsuit still in play

A second, separate litigation filed against Berner, Berling and other Cookies executives by two current investors in the company, who together claim to own about 10% of the business, is still pending.

In an Instagram post on Monday, Berner shared part of Rock’s statement.

“A bunch of stuff popped up online last week,” he wrote. “It feels good to set the record straight on this one.”

Rich Howell, one of the attorneys at Irvine, Calif.-based Rutan who filed the second suit on behalf of the two Cookies investors, called Rock’s backpedaling a “complete reversal” but said in the statement that his client’s legal action would continue.

“We have no insight into the circumstances that prompted this complete reversal from the detailed allegations set forth in the formal pleadings submitted by CRP against Cookies Creative Consulting & Promotions, Inc and various other defendants in the Los Angeles Superior Court,” Howell said.

He also noted that Rock’s claims were “verified and sworn to under penalty of perjury.”

“Regardless, this reversal has no bearing or impact upon our clients’ legal claims involving Cookies and its principals.” (Full Story)

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