Cookies gets sued (again)
Plus, Tilray had a good day, Green Thumb Industries and Cresco Labs get into a spat, and much, much more.
We’re back to our regularly scheduled programming today.
For those of you returning, I hope you enjoyed Marc’s newsletter takeover on Tuesday. I’m hoping that a rising tide lifts all boats, here — I’m definitely up for more of these, so reach out if you have an idea.
I’ve got a long track record of breaking stories about the people, companies, and policies that matter.
I want this newsletter to be your guide to the brave new frontier of cannabis, whether you’re already in the industry or are looking for your opportunity.
All that’s to say I’ve seen a thing or two, and I’ve heard even more — and like any good reporter, I’m terrible at keeping secrets.
You’ll be the first to know when I have something good to share.
Alright, let’s get to it.
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💡What’s the big deal?
What happened: Cannabis brand Cookies, founded by the rapper Berner, is getting sued — again.
The new suit, filed in Los Angeles County Superior Court last week by investors Wilder Ramsey and Tom Linovitz of Red Tech Holdings and Gron Ventures Fund, claim that the company blew through investor funds through “multimillion dollar kickbacks and other self-dealing,” reports Marijuana Business Daily’s Chris Roberts.
The investors chipped in a combined $15.5 million into Cookies.
Why it matters: Cookies was once considered a success story among cannabis brands.
It’s been difficult for cannabis brands to get any semblance of traction, as the product is hard to differentiate on store shelves.
Cookies even opened a clothing store in New York’s Herald Square, and it’s common to see people — even at rival brands — wearing Cookies swag at industry events.
Zoom out: This is the third lawsuit filed by investors against Cookies this year.1
Among the other claims levied at Cookies in the lawsuits:
The company burned through cash and couldn’t support its $275 million valuation.
Cookies missed its financial targets.
The company spent a full $23 million investment from Entourage Effect Capital and is trying to raise more money to stay afloat.
Berner, full name Gilbert Milam Jr., diverted Cookies’ money into his own side companies.
But wait, there’s more: Earlier this month, a previous lawsuit against Cookies on behalf of NedCo — which is co-owned by Ned Fussell, the co-founder of CannaCraft — was refiled in the Los Angeles County Superior Court.
An eagle-eyed reader pointed out to me that the defendants have retained the expensive litigation firm Quinn Emmanuel, as well as big law firms like Baker McKenzie and Perkins Coie.
It’s a sign that they’re taking this very seriously.
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🥊 Quick hits
MasterCard has told payment processors and banks to stop allowing cannabis purchases on debit cards, Bloomberg reports.
The New Jersey Cannnabis Regulatory Commission reversed a move to give social equity applicants the first shot at delivery and wholesale licenses in the state.
Model Gigi Hadid was arrested last week for cannabis possession in the Cayman Islands.
Senate Banking Committee Chairman Sherrod Brown said the SAFE Banking Act won’t get a vote before the July 31 recess, Marijuana Moment reports.
🗣️ Quote of the week
“It’s the NBA. Everyone does it. It’s like wine.”
Cannabis was removed from the NBA’s prohibited substances list in the new collective bargaining agreement between the player’s union and the league.
📉 Market moves
What happened: Canadian cannabis company Tilray reported its fourth-quarter results on Wednesday.
The company had a rare great trading day for a cannabis company lately: The stock closed up 15%.
Why it matters: As one of the biggest of the original crop of Canadian cannabis companies — and one of the few that has a coveted Nasdaq listing — Tilray is often considered a bellwether for the rest of the industry.2
The company improved its Q4 revenue by about 20% over the same quarter the year prior, beating analysts’ expectations. Tilray also lost far less money compared to the same quarter last year, indicating that some changes made under CEO Irwin Simon are working.
But still, Tilray lost about $1.4 billion this year. Everything with a grain of salt.
What else happened?
Cannabis company Cresco Labs complained in a suit that competitor Green Thumb Industries poached a high-level employee who violated a non-compete clause, reports The Chicago Sun-Times.
Canadian cannabis company Aleafia has entered creditor protection after a planned merger with Red White and Bloom Brands failed.
The owners of Green Dragon, a Colorado dispensary chain that was acquired by cannabis tech company Eaze, are now suing Eaze. The complaint alleges that Eaze and its investors “raided Green Dragon” for personal gain.
👩 People moves
Trulieve CFO Tim Mullany left the company after 10 days on the job. His predecessor, Alex D’Amico, resigned in June. Ryan Blust, who’s taking over the job on an interim basis, will be the company’s fourth CFO in three years by my count.
Gia Morón is stepping down as the president of Women Grow, and professional networking group for women in the cannabis industry.
Law firm Greenspoon Marder hired Jon Purow to expand the firm’s Cannabis Law and Intellectual Property practice groups in New York.
📢 Call out
I’m working on a story about how employees, executives, and investors in the cannabis industry have had their personal credit cards cancelled and their bank accounts shut down.
If that’s you, and you’d like to chat, reply to this email.
📚 What I’m reading
Aurora Cannabis CEO pay soars to $6.7-million despite shares tumbling (The Globe and Mail)
Death and taxes (On Drugs)