California cannabis giant Cookies is now being targeted in a third ongoing legal case, with plaintiffs accusing the company of mismanaging tens of millions of dollars.
Red Tech Holdings, which invested $10 million in Cookies in 2019, and Gron Ventures which invested an additional $5.5m in 2020, have claimed that Cookies management ‘burned through cash and ran out of money’ after ‘wildly missing its numbers’ to support a $275m valuation.
MJBizDaily reported that the investors have also filed a restraining order to prevent the company executives from ‘continuing to run Cookies into the ground’, with a hearing scheduled later this week.
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In response to these requests, Cookies President Parker Berling said in a court filing that ‘many’ of the claims were ‘demonstrably false’, adding that a restraining order would cause ‘irreparable harm to Cookies by bringing its business operations to a halt for over a year while the arbitration is pending’.
Meanwhile, the plaintiffs have claimed that they were given binding assurances that there were ‘no agreements, understandings, or proposed transactions’ between Cookies and any outside ventures controlled by the directors, yet the company ‘admitted at least seven different transactions of self-dealing’ which were not previously disclosed.
These investments reportedly included a garden supply company mostly owned by Mr Berling, a software company controlled by both the CEO and President for ‘unspecified software development fees’ among others.
