It's a bumpy ride (financially) for Cookies

Cookies, one of the most recognizable brands in the cannabis sector, is probably going through one of the most critical periods in its history: a recent court decision could dry up its cash flow at a time when the company is already engaged in several complex legal battles.

According to court documents cited by the trade press, a San Francisco judge ordered that the royalties paid by licensed stores in the United States, Canada, Israel and Thailand are now redirected to the Cole Ashbury Group, the brand's former commercial partner. An exceptional measure which, according to Cookies« lawyer, could lead to »immediate insolvency".

A model based on pressure licensing

As we explained in our Berner video, the business model of Cookies is essentially based on the trademark license rather than the direct operation of stores. Third-party stores use the brand's visual identity, genetics and products in exchange for royalties. This mechanism has enabled Cookies to expand rapidly, both in the U.S. and internationally.

But it is precisely this model that has been undermined. Judge Dennis Hayashi's order requires that 100% royalties intended for Cookies Creative Consulting & Promotions - the entity that historically generated operating revenues - be paid to the Cole Ashbury Group, to reach 8.3 million.

For the company, this sudden cut in revenue amounts to a financial stranglehold. In previous filings, the company's lawyer had warned that depriving Cookies of these royalties would be tantamount to removing all operational leeway.

A legal battle resulting from an agreement signed in 2019

The dispute has its origins in an agreement signed in 2019 for the store Berner's on Haight, now closed. The contract included a put option allowing the Cole Ashbury Group to force Cookies to buy back the store for $10 million after 42 months of operation.

In 2023, Cole Ashbury exercises the option. Cookies refused. The case ends in arbitration, and the group obtains more than 7.3 million in property & casualty, plus 1.1 million dollars lawyers' fees. The judge validated the whole in June 2025. Cookies had tried to defend that the store had suffered from internal management problems, but the arbitrator ruled that the company was contractually bound, whatever the problems encountered.

The latest court ruling goes further, directly attacking the heart of the group's economic operation. Lawyers quoted in the press point out that for a company built around a brand, the capture of royalties can be «a fatal blow».

Court documents show that the Cole Ashbury Group would also seek to seize other assets, including a «Cookies Bus» promotional vehicle and a line of alcoholic beverages recently launched by the brand.

Some licensee partners may also question the stability of the business and reconsider the value associated with the brand Cookies, already weakened by judicial pressure.

A legal victory elsewhere, but unusable for now

Paradoxically, at the beginning of 2025, Cookies won an arbitration by 22.7 million dollars against Cookies Retail LLC, for unpaid royalties and misuse of intellectual property. But this decision is under appeal, which is blocking the payment of funds. As a result, Cookies has to pay 8.3 million today, but cannot collect the 22.7 million that could save it.

Cookies appealed the unfavorable decision, while defending its other, now disputed, victory. Experts point out, however, that arbitration awards are rarely canceled in California, which suggests that the battle could last a long time.

Meanwhile, the company continues to operate and maintain its international partnerships, but with vital income now redirected to a creditor. For a brand that symbolized rapid expansion and commercial power in the cannabis industry, this setback marks a major turning point - potentially even, an existential test.