Cookies owes $8.4 million to partner on San Francisco marijuana store

Prominent marijuana brand Cookies is on the hook to pay its former partner on a failed San Francisco marijuana store $8.4 million, according to court records.

The significant payout due to the Cole Ashbury Group, Cookies’ erstwhile partner at the Berner’s on Haight dispensary that closed last year after opening to great fanfare in December 2019, is the result of a “put option” baked into the two parties’ licensing agreement, according to an earlier arbitration ruling upheld on June 30.

The April 2025 arbitration ruling, which awarded Cole Ashbury $7.3 million in damages plus more than $1.1 million in attorney’s fees and costs, was first reported by Blurred Culture.

Retired San Francisco Superior Court Judge Harold Kahn finalized the ruling on June 30, records show.

Representatives from the Cole Ashbury Group, which operated the first cannabis store in San Francisco permitted under that city’s marijuana social equity program, did not immediately respond to an MJBizDaily request for comment.

In a statement to SFGate, Parker Berling, San Rafael, Calif.-based Cookies’ president, said that the company “respects” the decision but will consider “all available options.”

$10 million ‘put option’ as part of marijuana store licensing agreement

According to the findings from the arbitrator, retired San Francisco Superior Court Judge David Garcia, the two parties’ November 2019 licensing agreement included a “put option” that, if exercised, required Cookies to buy out Cole Ashbury Group for $10 million.

That valuation was based on average sales in that era, before some of the publicized struggles affecting the legal cannabis industry set in, Garcia wrote.

That option could be activated if Cole Ashbury Group maintained its license to use Cookies’ branding and iconic strains for 42 months, according to the agreement.

Cole Ashbury Group exercised that option on May 22, 2023, but Cookies refused to pay, which led to an October 2024 arbitration hearing that Garcia oversaw, according to court records.

In the meantime, Cookies revoked the store’s permission to use its branding. The rebranded store, called Blaze on Haight, closed sometime after the relationship with Cookies ended in early 2024.

Cookies must ‘suffer the consequences’ of a bad deal

In the arbitration proceedings, Cookies tried to argue that store was mismanaged and that Shawn Richard, the store’s equity owner, violated the terms of the licensing agreement with alleged misbehavior, including a still-pending sexual harassment lawsuit.

Richard has denied any wrongdoing in that lawsuit, which is still ongoing, records show.

Cookies also contended that the store, which allegedly never turned a profit despite a prime location in San Francisco’s iconic Haight Ashbury neighborhood and never paid Cookies any licensing fees, was worthless.

But Garcia dismissed those arguments, noting in his February ruling that Cookies never moved to revoke the store’s licensing agreement.

And though “the belief that the storefront in the iconic Haight Ashbury was destined for success was unfounded,” that did not invalidate the put option, he added.

“The usual consequence of making a bad deal is to suffer the consequences,” Garcia wrote in his ruling.

Garcia noted that the store’s struggles are likely the result of  “a governmental regulatory failure that has been complicated by local and state governments that have contributed to the problem by perhaps overtaxing and over permitting cannabis dispensaries.”

The situation follows Cookies’ significant win in a separate arbitration proceeding with another retail partner.

In those proceedings, in which Garcia also served as arbitrator, Cookies was awarded $22.7 million from Cookies Retail, which is an alter-ego of Los Angeles- based TRP Co., for unpaid royalty fees and “misuse of trademarks.”

Court records show that Cookies Retail is attempting to invalidate that ruling. A hearing is scheduled for July 14.

Eaze will attempt to make Haight-Ashbury marijuana store work

But though the Haight Street store evidently did not succeed under the Cookies branding, another national cannabis brand plans to give it a go, MJBizDaily has learned.

State Department of Cannabis Control records show that Cory Azzalino, CEO of Eaze, was added to the store’s permit sometime this year.

Eaze Technologies, a marijuana delivery startup, . A new company, called Eaze Inc., emerged earlier this year under the ownership of Netscape billionaire Jim Clark.

The new Eaze will take over management of the location under the branding Eaze on Haight, Azzalino told MJBizDaily last month.

“We are just managing the location, not taking over ownership,” Azzalino said in an email.

He did not provide an opening date. The store remained shut as of Wednesday.

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.