Equity

Social Equity Licensee Accuses Cookies of Breach of Contract

In a developing story from the cannabis industry, Ross Bradshaw, a Massachusetts social equity cannabis license holder, claims that several entities affiliated with the renowned “Cookies” brand, created by hip-hop artist Berner, have defaulted on a $2 million agreement. This alleged breach of contract involves Bradshaw’s Worcester dispensary, New Dia LLC, and has led to significant legal action.

Background of the Dispute

Bradshaw and his New Dia LLC assert that in 2020, the “Cookies” brand approached them with a proposal to acquire their Worcester dispensary. The plan included selling the “Cookies” line of cannabis products at the location. The deal was approved by the Massachusetts Cannabis Control Commission, allowing Cookies to gain a 49% stake in the dispensary. However, Bradshaw contends that the Cookies entities have since refused to finalize the deal and pay the agreed-upon amount while continuing to assert control over the dispensary, which has been rebranded as Cookies Worcester Dispensary.

Allegations and Legal Actions

The complaint filed in Suffolk County Superior Court accuses the Cookies entities of “misconduct” and breach of contract. New Dia claims that the defendants are attempting to benefit from owning a stake in the company without fulfilling their financial obligations. According to Bradshaw, “Defendants seek [and] reap the benefits of owning an interest in New Dia without paying for those benefits.” Despite the rebranding and claims of ownership, New Dia insists they have received no payment for nearly half of the company.

The Role of Vicente Sederberg LLC

The complaint also implicates Vicente Sederberg LLC, a cannabis-focused law firm that acted as the escrow agent for the transaction. Bradshaw alleges that the law firm’s involvement has further complicated the situation, as the deal remains incomplete.

Social Equity License Complications

A unique aspect of this case is the involvement of a social equity license. Massachusetts’ cannabis law designates certain licenses for individuals from communities disproportionately affected by the war on drugs. Bradshaw’s license falls under this provision, restricting him from selling more than 49% of his business to another entity. This legal stipulation has reportedly frustrated the Cookies entities, who are now allegedly trying to renegotiate the terms or involve a third party to complete the transaction.

2021 Press Release vs. Current Actions

In 2021, Cookies released a statement highlighting their partnership with New Dia, an economic empowerment applicant, as a testament to their commitment to diversity, equity, and inclusion (DEI) in the cannabis industry. The press release stated, “The Partnership with One of the State’s First Economic Empowerment Applicants Represents Cookies’ Commitment to Promoting DEI in Cannabis.” However, the current dispute suggests a stark contrast to these proclaimed values. Bradshaw’s allegations of misconduct and breach of contract indicate that the Cookies entities’ actions may not align with their public commitments.

Additional Claims and Arbitration

Bradshaw and New Dia believe they have additional claims for securities fraud, violations of the state’s unfair and deceptive practices in trade law, and breaches under the Lanham Act. However, these claims are subject to arbitration as per the contract.

Current Legal Representation and Responses

New Dia and Bradshaw are represented by Colin R. Hagan and David J. Shlansky of the Shlansky Law Group LLP. As of Tuesday, neither representatives for Cookies nor Vicente Sederberg LLC have provided comments on the matter. The case, officially titled New Dia LLC et al., v. CR Operator Holdings LLC et al., is being heard in the Suffolk County Superior Court.

Conclusion

This unfolding legal battle highlights significant issues within the cannabis industry, particularly around social equity licenses and contractual obligations. The outcome of this case could set a precedent for future dealings involving cannabis dispensaries and social equity licenses.

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