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The Cookies empire appears on the brink of collapse after a San Francisco judge earlier this month ordered the national cannabis’s main revenue source diverted to settle a $8.4 million judgement, court records show.

Royalties from Cookies-licensed, third-party owned stores in Canada, Israel and Thailand as well as the United States – the lifeblood of the “asset-light” marijuana branding powerhouse Forbes once estimated was worth $250 million – must instead be paid to the company’s erstwhile partner on a failed San Francisco marijuana store, Superior Court Judge Dennis Hayashi ordered Nov. 13.

The result is “leaving Cookies without operating revenues,” Cookies’ attorney, Robert Finkle, claimed in earlier court filings.

It’s the latest serious headache for the San Francisc0-based brand, still one of cannabis’ most prominent. A Cookies-branded store in Oakland closed last year.

Meanwhile, Cookies is trying with less success to collect a serious judgment of its own – from another erstwhile retail partner.

In addition to royalty revenue from Cookies-branded cannabis stores, court documents show the Cookies Creative Consulting and Promotions assets Cole Ashbury Group is targeting include:

• The Cookies Bus, a motorcoach used by the brand’s co-founder and public face Gilbert Milam, Jr..
• Cookies’ line of branded alcoholic beverages called “Adios” that debuted over the summer.

Cole Ashbury Group operated a short-lived marijuana social equity store called Berner’s on Haight.

Bart Dalton, Cole Ashbury Group’s Plano, Texas-based attorney, did not respond to a request for comment.

Cole Ashbury’s principals also operate several Cookies-branded stores in Illinois which are contractually obligated to pay royalties.

Neither Parker Berling, Cookies’ president, Finkle, Cookies’ attorney of record, provided comment.

‘Immediate insolvency event’

In an earlier court filing, Finkle claimed that an order forcing Cookies to “divert 100% of such payments” would “result in an immediate insolvency event.”

True to his warning, the situation likely spells a “death knell” for the brand, once one of the country’s most prominent, said Chris Wood, a cannabis attorney at Wykowski & Wood and adjunct professor at the University of California San Francisco School of Law.

By nature of its structure – reliant on income from branding agreements with third parties rather than physical assets – “Cookies is just a little more vulnerable,” Wood said.

“It’s easy to say, ‘Don’t pay them. Pay me instead.’”

But that might prove difficult if the brand is damaged.

“With Cookies, really, the only asset is the brand,” he said. And the judgment itself might lead Cookies’ licensing partners to argue that the brand’s value is diminished.

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Marijuana powerhouse Cookies risks ‘insolvency’ after judgment