The Daily - The Sunday Read: ‘How Do You Make a Weed Empire? Sell It Like Streetwear.’

Episode Date: February 25, 2024

The closest thing to a bat signal for stoners is the blue lettering of the Cookies logo. When a new storefront comes to a strip mall or a downtown shopping district, fans flock to grand-opening parties, drawn by a love of the brand — one based on more than its reputation for selling extremely potent weed.People often compare Cookies to the streetwear brand Supreme. That’s accurate in one very literal sense — they each sell a lot of hats — and in other, more subjective ones. They share a penchant for collaboration-based marketing; their appeal to mainstream audiences is tied up with their implied connections to illicit subcultures; and they’ve each been expanding rapidly in recent years.All of it is inextricable from Berner, the stage name of Gilbert Milam, 40, Cookies’ co-founder and chief executive, who spent two decades as a rapper with a sideline as a dealer — or as a dealer with a sideline as a rapper. With the company’s success, he is estimated to be one of the wealthiest rappers in the world, without having ever released a hit record.

Hi, I'm Ezra Marcus. I'm a contributing writer to the New York Times Magazine. This week's Sunday read is my profile of a Bay Area rapper who goes by the name of Burner. He's a guy you've probably never heard of, who, in all fairness, is not the most accomplished rapper. But he somehow always ends up alongside Jay-Z and Kanye on these lists of the five richest rappers in the world. That's because Berner is the CEO of Cookies, one of the largest, most well-known legal cannabis brands in the United States.

Maybe the best known. And what makes Berner fascinating is that, in a way, he embodies the current state of the cannabis industry as a whole. On the one side, a weed industry that's legal and yet completely hamstrung by regulation. And on the other, a black market that's still thriving, and even facilitated by the supply from the legal side. A couple decades ago, Berner was working at a medical marijuana dispensary while also dealing weed on the street. Weed was on the cusp of becoming recreationally legal in California,

cusp of becoming recreationally legal in California, and Berner saw an opportunity. He noticed that when he'd draw colorful labels for weed strains, they'd sell better. Branding is really important, he figured. And so he started using rap music as a marketing tool. He made songs with famous rappers like Wiz Khalifa, who embody cannabis as a lifestyle. And he built his brand around a novel strain of weed called Girl Scout Cookies. He would give out free quarter pounds of it to dealers to spread awareness. It turned Berner into an iconic figure. It turned Berner into an iconic figure. By the 2010s, Berner was selling T-shirts and hoodies with a Cookies logo on them.

Then, after cannabis was legalized, he partnered with investors who transformed Cookies into a real company. But Cookies is different from these other large corporate cannabis companies, which give off a kind of safe, almost medical consumer product kind of vibe. Cookies trades on the romance of the black market and the subcultural cachet of illegal weed. It resonates with heavy cannabis consumers like nothing else. There are Cookies stores all over the world. nothing else. There are cookies stores all over the world. Anytime a new store opens, it's like this subcultural event akin to juggalos or deadheads. Cookies obsessives will travel and line up around the block to meet Burner and buy cookies merch.

None of that would be possible without Berner's brilliant marketing. I went to visit Berner at his compound in Marin County, California. It's this giant, nondescript warehouse on the outside, but inside it's like an upscale WeWork office, but with all these stoner touches. There's trippy Hunter S. Thompson art and hallucinogenic scenes everywhere, and tons of rooms displaying different projects. And then there's a bunch of guys sort of hanging out there. They're smoking, burners rolling joints. He's showing me big bags of weed strains he's developing. It's not your classic business school background.

It's almost the exact opposite. And so, even though he is, in many ways, the archetypal stoner, Berner clearly has a sophisticated, keen business mind. So, here's my article. How do you make a weed empire? Sell it like streetwear. Read by James Patrick Cronin. Our audio producer today is Jack DeSidoro. And the music that you'll hear was written and performed by Aaron Esposito. The closest thing to a bat signal for stoners is the blue lettering of the cookies logo. When a new storefront comes to a strip signal for stoners is the blue lettering of the cookies logo. When a new storefront comes to a strip mall or a downtown shopping district, fans flock to grand opening parties drawn by a love of the brand, one based on more than its reputation for selling extremely potent weed.

Until recently, the company was largely a West Coast phenomenon, but as marijuana legalization spread east, so did cookies. A little over a year after recreational sales became legal in New Jersey, the chain opened a new location in a bland outdoor mall in Harrison, its aesthetic landing somewhere in the startup meets streetwear zone between Apple and Kith. I walked over to a large circular table laden with dozens of jars, each containing a different strain. There were longtime cookies stalwarts like Gary Payton, a collaboration with the NBA legend, and new variants with names like Mexican Flan and Dirty Muffler. There, I met Nikola Pavlovich, a genial salesman wearing a flamingo-patterned bucket hat atop long hair, canvas moccasins, and a shirt covered in psychedelic flowers. Pavlovich, 31, is an aspiring stand-up comic who began smoking to help with anxiety and found himself down what he called the canisaur rabbit

hole, reading forum posts about exotic hybrid genetics and terpene levels. This expertise eventually took him to cookies, where his role is to match customers with the ideal strain for their lifestyles. I asked what he would suggest for a freelance reporter who might want to enliven dull afternoons at home in front of the computer. Pavlovich recommended a strain called laughing gas. This is like renting a Ferrari in Miami and going on a straight highway, he told me, and just slowly pressing the gas. All around us were neatly labeled $70 jars of weed and $300 bongs laser etched with the Cookies logo. And, of course, hoodies. Cookies clothing plays a key role in both the brand's origin story and its current marketing strategy.

The brand predates any legal marijuana regime. When cookies was strictly a black market concern, hoodies and hat sales allowed it to gain a foothold above ground. And the soft goods give buyers a way to signal something specific to the outside world. I smoke lots of weed, but in the cool Wiz Khalifa way, not the lame suburban mom way. People often compare cookies with the streetwear brand Supreme. That's accurate in one very literal sense. They each sell a lot of hats, and in other more subjective ones. They share a penchant for collaboration-based marketing, their appeal to mainstream audiences is tied up with their implied connections to illicit subcultures,

and they've each been expanding rapidly in recent years, thanks to infusions of venture capital. Harrison was the 64th cookies outlet to open in the United States. There are also retail locations in Israel, Thailand, and Canada. All of it is inextricable from Berner, the stage name of Gilbert Milam, 40, the company's co-founder and chief executive, who spent two decades as a rapper with a sideline as a dealer, or as a dealer with a sideline as a rapper. The two roles have long propped each other up, to the point that Milam is estimated by some to be a centimillionaire, though any estimate of his net worth depends largely on how much you think cookies is worth. He claimed in a 2019 podcast interview to have rejected an $800 million

offer for the company. A 2022 report from the journalist Zach O'Malley Greenberg placed his worth at $410 million. Forbes, meanwhile, valued cookies at a more conservative $150 million when it wrote about Milam in 2022. Any of these figures would make him one of the wealthiest rappers in the world, without him having ever released a hit record or even one that most rap fans have heard of. Many of these estimates were made early on in the Biden administration, when states like New Jersey and Montana were moving to legalize, and there was still hope that democratic control of the executive branch might lead to quick decriminalization or rescheduling of the drug at the federal level. O'Malley Greenberg recently reassessed Milam's net worth at $250 million.

What happened instead was a national patchwork of chaos. Every state's laws and agricultural profile are different, making it extremely hard for national brands to operate within the rules and easy for bad actors to take advantage. Several cannabis sources I spoke to said that it has long been an open secret that major legal companies are flooding the black market with legally grown cannabis. Look no farther than the vast quantities of weed for sale in New York City at unlicensed stores. The legal market has been cannibalized by the black market, said Josh Berman, a cannabis veteran who has known Milam for about a decade and previously worked as cookies grower and

processor in Washington state. The same people who are selling in stores are the same people controlling the black market, and they're picking and choosing which lane makes the most sense. Cookies, more than most players in the cannabis business, trades on its origins in the pre-legalization days. It is an empire Milam built on a series of risky moves, first by entering the cannabis black market and then by turning his participation in it into the cornerstone of a recognizable brand, long before legalization made that safe. The core of Milam's appeal is the charismatic narrative of his rise from black market hustler to mogul. Yet the tension between the street and the nascent

legal cannabis industry, the latter still struggling to distance itself from the former, has brought with it some thorny problems for his company and the industry at large. As he seeks to capitalize on the legalization blitz, Milam is facing scrutiny from regulators, along with a number of lawsuits from corporate rivals as well as former investors and business partners. He could emerge on the other side on top of a booming industry, or one that's collapsing under the weight of its own ambition. Milam recently finished construction on something he calls the Compound, which occupies much of a block in an office park in Maring County. There is no public signage. Reflective windows are the only indication that the work being done within might be anything less traditional than accounting. Milam picked

the location in part as a safety precaution. Because marijuana remains illegal at the federal level, legal weed companies are largely shut out of the federally regulated banking system, turning stores into cash-heavy targets for robberies. Before this, Milam told me his arrangement was less secure. He recalls employees texting him pictures of piles of cash on a table. I'm like, you guys have no business around all that cash by yourselves in f*** San Francisco, he said. After all, he was no longer a black market dealer, and neither were his colleagues. They were white-collar cannabis executives with backgrounds in business. Even in the suburbs, he remains security conscious, and he suggested to me that the compound was well-protected. God forbid someone were to kick in this door right now,

we've got a game plan, and you're gonna hear some loud-ass rounds go off, he said. Through a representative, Cookies said that this is not representative of his position on the topic of security and personal protection. The compound was only a few weeks old when I visited in late June. Milam led me on a tour through the massive building where some rooms remained under construction. He led me past a room with a bank of monitors where designers worked on product labels to a room with large shelves stacked with jars of weed, new strains in development. Cookie's R&D process involves Milam's smoking buds that emerge from its grow lab

and seeing if he likes them. It's the best job in the world, he said. lab and seeing if he likes them. It's the best job in the world, he said. A cavernous space, currently containing not much more than a sports car beneath a tarp, will eventually turn into a soundstage. Milam wants to start a streaming service called Couch Locked Network, where he'll cater to stoners with cooking shows and crime documentaries. Like Vice, he said, if they hadn't fumbled the bank. As we walked through the corridors, the vision grew more expansive. He told me at one point that he hopes, after he's gone,

a hologram version of him will be able to introduce new cookies strains, locked in cold storage by present-day Milam over the course of the next century. We made our way to the kitchen where a private chef was making lunch, Japanese chicken curry, for half a dozen guys sitting around a table. As we ate, a nurse came in and drew Milam's blood. Two years ago, he received a diagnosis, stage 3 colon cancer. Soon after that, he said, he decided to build the compound. That's everything I've worked for.

That's 49 albums, all the years of touring. That's 20 years of work right there, he said. It was a bet on the future existence of both the company and himself. In March of last year, following chemo and surgery, he announced that he was cancer-free. I want to see cookies through to the end, he said. I'm doubling down on cookies. After lunch, Milam and I walked upstairs to a large boardroom with skylight-studded ceilings. A long table surrounded by Herman Miller chairs sat in the middle, surrounded by stoner chic art, trippy optical illusions, a framed Jimi Hendrix poster, a life-size sculpture of Hunter S. Thompson. Milam said he liked to sit there and feel his empire humming around him. He lit a blunt and

unfurled the narrative of his life, beginning with his first job in the cannabis industry as an employee at the Hemp Center, a medical dispensary in San Francisco's Richmond district. That was 2002. Eight years earlier, California became the first state in the country to legalize medical marijuana. And though the Hemp Center was fully above board, it was, in another sense, a complete fiction. Anyone could get a prescription for medical marijuana from a doctor advertising in the back pages of the alt-weeklies and a complaint about, say, chronic pain. Milam's responsibilities included writing the names of strains on note cards. I just would be high, doodling and coloring my s*** and making it look tight, he said.

Customers, he noticed, would gravitate toward the signs he drew. A lightbulb went off. Branding actually really matters. In 2007, Milam began releasing a steady stream of music, depicting the life of a smoker and dealer in granular detail. He aggressively pursued collaborations with Bay Area legends like the Jacka and Messy Marv, says Kamel Jacobell, a Bay Area event producer who has known Milam since the Hemp Center days. As a rapper, Milam wasn't exactly reinventing the wheel, but he cleverly bootstrapped a double-barreled career path. Selling weed allowed him to finance albums with hot artists and establish street

bona fides, and the music promoted his dealing and status as an early public-facing weed mogul. This dynamic continues today. He's positioned it where his music and his career just fuels the success of his cannabis company and vice versa, Jack O'Bell said. They kind of ping-pong back and forth off each other. During the mid-aughts, Milam heard about a reclusive Bay Area grower named Les Jai Chang, aka Jai or Jigga, who had managed to produce some unique flavors. They started working together, and in 2008, Jai brought him a fateful strain. There's no seeds, the bud structure, the smell, the taste, the high, Milam recalls.

Everything about it, I was like, this is it. It's out of here. Jai thought that it tasted like a thin mint, which gave the strain its name. Girl Scout Cookies. To spread the word, Milam says he reached out to the biggest dealers he knew and gave them each a quarter pound of Girl Scout Cookies to hand out to customers as a sample. Smokers loved the strain, but when they asked for more, their dealers were dry. That's what broke cookies hard, Milam says. The limited supply created a hype around it, he says, just like Jordan's. In 2011, Milam capitalized on the strain's notoriety by starting a brand called Cookies SF, which sold streetwear and eventually

smokers' tackle items like rolling trays. Milam began to hang out and record with rap's stoner icons, Wiz Khalifa, Snoop Dogg, Currency, B-Real from Cypress Hill. He says he never asked rappers to mention his strains, but soon enough Girl Scout cookies began showing up in rap lyrics. Wiz Khalifa signed Milam to his label, Taylor Gang Entertainment, and invited him on tour. Milam wasn't allowed to perform, though, so during other artists' sets, he would walk through the crowd, slanging trays and jars directly to fans, like a hot dog or peanut guy. He says he would

clear $3,000 in merch sales a day. The other artists made fun of him for not chasing after groupies and enjoying himself, but when the tour was in Texas, Milam showed up wearing a Rolex he bought from the legendary Houston jeweler Johnny Dang. The jokes at his expense stopped. Throughout his rise, Milam was an active participant in the black market with all that it entailed. It was scary, he said. It was like Ozark. The risk of robbery was ever-present. He sometimes acted as a middleman, connecting dealers with growers in Northern California, and people on either side could resort to violence if a deal went south. A path out of the black market appeared on the horizon as legalization began

to spread across the country, starting with Colorado voting in 2012 to legalize recreational marijuana sales. Legal weed was coming to America, and Milam wanted in. He had name recognition and access to a steady supply of new strains through Jai. What he did not have was a functioning company. The largest cannabis companies in the country today are known as MSOs, or multi-state operators. They build out independent supply chains in every state they sell weed in. These are typically buttoned-up, relatively faceless corporations, often publicly traded with market caps in the hundreds of millions. These are companies with names like Cresco Labs, Curaleaf, TrueLeaf, and Terrasend. Many of them emerged on the East Coast

and Midwest in states that granted only a handful of commercial licenses. Without competition, they didn't need to build a brand and could focus on scale and infrastructure. Parker Burling, the president of Cookies, likes to point out that the company came out of a completely different environment. Highly competitive markets emerged on the West Coast, where medical use thrived for more than a decade before recreational legalization swept the country. Most of the MSOs, I think, are companies first trying to build brands, and then we were a brand first trying to build a company around the brand, Burling says. From the beginning, Burling and Milam knew cookies couldn't compete with the

MSOs on their own terms. They were just too big. And because it remains illegal at the federal level, weed cannot be transported over state lines. Every state, meanwhile, built its own regulatory framework for cannabis, each with a bespoke tangle of tax rates and limits on how it can be grown, advertised, and packaged. This makes for a fiendishly difficult industry to compete in at a national scale. Why would you ever set up 20 manufacturing facilities across the U.S., Burling asked. That's insane, but that's what the cannabis industry is today. To circumvent this problem, Milam and Burling found their way to a strategy similar to fast food franchising.

Broadly, Cookies finds people who already have permits and partners with them, allowing them to use the brand name and genetics so they can grow the strains and operate the stores. I look at it as like a league, Milam said. We're not like an NFL team. We're not a player. We're not the coach. We're a league. We're putting people in position. We allow people to play ball. This strategy has allowed for rapid expansion. The first cookies store opened in Los Angeles in 2018. The company has since opened 69 more. Milam, who has 2 million followers on Instagram, claims that his celebrity gives him a marketing advantage over the MSOs. I can get off with one Instagram post while one of these companies can get off with a $4 million billboard campaign, he said. And I'm shadow banned. And perhaps, unlike any other chief executive in America, he's constantly touring. He spent this past summer opening for

Snoop Dogg and Wiz Khalifa in venues across the country, each performance a marketing opportunity for cookies. In early August, the high school reunion tour stopped at a large arena in Holmdel, New Jersey. Milam played early as the crowd was still filing in. The LED screen on stage behind him was emblazoned with a QR code that led to the company's landing page, where prospective buyers can scroll through strains like Bernie Hana Butter and Congo Cashmere. He hyped the opening of the upcoming store in Harrison, produced a case of joints, tossed one to a woman a few rows back, and led

the crowd in a chant of, hit it, hit it, until she took a big puff. This goofy stoner act elides Milam's history as a sophisticated black market operator. Take the stunt he pulled when he gave Girl Scout cookies to dealers. He brags that the MSOs would never be in the position to even put a QP, a quarter pound, in someone like that's hands, he said. I understand the business of weed. Not just the legal business, not just the black market business. They play a role with each other. If it resonates on the streets, it will resonate in the legal market. If people from the streets will go in and buy weed in the legal market, you're doing something damn right. Milam isn't entirely unique in the way he has moved between these two worlds.

The black and legal markets continue to exist both in concert and competition with each other. Even as more states continue to legalize the drug, taxes and limits on transporting cannabis keep prices high, allowing street dealers to compete effectively on price with licensed sellers. In many states, the halting rollout of licensing has unleashed unregulated gray markets that threaten to engulf the legal markets before they can flourish. Over the past couple of years, Pot, dubiously branded as Cookies, flooded stores across New York State. None of that was legal. Cookies did not have the permits to sell cannabis products in the state, and indeed, the company said it was not doing so. But it could be real Cookies product purchased wholesale in California and shipped cross-country by third-party distributors,

or some totally unrelated weed repackaged and counterfeit cookies bags, which are readily available on websites like Alibaba. Through a representative, cookies said that it is likely the most knocked-off and counterfeited cannabis brand in the world. Cookie stores continue to open around the country, and Milam says that the future is bright for the company. But over the past year, it has been dragged into several legal disputes involving investors, business partners, and corporate rivals who claimed a pattern of unscrupulous business practices by Milam, Burling, and other executives. Two groups of shareholders have claimed that Burling compels Cookies' licensors to use a construction company called GCI, at which Burling's brother is an executive, and that the company charges exorbitant prices. Cookies and Burling have denied these allegations. Investors also accused the company of balance sheet chicanery.

Cookies, a complaint said, burned through cash and ran out of money while also making payments to companies in which Milam and Burling have a financial interest. Burling has said these claims are demonstrably false. Another suit targets the company, as well as several others, for unfair business practices, arguing that its involvement in the production of a category of products known as hemp-derived intoxicating cannabinoids effectively undermines the entire legal cannabis market. Cookies denied the claims. The lead plaintiff of the suit is March & Ash, the retail arm of a California cannabis company,

and offers a window into the vexed state of the legal weed business. Hemp-derived intoxicants exist in a regulatory gray area, based on a creative interpretation of the 2018 Farm Bill, which legalized hemp-based substances like CBD as long as they contained a very low level of THC. But if you infuse legal hemp with synthetic compounds like THCO, THCP, and HHC, all psychoactive substances very similar to THC that are not scheduled by the Drug Enforcement Administration, the product can be sold as a legal derivative of hemp, even though it has powerful psychoactive properties matching or even surpassing normal weed. but has powerful psychoactive properties matching or even surpassing normal weed.

On top of that, it is cheap to produce, not subject to the high taxes on cannabis products in recreational use states, and can be sold in jurisdictions where prohibition still exists. Milam's career as a rapper has been used against him in court by at least one investor who transcribed his lyrics in a filing to paint him as a real-life gangster. Milam has in turn used music to respond to his complainants. A promotional video that came out in May of last year for a song called One Shot Kill features Milam sitting at the head of a table in a boardroom staring down men in suits whose reflections in the polished conference table are wearing ski masks. Milam declined to comment on the lawsuits

and has called them an effort to usurp his control of the business. It's worth noting that there is nothing surprising about a startup's facing legal challenges from competitors and disgruntled investors during its tumultuous growth phase. Still, the litigation may signal that what has buoyed cookies so far, a strong brand built on associations with hip-hop and legacy drug culture, may not be enough to weather the storm rocking the industry at large.

Cannabis stocks are down, black markets remain robust, even as regulatory blunders and red tape continue to hamstring would-be legal operators, high taxes and a lack of viable banking keep margins thin. Every operator has struggled during this period, said Jesse Redmond, a cannabis sector analyst at Water Tower Research. I literally do not know of an exception of someone that's killing it during this period. Some are doing better, some are down 50%, some are down 99%. As legal weed proliferates across the country, many storefronts have adopted a sterile corporate aesthetic, while others lean into puerile graphics of, say, red-eyed Rick and Morty smoking blunts. Cookies tries to distance itself from this mundane reality by associating

itself with the romance of the black market. At the mid-August store opening, a line snaked through the store. People waited to meet Bransonust store opening, a line snaked through the store. People waited to meet Branson Belchie, a legendary figure in cannabis lore and among the most famous pot dealers of all time. In the 1990s, Branson cultivated a following among New York's rising hip-hop royalty. His name shows up in dozens of songs by Biggie Smalls, Redman, Cam'ron, and others. Yet at the peak of his fame, he wasn't giving interviews or making public appearances. He was closer to an urban legend than a celebrity. Now he was signing T-shirts and posing for selfies

in a gleaming New Jersey storefront as 20-somethings in fancy sneakers perused Cookie's wares and chatted while a DJ in the corner played throwback rap hits. Branson was there as part of a promotional push for a new strain he released with Cookies last year called Harlem's Finest. It comes in a bag with a golden triangle emblazoned on the front, a nod to the unusual triangular bags associated with Branson in the 90s. Now, Cookies is allowing Branson to finally step out of the shadows. But that doesn't mean the shadows are gone or that the faltering legal industry will ever be able to dispel them. Branson was

notably ambivalent about his newfound status as an elder statesman. I'm not really that enthused about being exposed that kind of way because I've been discreet about what I've done over a period of time, he told me. A world in which people can go to the ATM and buy an eighth from an unlicensed bodega, he told me, was hardly rid of illicit operators. If anything, it's a world that would increase the pressure on them. If I was still on the corner, he said, nodding at the immaculate store around us, this would be my competition.