Ascend Wellness (OTC: AAWH) has pulled off the gloves in its latest complaint (filed on February 14, 2022) against MedMen (OTC: MMNFF) calling the company, “A broken and mismanaged cannabis company that has repeatedly reneged on its promises to its employees, suppliers, shareholders, medical marijuana patients, regulators, and now Ascend.” MedMen had agreed to sell its New York assets to Ascend, but the deal was contingent upon New York State giving approval to the deal. The state regulators gave an ambiguous approval in December but tried to clarify that language in the waning hours of 2021. MedMen has since refused to close the deal saying the state hadn’t really given final approval and accusing the state and Ascend of influence peddling.
Ascend said in its latest court filing, “Not only has MedMen refused to close, it has picked Ascend’s pocket in the process, taking millions of dollars from Ascend after the deal was inked to stand up its financially stressed operations. Even worse, MedMen has lied about its reasons for doing so. The real reason is simple—MedMen has seller’s remorse and hopes to strike a better deal with a new buyer. Each day that MedMen fails to live up to its end of the bargain by refusing to close is not only harmful to Ascend, but to New Yorkers as MedMen’s license languishes. MedMen must be held to account for its wrongdoing.”
Ascend went on to say, “All told, Ascend made almost $8.5 million in cash payments to bail out MedMen. MedMen needed this cash infusion because its incompetent and unethical leadership had driven the company to the brink of insolvency and rendered it a pariah in its own business community.” Ascend said that it paid for MedMen’s operating costs, which totaled about $250,000 per month. In addition to the $4 million paid in 2020 for MedMen’s operating costs, over the course of 2021, Ascend paid an additional $4.5 million for MedMen’s operations. Ascend said without this money, MedMen would have faced tremendous difficulty meeting its financial obligations, leaving its creditors empty-handed, its employees potentially jobless, and thousands of seriously ill patients across New York with less access to the already limited supply of medical marijuana.
The filing also states that once MedMen got money from an investment with Tilray and Serruya Private Equity, it had the money to slow-walk the deal and wait to find a buyer that would pay more. Michael Serruya is now the CEO of MedMen.
The filing also states that “In 2019, Mr. Serruya was at the center of allegations that he violated the securities laws, engaged in self-dealing, and manipulated the stock of a different cannabis company. The MRTA requires leadership changes of this nature to be reported to the OCM; it is unclear whether MedMen ever did.” The filing referenced “Text messages show Cannabis investors Defrancesco & Serruya allegedly Colluded with Clarus Securities’ Christodoulis in Multiple Stocks, TERI BUHL (Sept. 20, 2019), https://www.teribuhl.com/2019/09/20/text-messages-show-cannabis-investors-defrancescoserruya-allegedly-colluded-with-clarus-securities-christodoulis-in-multiple-stocks/.”
The filing is a laundry list of bad deeds by MedMen plus a revolving door of CEO’s and stating that “As a result of MedMen’s actions, the New York Medical Cannabis Industry Association decided to cut ties with the company. MedMen is a pariah in its own industry. “