Ascend Wellness Holdings, Inc. (CSE: AAWH.U) (OTCQX: AAWH) has reported that MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) is trying to back out of the deal between the two companies. Ascend said that MedMen is challenging and disregarding the determination of the Office of Cannabis Management and the Cannabis Control Board of the State of New York which approved the transaction. MedMen had initially requested the New York State regulators approve the transaction in March 2021. Ascend said last week that New York had given its approval and that the company intended to close the transaction soon after. Now MedMen is disputing the NY Office of Cannabis Management regulatory approval, is refusing to close and is attempting to terminate the transaction.
Ascend said in a statement, “As New York and other states adopt adult use of cannabis, MedMen’s actions send the worst message – namely, that certain cannabis companies cannot be trusted to keep their word. AWH calls on MedMen to honor the commitment it made to New York, to its own investors and to AWH and promptly close the transaction. AWH will continue to pursue all measures to encourage MedMen to honor the Investment Agreement and close the transaction.”
Ascend accused Medmen of materially breaching the previously announced definitive investment agreement among AWH, MedMen NY, Inc., MM Enterprises USA, LLC, and AWH New York, LLC. The AWH Parties previously waived all closing conditions in favor of the AWH Parties, following the receipt of the required regulatory approvals, and requested to close the transactions contemplated by the Investment Agreement within the five business day period required under the Investment Agreement. AWH has made repeated attempts to close the transaction.
Original Acquisition Plan
MedMen so far hasn’t responded to the accusations that Ascend Wellness has leveled at the company. The two companies had agreed back in March for Ascend to make an investment of approximately $73 million in MedMen NY Inc. or MMNY. Following the investment, Ascend will hold a controlling interest in MMNY of approximately 86.7% and will have an option to buy MedMen’s remaining interest in MMNY in the future. Also in the agreement, Ascend must also make an additional investment of $10 million in exchange for additional equity in MMNY. This investment will also be used to repay MMNY’s senior secured lender if adult-use cannabis sales commence in MMNY’s dispensaries.