Ascend Wants MedMen's Political Accusation Claims Dismissed

Ascend Wellness (OTC: AAWH) fired its latest shot in the battle to force MedMen (OTC: MMNFF) to complete the previously agreed-upon sale of the company’s New York assets. On Monday, the company filed its latest documents with the court calling out MedMen’s accusations of political influence peddling. Ascend is arguing that MedMen is using the accusation as a way to distract and stall the acquisition process.

Background

Readers may recall that MedMen found itself in financial trouble at the beginning of 2021 and agreed to sell most of the ownership of its New York assets to Ascend. However, the New York cannabis regulatory bodies were in disarray throughout the year as the state ushered in a new governor. The newly-appointed Governor Kathy Hochul jump-started the group by quickly naming members of the Cannabis Control Board. Once the group got up and running, the MedMen license transfer had been in the pipeline for months and the clock was running out. As MedMen realized it had probably sold the properties too cheaply, it was in no hurry to see the deal approved and completed. Ascend on the other hand was pushing the regulators for an answer, which it finally got on December 16, 2021.

MedMen argued that the approval was conditional and not final. The company saw this as its way out of the deal and has insisted that the final approval by the regulators didn’t arrive in time. Then the company went on to accuse Ascend of political peddling by donating to a campaign for Governor Hochul in order to speed up the approval process. MedMen claimed that certain Ascend executives attended certain campaign fundraisers, which it then walked back.

Well, MedMen said it was incorrect in its accusations but refused to back down on its claims. Saying the peddling still occurred, it just had the dates and people wrong.

Ascend Wants MedMen’s Claims Dismissed

The latest court document points out some inconsistencies in MedMen’s argument. If MedMen is right that the final approval never happened, then how could Ascend have bought the approval through influence peddling? That would mean the lobbying campaign was a failure.

Additionally, Ascend said in the filing that the Investment Agreement required both Ascend and MedMen to work together to obtain government approval ‘as promptly as possible.’ and that both “parties agreed to use “commercially reasonable efforts” to ensure that all closing conditions were satisfied, including obtaining regulatory approval for their transaction. At bottom, MedMen pleads that Ascend fulfilled that contractual obligation by exercising its constitutional rights to engage in the political process to ensure the parties’ achieved the benefits of their bargain.”

MedMen asserted that on December 8, 2021, AWH NY President Andrew Brown attended an in-person fundraiser for Governor Kathy Hochul in Manhattan and that Ascend CEO Abner Kurtin met with “senior state executive officials” in Albany on December 10, 2021. Ascend said Brown could not have attended a fundraiser in Manhattan on December 8, 2021, because
he was in Albany that entire week appearing in federal court pro bono on behalf of an indigent party, and Kurtin could not have met with anyone in Albany on December 10, 2021
because he was in Florida. MedMen didn’t give this detail when it tried to walk back its accusations.

MedMen’s Own Political Moves

Ascend went on to suggest that MedMen’s more guilty of political peddling than Ascend is. “MedMen’s description of its own conduct gives away the game it is playing. After pleading
that it retained “a public strategy firm,” “regulatory counsel,” “government relations professionals” and “a regulatory consulting firm,” and worked to convince government officials of “the benefits to New Yorkers from the transaction all to achieve the very same purpose as Ascend—obtaining regulatory approval—MedMen cannot explain why Ascend’s lobbying efforts
breached the implied covenant but MedMen’s did not.”

The filing also says, “MedMen now alleges that “lobbyists at Dickinson & Avella” somehow “arranged” a “meeting at which state officials associated with the Office of the Governor discussed the application for approval of the MedMen-Ascend transaction. But MedMen does not allege that anyone from Ascend (or Dickinson & Avella) attended that meeting, nor does it explain how this meeting was supposedly “arranged. Adding to the irony is that MedMen’s complaints center on Dickinson & Avella, the very same firm MedMen retained to
lobby New York State officials on MedMen’s behalf just one year earlier.”

Plus, Ascend says “MedMen acquired its New York License in 2017, the same year in which it donated at least $50,000 to Governor Andrew Cuomo and just months before it donated
at least an additional $90,000 to Governor Cuomo and at least $20,000 to other New York officials, including a $25,000 donation to Governor Cuomo “the day before the company opened a dispensary on Fifth Avenue.”

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.


4 comments

  • Kevin

    March 31, 2022 at 11:07 am

    This deal is the biggest scam around. The whole “price” or “cost” that Ascend pays for MedMens New York License is determined by MedMens stock price. The purchase of a total of 45 million MM shares by Ascend, and 28 million in Cash is the deal. Who designs and agrees to a deal like that on what it turns out is a 250 million asset? So Ascend and its partners “Short” the crap out of MedMen down to a dime in December, and Now Want To Close As Soon As Possible!..before MM stock goes up! so they can pick up New York License for basically ten cents on the dollar. Tom Lynch agreed to this deal? The head of Sierra Constellations. Biggest Stock (Short) / Deal Scam in Years!

    Reply

    • Debra Borchardt

      March 31, 2022 at 4:31 pm

      No one put a gun to the head of MedMen to sign the deal.

      Reply

      • Kevin

        April 2, 2022 at 11:25 am

        Your right, MedMen and Tom Lynch agreed to this “deal”, then he went back to Sierra, who holds some of Medmen debt, but I contend that the whole “deal’ is a scam from the start, designed to Gut MedMen. You didn’t address any of the actual issues that I raised about the cost being determined by MM stock price, or Ascend shorting MM stock to get it on the cheap, does that seem like a normal transaction or deal to you?

        Reply

        • Debra Borchardt

          April 3, 2022 at 11:54 am

          MedMen was already experiencing financial trouble when they agree to sell the assets. Recall that they stated publicly that they were scaling back on the number of states they were in – so you could argue they were gutting themselves. My point is that they signed the document agreeing to stock prices, etc. They aren’t unsophisticated rubes. With regards to stock market moves – that’s fair game. It’s a publicly-traded stock. No company likes stock shorting, but that’s the risk you take when you go public. If you are willing to sell shares to the public and take their money then you have to be aware they can also short whether it’s Ascend or anyone else.

          Reply

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