MedMen Still Refusing To Close Deal With Ascend Wellness

MedMen (OTCQX: MMNFF) is still refusing to close its agreed-upon deal with Ascend Wellness Holdings, Inc. (CSE: AAWH.U) (OTCQX: AAWH) for the properties in New York. The investment, which was agreed upon in March 2021, saw MedMen signing an agreement with Ascend Wellness Holdings, where Ascend would make an investment of approximately $73 million in MedMen NY Inc. or MMNY. Following the investment, Ascend would 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. The deal was dependent upon New York State’s approval, which the Office of Cannabis Management of the Cannabis Control Board of the State of New York gave on December 16, 2021.

On January 2, 2022, Ascend said that MedMen attempted to terminate the Investment Agreement saying they hadn’t received approval from the applicable state regulators to satisfy the closing conditions. On January 3, 2022, AWH told MedMen that its termination attempt was invalid.  On January 6, AWH reiterated this in their notice to MedMen regarding regulatory compliance.

Ascend also accused MedMen Enterprises, Inc., the parent company of MedMen of failing “to maintain compliance with their regulatory obligations under applicable laws and regulations of the State of New York as they are required to under New York law and under the provisions of the Investment Agreement, including Section 5.01(a)(i). For example, it appears as though neither the Company Parties nor MedMen obtained approval from the relevant authorities for at least one, and possibly more, changes of control of the Company. In addition, it does not appear as though MedMen or the Company delivered the required notices to the regulatory authorities for changes in the Company’s corporate officers. Our concern about potential major compliance violations, in violation of New York law and in breach of the terms of the Investment Agreement, appears to be shared by the OCM, as such potential violations were identified by the OCM in its correspondence attached hereto as Exhibit A.”

MedMen’s only response so far has been to issue a press release saying it had terminated the deal. MedMen’s stock initially jumped on the news, but like other cannabis stocks has seen it share price erode during 2021. In November, MedMen appointed Michael Serruya as Chairman and Interim CEO. Serruya succeeded outgoing Chairman and CEO Tom Lynch, who held the position since 2020 and oversaw its operational turnaround. Serruya joined MedMen’s board in August 2021 as part of a $100 million investment in the company by Serruya Private Equity.

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.

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