MedMen To Take Back Influence Peddling Allegations

The latest twist to the ongoing battle between Ascend Wellness (OTC: AAWH) and MedMen Enterprises Inc. (OTC: MMNFF) is that MedMen is now going to take back some of its recent influence-peddling accusations. The conflict is over MedMen’s agreement to sell its New York assets to Ascend, which MedMen is now trying to terminate. Back in January, MedMen alleged that Ascend’s CEO Abner Kurtin used political influence with New York Governor Kathy Hochul and was shortly thereafter able to obtain an email saying the license transfer from MedMen to Ascend was approved.
MedMen made the following accusations:
1) AWH New York, LLC President, T. Andrew Brown, attended an in-person fundraiser for Governor Kathy Hochul in Manhattan on December 8, 2021
2) Ascend’s Chairman and Chief Executive Officer, Abner Kurtin, met with Governor Hochul’s secretary “and other senior state officials” in Albany on December 10, 2021.

Ascend’s legal representative Mylan Denerstein, of Gibson Dunn said, “After we provided documentary evidence proving MedMen’s assertions were demonstrably wrong, they indicated they will withdraw their false allegations. Like any house of cards, MedMen’s claims collapsed when exposed to the slightest scrutiny. Ascend will continue to correct the record and looks forward to entering New York’s cannabis market once its rights are vindicated in court.”

Bad Vibes

MedMen had agreed to sell a majority of its New York assets to Ascend Wellness, but the deal was dependent upon approval from New York State. That approval came on December 16, 2021, but MedMen claimed the communication on that day stated the approval was “conditional.” MedMen said that it needed final approval by December 31, 2021. Ascend claimed in its complaint, that it went back to the Office of Cannabis Management (OCM) and asked for clarification. The OCM stated that its approval was in fact final.

MedMen said in its countersuit that on December 28th, Richard Zahnleuter the General Counsel of the Office of Cannabis Management (which supports but does not direct the Cannabis Control Board) contacted MedMen to say he might need up to 60 days to finish its review. However, MedMen also said that Zahnleuter emailed the following evening saying that the December 16th email did give the “final” approval for the deal. Making things even more complicated, MedMen says it spoke with Zahnleuter on the phone who said he had been “pressured” to send the email saying the December 16th email gave final approval. Zahnleuter would not disclose to MedMen who had pressured him.

MedMen wants the court to declare the termination was valid and it also wants to keep the money Ascend gave for the deposit and the working capital advance. Ascend gave MedMen some much-needed cash, including an upfront $4 million cash infusion in December 2020 in connection with the execution of a letter of intent between the parties and a further $4.46 million to cover MedMen’s working capital needs and Utica facility site improvements and expansion during 2021. MedMen also wants a termination fee to be paid.

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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