MedMen Enterprises Inc. Archives - Green Market Report

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.”