MedMen Archives - Green Market Report

StaffMay 24, 2022
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The Daily Hit is a recap of the top cannabis business stories for May 24, 2022.

ON THE SITE

Live Blog from WEF 2022 in Davos Switzerland

Green Market Report editor-in-chief Debra Borchardt blogs live from the Medical Psychedelics Series, at the World Economic Forum being held in Davos Switzerland. Read more here.

MedMen Wins Suit Against Whitestar

MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) won its lawsuit against Arizona-based Whitestar Solutions, LLC. According to a statement,  Whitestar filed a lawsuit in March 2020, related to a Membership Interest Purchase and Sale Agreement governing the purchase of EBA Holdings, Inc. dba MedMen Scottsdale. Whitestar alleged fraudulent inducement and breach of contract, among other claims, and sought rescission of the underlying transaction or $60 million in alleged monetary damages. Read more here.

Illegal Cannabis Lounges in NYC

These consumption lounges are operating without licenses and it seems the city and state don’t care. Since the adult-use license program hasn’t been written and approved, these operations are technically violating the law. No law means no violations. So there really isn’t anything law enforcement can do. These lounges range from the first to market Happy Munkey to pop-up neighborhood lounges that are often located next to illicit street sellers. Read more here.

Psychedelics Companies

As the industry matures, there are clear leaders in the pack of psychedelics companies who are positioned to continue driving industry development. Compass Pathways, Atai Life Sciences, and Cybin are generally considered the top three companies in the industry, asserting their dominance in the market, with Field Trip Health and Seelos Therapeutics as psychedelics companies to watch. Read more here.

IN OTHER NEWS

Aleafia Health Inc.

Aleafia Health Inc. (TSX: AH, OTCQX: ALEAF) is pleased to announce that its upward trend in market share, purchase orders, and new SKU launches has continued in 2022’s first four months, following on from the growth in the quarter ended December 31, 2021. The Company has seen strong advances in its largest adult-use categories: flower, pre-rolls and vapes. Read more here.

Curaleaf Holdings, Inc.

Curaleaf Holdings, Inc. (CSE: CURA /OTCQX: CURLF), an international provider of consumer products in cannabis, will begin adult-use sales at its Edgewater Park, New Jersey dispensary on May 25. Located at 4237 US-130, Curaleaf Edgewater Park is now the Company’s second location to sell adult-use cannabis in the Garden State. Read more here.

Rubicon Organics Inc.

Rubicon Organics Inc. (TSXV: ROMJ) (OTCQX: ROMJF), a licensed producer focused on cultivating and selling organic certified, premium cannabis, today reported its financial results for the first quarter ended March 31, 2022. “Rubicon Organics is at a turning point in 2022, with higher yields and increased quality coming from our Delta Facility, whilst remaining cost-conscious we are driving to being profitable in 2022.” Read more here.

RIV Capital Inc., Etain LLC

RIV Capital Inc. (CSE: RIV) (OTC: CNPOF) today announced that it had received notice of an Ontario Superior Court of Justice application by JW Asset Management in connection with the Company’s process regarding its acquisition of ownership and control of Etain, LLC and Etain IP LLC, owners and operators of legally licensed cannabis cultivation and retail dispensaries in the state of New York. JWAM, an investment firm focused on the pharmaceutical and cannabis industries, is the holder of approximately 20.4% of the Company’s issued and outstanding Class A common shares. Read more here.

Pharmagreen Biotech, Inc., Long Valley Farms

Pharmagreen Biotech, Inc., (OTCQB: PHBI), which provides starter plantlets utilizing a proprietary tissue culture process, “Chibafreen,” to licensed cannabis cultivators and CBD/CBG hemp farmers, announced that it has completed another significant milestone in the business development with Long Valley Farms. Pharmagreen has advanced the next tranche of funds, whereby the use of proceeds is for the continuous application process for the LVF micro-business license and its nursery licenses in addition to the current cultivation license. PHBI anticipates having the permits in place within the following few months, depending on the regulator’s schedule. Read more here.

Avicanna Inc.

 Avicanna Inc. (TSX: AVCN) (OTCQX: AVCNF) (FSE: 0NN) a biopharmaceutical company focused on the development, manufacturing and commercialization of plant-derived cannabinoid-based products is pleased to announce that, through its majority owned Colombian subsidiary, Santa Marta Golden Hemp S.A.S., SMGH has completed its first commercial export of high concentration THC and high concentration CBD full spectrum psychoactive cannabis extracts to Portugal. Read more here.

Eden Empire Inc.

Eden Empire Inc. (CSE: EDEN) announced the signing of a non-binding letter of intent agreement with Plantvida located in Colombia. The agreement dated May 20th, 2022, is made by and between Eden Empire Inc. and Plantvida. The Plantvida SAS project located in north-western Cundinamarca, Colombia, is dedicated to implementing strategic social business, bringing safe, natural and ecologically friendly wellness products to the emerging cannabis business with the goal of providing work and social benefits to the community, such as education, unemployment, health, housing and security. Read more here.

Abaca

Arkansas-based cannabis financial technology firm Abaca has expanded coverage bringing digital-first banking, payment and treasury management solutions to Mississippi’s cannabis industry. Integral in banking 95 percent of Arkansas’s cannabis industry since day one and hundreds of cannabis clients across the country, Abaca is uniquely positioned to support Mississippi. Read more here.


Debra BorchardtMay 24, 2022
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MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) won its lawsuit against Arizona-based Whitestar Solutions, LLC. According to a statement,  Whitestar filed a lawsuit in March 2020, related to a Membership Interest Purchase and Sale Agreement governing the purchase of EBA Holdings, Inc. dba MedMen Scottsdale. Whitestar alleged fraudulent inducement and breach of contract, among other claims, and sought rescission of the underlying transaction or $60 million in alleged monetary damages.

MedMen maintained that the lawsuit and claims were baseless and without merit – and the judge agreed on all counts, canceling the upcoming jury trial and stating that “no reasonable juror could conclude that Whitestar is entitled to relief on any of those claims.” The judge further ruled that as the prevailing party, MedMen is entitled to submit an application to recover attorneys’ fees and taxable costs from Whitestar.

Original Agreement

In 2018, MedMen signed an agreement to purchase Scottsdale-based cannabis company Monarch from WhiteStar Solutions. At the time, Monarch was a licensed medical cannabis license holder with a dispensary, cultivation, and processing operation. In addition, MedMen was to acquire WhiteStar’s exclusive co-manufacturing and licensing agreements with Kiva, Mirth Provisions and HUXTON for the state of Arizona. MedMen agreed to pay WhiteStar approximately 80% in stock and 20% in cash in an undisclosed amount.

CSO Leaves

Separately, MedMen said Tyson Rossi, Chief Strategy Officer, is leaving MedMen, effective June 3, 2022. Moving forward, the role will be filled internally.

“We thank Tyson for his leadership and contributions to MedMen,” said Record. “We wish him all the best in his future endeavors. We are also thankful to have a strong bench of talent to fill these openings.”

Arizona Deals Go Bad

MedMen is still in a lawsuit with its other Arizona acquisition for a dispensary called Level Up. Those owners claim MedMen never paid the remaining $12 million owed on the deal. They have tried to take back the dispensary as a result of the claimed missing payment. The owners supposedly sold MedMen’s ownership but then never turned over the proceeds to the company. A judge ordered the men to pay MedMen $10.4 million from the deal. However, the former owners are also in bankruptcy court causing a messy situation for all involved.


Debra BorchardtMay 11, 2022
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MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) finally agreed to close the deal to sell its New York assets to Ascend Wellness (OTC: AAWH). The two companies had initially agreed to the transaction, but then MedMen was accused of having “buyer’s remorse” by Ascend when it tried to pull out of the deal. The two companies then engaged in a nasty legal battle with MedMen accusing Ascend of greasing politicians‘ hands in the state. MedMen NY owns and operates four medical cannabis dispensaries located in ManhattanLong IslandSyracuse, and Buffalo; and one cultivation facility located in Utica, New York.

MedMen said the new settlement will bring more money to the company’s shareholders, although the increased amount is only $15 million. The deal is expected to close in 30 days. According to a statement, “Under the terms of the settlement agreement, AWH will pay MedMen $88 million: $73 million as an assumption of debt and $15 million in cash. Other terms of the transaction will be as originally announced in February 2021.”

In MedMen’s most recent earnings announcement, the company noted it only had $14 million in cash as of the end of March. The current liabilities for the company are $375 million. It had a net loss of $30 million on quarterly revenues of just $35 million.

“This resolution is a clear win for MedMen shareholders, as the company will receive $15 million in additional value,” said Michael Serruya, MedMen’s Chairman of the Board. “This resolution enables MedMen to move forward with plans to significantly restructure its balance sheet, reduce debt, and focus on its core markets.”

COO Departs

Serruya was only the interim CEO for MedMen and two weeks ago he was replaced when Edward Record was appointed CEO. Record joined MedMen’s Board of Directors in 2021. He brings deep retail and restructuring experience, having overseen financial and operational performance for several large national retailers. He previously served as the Chief Financial Officer for Hudson’s Bay Company, whose U.S. holdings include Saks Fifth Avenue. Before joining HBC, Record was Chief Financial Officer for J.C. Penney. At the same time, MedMen’s COO Roz Lipsey, notified the company of her decision to resign, effective May 20, 2022.

Ascend’s Side

A statement by Ascend showed that the company would receive a 99.99% controlling interest in MedMen NY at closing. AWH will pay MedMen $74 million at closing, inclusive of the $63 million transaction consideration and the $11 million settlement payment. AWH has already paid $4 million of the consideration as a deposit. AWH said it will make a subsequent payment of $14 million upon the first sale of recreational cannabis in a MedMen NY dispensary, inclusive of the $10 million transaction earn-out and the incremental $4 million related to the settlement. There will be no additional earn-outs and no assumption of debt.

While MedMen is claiming to have received more money, in the initial deal, Ascend was only going to get 86.7% of the company with an option to buy the remaining amount. Now it seems it got that amount for just $15 million.

“We are thrilled to put this dispute behind us and look forward to the imminent closing of this transaction,” said Abner Kurtin, Founder, and CEO of AWH. “We continue to build scale in some of the most sought-after locations in premier, limited license markets in the country, and with this investment, we will bring our high-quality products and exceptional retail experiences to our seventh state. While we always seek accretive deals, this transaction is particularly attractive given a recent comparable acquisition valued at $247 million.”

T. Andrew Brown, President of AWH NY, added, “We look forward to shifting our attention toward operating the four dispensaries, expanding the cultivation facility, and working alongside the Office of Cannabis Management and the Cannabis Control Board. Servicing the patients of New York, creating diverse jobs, and enhancing our social-equity initiatives throughout the state are among my top priorities.”


Debra BorchardtMarch 9, 2022
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In the continuing battle between MedMen (OTC: MMNFF) and Ascend Wellness (OTC: AAWH), Ascend’s CEO Abner Kurtin addressed the situation during the company’s earnings call after the market closed. On Monday, MedMen filed another court document amending its allegations over political influence peddling. In that filing MedMen essentially said that it may have had incorrect details, but the company still stands by its accusations. It has accused the New York political machine of approving the acquisition but only after the Governor’s office received a donation from Ascend.

According to the transcript, Kurtin said, “Before moving on, I want to address our pending New York transaction, an ongoing litigation related to the license, we are under contract to purchase from MedMen New York. As you likely know, we are in litigation with MedMen regarding what we call their invalid termination of our investment agreement. The case is plain and simple, for the lawsuit is just a desperate attempt to throw everything but the kitchen sink at us to make a quick buck, it’s a case of seller’s remorse, you can’t back out of a home sale once you realize that you could have gotten a better deal. This is no different.

In January after we filed our lawsuit against MedMen, the parties agreed to maintain the status quo until the trial. Today (March 8) MedMen dropped at least two false and disparaging allegations regarding a meeting at a fundraiser, which was representatives of the governor’s office and Ascend that MedMen included without any basis in their original counterclaims. This is just further proof that MedMen will say anything including making false accusations to try to get more money from us.

At the beginning of the action together with MedMen, we agreed on an accelerated trial schedule. Just yesterday, we filed a cease and desist letter to stop MedMen from marketing the asset, which is a brazen attempt to violate the status quo. We are very confident in our position and we have no doubt that the lawsuit will end in our favor, with MedMen obligated to proceed with the transaction and pay our legal fees. Once the dispute is resolved, we intend to proceed with our canopy expansion plans and readying the assets for the start of adult-use sales in New York. It is time for MedMen to honor its obligations under the agreement so we can proceed to build the business for the benefit of medical patients in New York as MedMen has failed to do while owning the license.”

Kurtin was asked by analyst Ty Collin of Eight Capital about the New York market, assuming Ascend won the legal battle. Collin’s wanted to know whether even if the company won the battle, it was going to be far behind its competitors.

Kurtin answered, “Look, I think that we’re hopeful, we agreed to an expedited trial. We’re hopeful that sometime this year we get resolutions. We do acknowledge that the New York legal system moves at its own pace. And the sellers have a long history of litigious behavior. So you never know what kind of appeals they might pursue. But we think this is an open and shut case, and therefore summary judgment and the quick result is a possible outcome.

In terms of being behind, we think we’re in good shape. We can’t disclose everything we’re working on now. But we think we have a good opportunity to join adult-use when it opens with substantial canopy through actions that we’re doing. So we’re very hopeful here that we’re going to be able to be in a great position in New York despite the current litigation. Thank you.”

Editors note: Green Market Report made some slight grammatical corrections to the quote. Transcribed comments often have errors in grammar and the corrections do not take away from the meaning. It just makes it easier to read.


Debra BorchardtMarch 8, 2022
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On March 7, MedMen Enterprises Inc. (OTC: MMNFF) amended its complaint against Ascend Wellness (OTC: AAWH) with regards to its accusation of political influence-peddling but still maintains that its accusations are true. A few weeks ago, MedMen made the explosive allegation that New York’s cannabis regulators only approved Ascend’s request to acquire MedMen’s New York assets after political donations had been made. Ascend fought back saying the people accused of those actions weren’t actually at these political fundraising events and that MedMen would be correcting its allegations. Yesterday, it seems the corrections were made, but MedMen used the opportunity to insist that it is still telling the truth. The court filing claims,

Although the Office of the Governor has denied that specific state officials named in MedMen’s original Counterclaims met with specific Ascend officers, neither the Governor nor Ascend has denied that some form of communication occurred between Ascend or its agents and government officials unaffiliated with the Board or the Office regarding the application

On information and belief, individuals who were involved in Ascend’s lobbying efforts have acknowledged that MedMen’s original counterclaims, even if inaccurate with regard
to some specific details, were nevertheless very close to the truth, saying, in sum and substance, “they are on to us.”

So, MedMen is saying that maybe it got the details wrong, but that the Albany politicians still worked in cahoots to get the approval for the acquisition. MedMen notes that New York’s cannabis regulators were in transition from one governor to another and in the process of creating its governing board as the acquisition approval process took a back seat. MedMen says that the first two meetings of the newly named Cannabis Control Board didn’t even have the acquisition approval as part of its agenda. The next planned meeting was for December 16, but MedMen says that Ascend began making preparations prior to that meeting in the assumption they would get the approval for the acquisition.

They say Ascend CEO Abner Kurtin began informing people that the transaction would be approved during the upcoming Board meeting and on December 14, Ascend employees represented to MedMen that the transaction would close the following week, and that MedMen NY employees should therefore prepare to become employees of Ascend. On December 15, Ascend allegedly sent MedMen a draft press release titled “AWH Receives New York State Approval for Investment Agreement with MedMen NY Inc.” MedMen says that these actions suggest that Ascend had received—or believed it had received— assurances from the state that the Board would approve the application.

Governor Denies MedMen’s Claims

MedMen maintains “that Ascend had used political pressure and undue influence in an attempt to force through an approval that the Board was not prepared to give.”

 

On January 24, 2022, in response to allegations of a meeting between Mr. Kurtin and Governor Hochul’s secretary and other specific senior state officials in MedMen’s initial
counterclaims, the Office of the Governor released a statement declaring that “None of the Governor’s senior team members named here have ever met with these individuals.” (emphasis added). This statement was notable more for what it did not deny, including that state officials associated with Governor Hochul communicated with representatives of Ascend, the Board, and the OCM in the run-up to the conditional approval.

Ascend says it has the right to petition the government and engage in the political process. MedMen claims that Ascend ended up donating $20,000 at a fundraiser for Governor Hochul on October 28 that was organized by a lobbying firm hired by Ascend.

Ascend Spokesperson said, MedMen’s case continues to reflect nothing more than seller’s remorse. After we proved their first set of politically-charged allegations false, MedMen has admitted they were ‘inaccurate,’ dropped several of their claims, and are now desperately throwing everything but the kitchen sink into their filings in the hope that something sticks. Despite MedMen’s latest round of misleading and meritless allegations, we are confident that the facts and the law are on our side. Ascend looks forward to entering the New York market upon completing its purchase of MedMen’s New York operations.”

MedMen’s Own Political Donations

While MedMen is complaining about Ascend political donations, MedMen has actually donated much more money to New York’s politicians. In 2019, the New York Post reported, “MedMen CEO Andrew Modlin donated $25,000 to Cuomo the day before the company opened a dispensary on Fifth Avenue and The MedMen Opportunity Fund gave $65,000, a so-called “LLC loophole” donation.” In 2020, MJBiz reported, “The Nevada secretary of state’s office is reviewing allegations made by a former MedMen Enterprises executive that the cannabis company’s co-founders made illegal campaign donations to Democratic Gov. Steve Sioslak.”

In 2020, in 2020, the Center for Responsive Politics reported that MedMen was number seven on a list of top cannabis company political donors. Ascend was not on this list. Cannabis Wire wrote that it had discovered that a $50,000 donation to Cuomo was linked to a non-profit Christian mission actually came from MedMen. This brings MedMen’s total Cuomo donations to $140,000.

Conditional Approval

Readers may recall that MedMen is hanging its decision to terminate the agreed-upon acquisition because the Board gave “conditional” approval of the transaction – not “final” approval. MedMen says the Board made other approvals during the Dec. 16 meeting that were not conditional. MedMen also claims that the two companies discussed the ambiguous conditional language as the clock was ticking down towards the end of the year. Ascend was willing to look past the word conditional, while MedMen was not. The Board apparently asked for an extension to continue reviewing the request and MedMen was not willing to give the extension. At this point, it looked as if Ascend realized that MedMen would use this word as its way to terminate the deal and either potentially sell the assets for more money or keep them. Ascend sought clarification and got the email from, Richard Zahnleuter, the Office of Cannabis Management’s new General Counsel said the conditional approval could be considered final. MedMen says Zahnleuter did not have the authority to make that decision.

MedMen’s Legal Wins

MedMen may be feeling very confident in its legal dealings these days. The company recently won its lawsuit against former CFO James Parker, the same executive that made the allegations of forced political donations in Nevada. MedMen also won the case against Parker with regards to the money extended to him for his legal battle. Parker will have to pay that money back.


Debra BorchardtFebruary 28, 2022
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MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) announced that it plans to sell its Florida assets to Florida-based private company Green Sentry Holdings LLC for $83 million. MedMen said in a statement that it is a cash deal that includes the sale of substantially all of MedMen’s Florida-based assets, including its license, dispensaries, inventory, and cultivation operations. Additionally, MedMen agreed to license its trademarks in the state for two years, subject to termination rights, for a quarterly revenue-based fee.

“As MedMen continues to transform its business model and position itself for future growth, our go-forward strategy is going to include an asset-light model that enables us to leverage the power and strength of the MedMen brand,” said Michael Serruya, MedMen’s Chairman and Interim CEO. “We feel confident this model will deliver strong financial results and opportunities for growth across many states and will continue to identify trademark licensing opportunities that will introduce the MedMen brand and retail experience to other markets across the United States and internationally.”

Green Sentry is associated with Brady Cobb, who is an attorney, lobbyist, strategist, and consultant based in South Florida who focuses his practice in the areas of regulated medical cannabis, Federal and State government relations, and regulatory matters. Brady is also a cannabis entrepreneur who co-founded Florida cannabis operator Bluma Wellness and sold it to Chicago-based Cresco for $213 million in April. He also has an incredible family history – his father was a pot smuggler for Pablo Escobar in Florida in the 1970s and 1980s. Perhaps Green Sentry will fare better in its dealing with MedMen than Ascend Wellness, which can’t seem to get MedMen to let go of its New York assets.

According to MedMen’s last annual report, the company had six stores in Florida that serviced the medical-only market. MedMen also operates a cultivation and production facility in Eustis, Florida, which is approximately an hour’s drive north of Orlando. The company also has five registered trademarks in Florida. The company also said that revenues in Florida had not been substantially impacted by COVID. However, the annual report stated, “During the year ended June 26, 2021, the company strategically closed five retail locations in Florida to provide better and consistent supply for its patients. While these dispensaries remain temporarily closed as of June 26, 2021, the company saw improved plant yields and quality driving improved margins.”

The transaction is subject to customary closing conditions, including applicable regulatory approvals. The deal is expected to close in late April or early May 2022, pending the receipt of all required contractual consents and governmental approvals including the requisite change of ownership approval from the Florida Office of Medical Marijuana Use.

Ascend Wellness Update

Of course, MedMen had agreed to sell its New York assets to Ascend Wellness but has since decided to try to terminate that deal. In the latest development, MedMen submitted documents asked that the court send all papers to a lawyer named Peter Fountain when they had been going to Alex Spiro, both at the law offices of Quinn Emanuel Urquhart & Sullivan, LLP.

 


Debra BorchardtFebruary 23, 2022
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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 BorchardtFebruary 21, 2022
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After the market closed on Friday before a three-day weekend in the U.S., MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) announced the appointment of Ana Bowman as Chief Financial Officer, effective February 22, 2022. Bowman succeeds outgoing interim CFO Reece Fulgham, who will be returning to consulting firm Sierra Constellation Partners. The appointment comes on the heels of the company’s successful lawsuit brought by former CFO James Parker.

Bowman joins the company as it finds itself in a tangled lawsuit with Ascend Wellness over the assets in New York state. MedMen had agreed to sell the assets but is now trying to terminate the deal. Bowman is also stepping into a position that seems to be a short-lived one at the company.

CFO Churn

CFO James Parker had a quick shot at the role before leaving in a dispute with the company in November of 2018. By August 2019, MedMen was churning through CFO’s like tinder dates. Jim Miller had been appointed interim CFO after Parker resigned. He was replaced by Michael Kramer in December 2018, who was terminated in October 2019. Zeeshan Hyder was named the new CFO in October 2019. Hyder only lasted a little over a year before leaving in December 2020. Reece Fulgham became the new interim CFO and remained in that role until Bowman was appointed.

Bowman brings years of cannabis industry expertise, having served as Vice President of Financial Reporting and FP&A of Tilray Brands (Nasdaq: TLRY; TSX: TLRY), a leading global cannabis lifestyle and consumer packaged goods company. Prior to joining Tilray, Bowman served as Corporate Controller of several publicly-traded U.S. registrants, following an exit from the world of big four public accounting.

“We are excited to have Ana join as our permanent CFO — bringing with her significant financial expertise from her time at Tilray and large public accounting and auditing firms, including Ernst & Young and Deloitte,” said Michael Serruya, MedMen’s Chairman and CEO. “We also want to thank Reece for stepping in as our interim CFO and wish him well in his future endeavors.”


Debra BorchardtFebruary 15, 2022
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Ascend Wellness (OTC: AAWH) has pulled off the gloves in its latest complaint (filed on February 14, 2022) against MedMen (OTC: MMNFF) calling the company, “A broken and mismanaged cannabis company that has repeatedly reneged on its promises to its employees, suppliers, shareholders, medical marijuana patients, regulators, and now Ascend.” MedMen had agreed to sell its New York assets to Ascend, but the deal was contingent upon New York State giving approval to the deal. The state regulators gave an ambiguous approval in December but tried to clarify that language in the waning hours of 2021. MedMen has since refused to close the deal saying the state hadn’t really given final approval and accusing the state and Ascend of influence peddling.

Ascend said in its latest court filing, “Not only has MedMen refused to close, it has picked Ascend’s pocket in the process, taking millions of dollars from Ascend after the deal was inked to stand up its financially stressed operations. Even worse, MedMen has lied about its reasons for doing so. The real reason is simple—MedMen has seller’s remorse and hopes to strike a better deal with a new buyer. Each day that MedMen fails to live up to its end of the bargain by refusing to close is not only harmful to Ascend, but to New Yorkers as MedMen’s license languishes. MedMen must be held to account for its wrongdoing.”

Ascend went on to say, “All told, Ascend made almost $8.5 million in cash payments to bail out MedMen. MedMen needed this cash infusion because its incompetent and unethical leadership had driven the company to the brink of insolvency and rendered it a pariah in its own business community.” Ascend said that it paid for MedMen’s operating costs, which totaled about $250,000 per month. In addition to the $4 million paid in 2020 for MedMen’s operating costs, over the course of 2021, Ascend paid an additional $4.5 million for MedMen’s operations. Ascend said without this money, MedMen would have faced tremendous difficulty meeting its financial obligations, leaving its creditors empty-handed, its employees potentially jobless, and thousands of seriously ill patients across New York with less access to the already limited supply of medical marijuana.

The filing also states that once MedMen got money from an investment with Tilray and Serruya Private Equity, it had the money to slow-walk the deal and wait to find a buyer that would pay more. Michael Serruya is now the CEO of MedMen.

The filing also states that “In 2019, Mr. Serruya was at the center of allegations that he violated the securities laws, engaged in self-dealing, and manipulated the stock of a different cannabis company. The MRTA requires leadership changes of this nature to be reported to the OCM; it is unclear whether MedMen ever did.” The filing referenced “Text messages show Cannabis investors Defrancesco & Serruya allegedly Colluded with Clarus Securities’ Christodoulis in Multiple Stocks, TERI BUHL (Sept. 20, 2019), https://www.teribuhl.com/2019/09/20/text-messages-show-cannabis-investors-defrancescoserruya-allegedly-colluded-with-clarus-securities-christodoulis-in-multiple-stocks/.”

The filing is a laundry list of bad deeds by MedMen plus a revolving door of CEO’s and stating that “As a result of MedMen’s actions, the New York Medical Cannabis Industry Association decided to cut ties with the company. MedMen is a pariah in its own industry. “


Debra BorchardtFebruary 11, 2022
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Law360 reported that on Wednesday a New York state judge Wednesday authorized subpoenas requiring the state’s cannabis regulators and Gov. Kathy Hochul to produce documents related to the contentious acquisition between MedMen (OTC: MMNFF) and Ascend Wellness Holdings (OTC: AAWH). The conflict stems for Ascend’s plan to acquire MedMen’s New York assets, which stumbled as New York State experienced a change in the governors seat and a lack of leadership in the legal cannabis program.

The acquisition was dependent upon New York State’s approval for the acquisition which came in the waning days of 2021. MedMen believed that the approval from the state was conditional and not a “final” decision. The company also believes that without a definitive final approval, it doesn’t have to complete the transaction. For its part, MedMen also had a change of leadership during this same time and the new CEO Michael Serruyo is believed to feel the price was too low and wasn’t willing to let go of the New York Assets for a the previously agreed upon price.

Ascend has argued that MedMen isn’t completing the deal as was agreed and they point to an email from New York regulators saying the decision to approve the acquisition was final.

Political Peddling

The bombshell accusation from MedMen was that Ascend Wellness executives attended a fundraiser for the incoming Governor Kathy Hochul. MedMen implied that Ascend got the approvals only after these events and suggested that there was political peddling. That Ascend got the approvals by greasing the wheels in Albany. Public records show that Ascend did donate $15,000 to Hochul’s campaign in October 2021.

Now it seems MedMen is serving subpoenas to Hochul’s office, the New York Office of Cannabis Management and its governing body, the Cannabis Control Board. Law360 also reported that the subpoenaed parties, also includes the New York Department of Health, the body formerly responsible for overseeing the state’s medical marijuana program and that the parties will have 20 days to comply.

Hazel Crampton-Hays, a spokesperson for the governor, said in an email Thursday to Law360, “We objected to the overly broad scope of the previous subpoena, and filed a letter with the court asking for an opportunity to be heard. The court instead denied the motion on that subpoena outright. We are aware of this new subpoena, and fully expect to comply and provide responsive documents.”

Green Market Report has asked a MedMen spokesperson repeatedly for information regarding the subpoena’s and was given no information.

MedMen’s Political Donations

MedMen is no stranger to the world of political donations. In 2019, The New York Post wrote that MedMen’s former CEO and co-founder Andrew Modlin donated $25,000 to Cuomo the day before the company opened a dispensary on Fifth Avenue. The story also reported that The MedMen Opportunity Fund gave $65,000, a so-called “LLC loophole” donation.

The company’s former CFO James Patterson also accused the company of forcing him to make a $10,000 political donation. However, Patterson lost his recent case against the company in which he made several inflammatory accusations.

 


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