MedMen Withdraws From New York Deal With Ascend Wellness As Empire State Market Heats Up

Ascend Wellness plans to enter New York State’s increasingly hot cannabis business have so far encountered a problem.

A $ 73 million acquisition of Ascend Wellness AAWH,
+ 4.34%
inked with MedMen MMNFF,
-4.36%
in February 2021 – when New York’s adult use market was more dormant – did not close.

Since the deal was first announced almost 11 months ago, the Empire State’s legal cannabis industry has been in a mode of rapid expansion. The Albany state legislature agreed to adult cannabis use on March 31, and New York Gov. Kathy Hochul recently said it is moving forward in 2022 with plans to issue coveted licenses for dispensaries, growers and distributors of adult cannabis.

See: New York State to Create $ 200 Million Fund to Support Social Equity for Cannabis Licensees

An industry executive told MarketWatch that New York State’s medical cannabis licenses are valued at around $ 250 million to $ 400 million these days.

MedMen agreed last February to sell 86.7% of the capital of its New York operations to Ascend Wellness for assuming up to $ 73 million in MedMen debt. MedMen operates four dispensaries in New York City, including a flagship store on Fifth Avenue and other locations in Long Island, Buffalo and Syracuse.

MedMen announced on January 3 that it has terminated the investment agreement with Ascend Wellness. The company’s statement did not provide further comment. A spokesperson for MedMen did not respond to an email from MarketWatch.

In recent statements about the flawed deal, Ascend Wellness said MedMen claimed it had not received the proper regulatory approvals to transfer its cannabis license.

“AWH is appalled by MedMen’s baseless attempts to terminate the agreement and is increasingly concerned about MedMen’s ability to keep its New York license in good standing,” said Abner Curtin, CEO of Ascend Wellness, at the start. January.

Ascend Wellness cited emails and other correspondence from the Cannabis Control Board (CCB) and the New York City Office of Cannabis Management (OCM) confirming that the deal has been approved.

A spokesperson for Ascend Wellness said the company has yet to take legal action over the matter.

MedMen’s statement ending the sale to Ascend Wellness came about six weeks after the company appointed Michael Serruya on November 22 as interim chairman and CEO, succeeding outgoing chairman and CEO Tom Lynch. Serruya joined MedMen’s board of directors as part of a $ 100 million investment in the company by Serruya Private Equity in August.

Also in August, Tilray Inc. TLRY,
+ 2.47%
and other investors have revealed their intention to purchase approximately $ 166 million of MedMen convertible debt and warrants held by Gotham Green Partners. The notes will be converted into an approximate 26% stake in MedMen shares, subject to US legalization of cannabis in the coming years. At the time, the debt due date was set for August 16, 2028.

Ascend Wellness currently operates medical and adult dispensaries in Illinois, Michigan, Ohio, Massachusetts and New Jersey.

Also read: New York’s new cannabis chief promises half of legal licenses will go to social justice efforts

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