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Plans by Ascend Wellness to enter the increasingly hot New York state cannabis sector have hit a snag for now.
A $73 million acquisition Ascend Wellness
AAWH,
inked with MedMen
MMNFF,
back in February, 2021 — when New York’s adult use market was more dormant — has not closed.
Since the deal was initially announced nearly 11 months ago, the Empire State’s legal cannabis sector has been in rapid expansion mode. The state legislature in Albany OK’d adult use cannabis on March 31 and New York Gov. Kathy Hochul recently said she’s moving ahead in 2022 with plans to issue highly coveted licenses for dispensaries, cultivators and distributors of adult use cannabis.
See: New York state to create $200 million fund to support social equity cannabis licensees
One industry executive told MarketWatch that New York state medical cannabis licenses are valued at roughly $250 million to $400 million nowadays.
MedMen had agreed last February to sell 86.7% of the equity in its New York operations to Ascend Wellness for assuming up to $73 million of MedMen’s debt. MedMen operates four dispensaries in New York including a flagship store on Fifth Avenue, and other locations in Long Island, Buffalo and Syracuse.
MedMen said Jan. 3 that it 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 soured deal, Ascend Wellness said MedMen had claimed it had not received the proper regulatory approvals to transfer its cannabis license.
“AWH is dismayed 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,” Ascend Wellness CEO Abner Curtin said in early January.
Ascend Wellness cited emails and other correspondence from New York’s Cannabis Control Board (CCB) and Office of Cannabis Management (OCM) confirming that the deal was approved.
A spokeswoman for Ascend Wellness said the company has not taken any legal action at this time over the matter.
The statement from MedMen terminating the sale to Ascend Wellness came about six weeks after the company on Nov. 22 named Michael Serruya as chairman and interim CEO, succeeding outgoing chairman and CEO Tom Lynch. Serruya joined MedMen’s board as part of a $100 million investment in the company by Serruya Private Equity in August.
Also in August, Tilray Inc.
TLRY,
and other investors revealed plans to buy about $166 million in convertible MedMen debt and warrants held by Gotham Green Partners. The notes will convert to a roughly 26% stake of MedMen’s shares, contingent upon U.S. legalization of cannabis in the coming years. At the time, the maturity date for the debt was set at Aug. 16, 2028.
Ascend Wellness currently operates medical and adult-use dispensaries in Illinois, Michigan, Ohio, Massachusetts and New Jersey.
Also Read: New York’s new cannabis chief vows that half of legal licenses will go to social justice efforts
