Ascend Wellness Holdings, Inc. AAWH AAWH announced Monday that MedMen Enterprises Inc. MMEN MMNFF has materially breached the previously announced definitive investment agreement between AWH, MedMen NY, Inc., MM Enterprises USA, LLC, and AWH New York, LLC.
The move comes just days after receiving final approval for AWH's $73 million investment in MedMen's subsidiary in New York. On Thursday, the NY-based company was given green light from the New York Cannabis Control Board (CCB) and the Office of Cannabis Management of the CCB to follow through with the transaction.
The AWH parties, which previously waived all closing conditions in its favor following the receipt of required regulatory approvals, requested to close the transaction within the five-business-day period required under the terms of the investment agreement.
After repeated attempts to close the transaction, AWH received notice that MedMen was attempting to unilaterally terminate the transaction despite receiving final approval from the state of New York and AWH, waiving all closing conditions, the company revealed.
AWH called the move a material violation of MedMen's obligations under the investment agreement to close the transaction. MedMen requested that New York State regulators approve the transaction in March 2021. However, MedMen is now disputing the Office of Cannabis Management's unambiguous regulatory approval, refusing to close the transaction while looking to terminate it.
AWH founder Abner Kurtin had said earlier that the deal would "bring fresh capital and a new perspective to New York's medical marijuana program and its patients."
Under the deal, MedMen NY opted to undertake around $73 million of MedMen's current secured debt last year, while Ascend Wellness agreed to make a $35 million cash investment in MedMen's subsidiary.
Ascend Wellness New York will issue a senior secured promissory note in favor of MedMen NY's senior secured lender in the amount of $28 million, secured by Ascend Wellness.
In addition, the New York-based company will acquire a controlling interest in MedMen NY of some 86.7% equity and would also be given an option to buy the remaining stake.
Pursuant to the original terms of the agreement, Ascend Wellness must invest an extra $10 million, which should also be used to repay MedMen NY's senior secured lender once recreational cannabis sales start in its dispensaries, to compensate for the extra equity in MedMen's subsidiary.
More recent news from Ascend Wellness:
- Ascend Wellness Buys Ohio Cannabis Company, Its 2nd Dispensary In The Buckeye State
- Cannabis Earnings: Ascend Wellness Q3 Revenue Increases 13% Sequentially to $94 Million
- Ascend Wellness Holdings Cannabis Commences Trading On OTCQX In The US
AAWH Price Action
Ascend Wellness’ shares traded 5.04% higher at $6.57 per share at market close on Friday.
MMNFF Price Action
MedMen’s shares traded 1.20% lower at $0.164 per share at market close on Friday.
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