 One of the largest cannabis multi-state-operators, Ascend Wellness, has backed off a long-anticipated aquisition of MedMen New York.
The two companies had spent 17 months working out an acquisition agreement at a price of $88 million dollars, and endedup in a bitter court battle with Ascend Wellness suing MedMen over failure to close the deal. In May, the two settled their case and signed a term sheet agreeing to settle their lawsuit, with Ascend paying $4 million as a deposit to that. However, despite the time and money already invested in the deal, Ascend’s founder and CEO, Abner Kurtin, told investors that the deal is now off the table. Kurtin spoke at a second quarter 2022 earnings meeting, and told investors that due to concerns over MedMen New York’s assets, “which have deteriorated materially,” Ascend is no longer moving forward with the transaction. Kurtin said, “We have been engaged in negotiations with MedMen for 17 months and because of the state of MedMen’s assets, it is time for all of us to move on.” Kurtin told shareholders that the cancelled deal leaves the company with $70 milion dollars of unencumbered cash with which they can put towards other business initiatives. This would have been Ascend’s intro to the New York state adult use cannabis market, and now without MedMen they are left out of the state. While it seems their business decision was basedon MedMen’s assets, as Kurtin had said, he also disparaged the New York market, perhaps as a way to bolster support for their decision. Kurtin had been positive towards the New York market just a few months ago, but now after this deal went sour, Kurtin said the New York recreational adult use market is “highly uncertain, given the unknown timing of the commencement of adult-use sales, unclear licensing process, and the lack of policing of the illicit market … As a result, the New York market is not a priority for [Ascend Wellness], but we will continue to monitor it closely.” MedMen’s CEO, Ed Record, said in a statement to MJBizDaily that in light of New York state’s upcoming adult use market opening, the company’s “New York-based assets and trademark have never been more valuable.” Record said, “We are considering all options to ensure strong shareholder return; this includes the potential sale of assets and/or licensing of the MedMen trademark.” New York’s adult use market has been in a holding pattern while the state works out their regulations for legal sales. It had been hoped that sales would be able to begin later this year, but as of now, there is no new information on timing for that. Comments are closed.
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