The start of the year does not bode well for Ascend Wellness Holdings, Inc. (CSE: AAWH.U). The multi-state cannabis operator claimed today that MedMen Enterprises Inc. (CSE: MMEN) has materially breached the definitive investment agreement signed in February 2021.
The agreement was set to see a $73 million investment into MedMen’s New York-based subsidiary–$35 million in cash and $28 million in senior secured promissory notes. In exchange, Ascend Wellness is expected to hold 86.7% equity in the New York subsidiary with an option to acquire the remaining interest in the future.
But MedMen is said to have attempted to unilaterally terminate the agreement. The US cannabis retailer is disputing the regulatory approval of the transaction made by the Office of Cannabis Management and is refusing to close the deal.
“AWH received notice that MedMen has attempted to unilaterally terminate the Investment Agreement despite receiving final approval from the state of New York and AWH waiving all of their closing conditions,” said the company statement. “This is a material violation of MedMen’s obligations under the Investment Agreement to close the transaction.”
Ascend Wellness said it will still be working with the New York state regulators “to increase access to patients as it grows the New York Medical Marijuana Program and launches the adult-use program” despite the failed transaction with MedMen.
The firm is calling on the US cannabis retailer to “honor its commitment” and plans to pursue measures to encourage pushing through with the agreement.
Ascend Wellness Holdings last traded at US$6.61 on the CSE.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.