Benzinga | Jan 14, 2022 11:15AM EST

Ascend Wellness Files Lawsuit Against MedMen In Attempt To Resolve $73M Transaction

Ascend Wellness Holdings, Inc. (CSE:AAWH) (OTCQX:AAWH) has filed a lawsuit in the Commercial Division of New York's Supreme Court against MedMen NY, Inc. and MM Enterprises USA, LLC (CSE:MMEN) (OTCQX:MMNFF) in which AWH is seeking an order compelling the specific performance of transactions that were contemplated by an investment agreement between AWH and MedMen.

What Happened?

On Dec. 30, almost a year after announcing its plans to invest $73 million in MedMen's New York subsidiary, AWH received approval from the state's Cannabis Control Board (CCB) and Office of Cannabis Management to move forward with the transaction.

Under the investment agreement, MedMen NY had agreed to undertake around $73 million of MedMen's current secured debt, while Ascend Wellness would make a $35 million cash investment in MedMen's subsidiary.

MedMen, however, kicked off 2022 by refusing to close the transaction. AWH responded on Jan. 2 with an accusation 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. AWH notified MedMen that their termination attempt was invalid, calling the move a material violation of MedMen's obligations under the investment agreement.

By refusing to close the transactions on the grounds that required regulatory approval was not obtained, MedMen is essentially challenging the regulators' authority and ignoring rules set up by the New York's medical program, Ascend noted.

AAWH Price Action

Ascend Wellness' shares traded 3.42% higher at $6.05 per share at the time of writing on Friday.

MMNFF Price Action

MedMen's shares traded 2.04% lower at $0.1583 per share at the time of writing on Friday.

Photo: Courtesy of Sora Shimazaki from Pexels