Ascend Wellness acquires most of MedMen’s NY cannabis operation for $63 million

Massachusetts-based Ascend Wellness Holdings is acquiring an 86.7% interest in financially strapped MedMen Enterprise’s cannabis operation in New York for $63 million, according to a definitive agreement announced Friday.

Multistate operator Ascend Wellness Holdings (AWH) has an option to acquire the remaining equity in the New York operation for $10 million, contingent on the launch of an adult-use marijuana market in the state.

“We believe the proposed transaction will bring fresh capital and a new perspective to New York’s medical marijuana program and its patients,” AWH founder Abner Kurtin said in a news release.

The transaction must be approved by the New York Department of Health. which regulates the state’s MMJ program.

The agreement comes as New York considers adult-use marijuana legalization and as Los Angeles-based MedMen struggles to rebound from a precarious financial position.

MedMen bought the New York MMJ vertical license in 2017 for roughly $25 million from Bloomfield Industries, which also was struggling financially at the time.

MedMen operates the maximum four dispensaries allowed in New York, including one on pricey Fifth Avenue in Manhattan.

But the New York medical marijuana market has underperformed because of heavy restrictions, including a ban on smokable flower.

Still, New York is considered a plum market once and if adult-use cannabis is legalized.

Under the terms of the agreement:

•  AWH will invest $35 million of cash into the MedMen New York subsidiary.
• Issue a guaranteed $28 million loan to reduce the debt owed to the subsidiary’s senior secured lender.

The $10 million to acquire the remainder of the equity, if adult-use cannabis sales start, would be used to repay the subsidiary’s senior secured lender, according to the release.

Ascend Wellness appears to be on the ascent, with assets and partners in Illinois, Michigan, Ohio, Massachusetts and New Jersey.