Marijuana multistate operator Ascend Wellness Holdings said Friday it filed a lawsuit seeking to compel MedMen Enterprises to complete the sale of the majority of its interest in a New York marijuana operation.
The suit – in the commercial division of the Supreme Court of the state of New York – also seeks a preliminary injunction and temporary restraining order preventing MedMen from doing anything that would affect the New York asset, Ascend said in a news release.
New York-based Ascend has claimed that Los Angeles-headquartered MedMen “materially breached” a deal announced in February 2021 to sell an 86.7% interest in MedMen’s New York operation for at least $63 million.
Ascend is turning to the courts after issuing two news releases on the matter earlier this month and filing a letter with the U.S. Securities and Exchange Commission.
MedMen hasn’t said why it is trying to terminate the agreement.
But in regulatory filings, MedMen said it notified Ascend on Jan. 2 of the termination of the investment agreement.
In a subsequent regulatory filing on Jan. 10, MedMen said that as a result of terminating the agreement, it is required to repay Ascend a “working capital advance” and a $4 million deposit.
MedMen didn’t immediately respond to MJBizDaily‘s request for additional comment.
The investment agreement was signed a month before New York passed a measure legalizing recreational marijuana. The state now is preparing for what is expected to be a multibillion-dollar recreational marijuana industry.
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MedMen, which has one of the state’s 10 medical cannabis licenses, agreed to sell a majority stake in its New York operation at a time that it was struggling financially.
But since agreeing to the sale, MedMen recently appointed its third CEO in two years.
It’s unclear whether that executive change caused MedMen to rethink the New York sale.