A legal stink over the price of a marijuana merger that had allegedly gotten an improper nudge from Gov. Kathy Hochul has been settled — with the acquirer forking over some extra green.
Boston-based cannabis retailer Ascend Wellness has agreed to pay an extra $15 million — hiking the purchase price by 20% to $88 million — to buy the MedMen pot dispensary chain’s New York assets, according to court filings.
The sweetener settles an explosive suit in which MedMen had alleged that Gov. Hochul’s office pushed to force the deal through at a bargain price on Ascend’s behalf — after Ascend’s executives donated $15,000 to her reelection campaign last fall.
A State Supreme Court judge had ruled Feb. 9 that Gov. Hochul needed to answer a subpoena within 20 days to shed light on whether her office pushed state regulators to approve the cannabis company merger at Ascend’s urging — and despite protests from MedMen, which is one of just 10 dispensaries licensed to sell medical marijuana in the state.
As of early May, Hochul — whose fast-tracking of the rollout of cannabis retailers last year had allegedly boosted MedMen’s value after it had agreed to sell its New York assets to Ascend, according to court papers — had not yet turned over the documents, sources close to the situation said.
“We have been more than happy to cooperate and provide any documents necessary because we know they would show the truth: that these allegations are baseless,” a spokesperson for Hochul said in a statement.
The court wanted a status report on the case by Friday, and the suit was moving to the depositions phase. MedMen recently had shown interest in deposing Hochul, with the company’s attorney Alex Spiro of Quinn Emanuel ramping up allegations about her fundraising machine in a March 8 amended complaint.
“Ascend retained two lobbying firms, Dickinson & Avella and Greenberg Traurig, and began a campaign of political donations plainly directed at influencing the most powerful political actor in the state — New York Governor Kathy Hochul,” MedMen alleged in the amended complaint.
The suit alleged that in late October, the two firms hired by Ascend “held fundraisers for Gov. Hochul’s election campaign, raising tens of thousands of dollars for the governor — including roughly $20,000 in donations from Ascend and its affiliates.”
“Ascend has refused to answer written interrogatories regarding whether it communicated with Governor Hochul’s office,” MedMen added, alleging that the silence is “an apparent admission that Ascend did indeed engage in the political machinations MedMen has alleged.”
In its lawsuit, MedMen had specifically alleged that the deal should have been terminated because state officials were not scheduled to clear it before a Dec. 31 deadline, but that Hochul’s office pushed it through at the last minute to help Ascend.
In a statement disclosing the settlement, Ascend said last Wednesday that closing the deal was still a bargain.
“The revised total consideration of $88 million remains significantly below recent precedent transactions,” Ascend CEO Abner Kurtin said in a statement last week. “We are thrilled to put this dispute behind us and look forward to the imminent closing of this transaction.”
“Despite the law and the facts being on our side, we agreed to settle this case because it was in the best interest of our shareholders and New York’s medical cannabis patients. We look forward to completing the sale and entering the New York market soon,” an Ascend spokesman added.
Ascend’s share price since Monday of last week has climbed from $2.87 to $3.21.
[Written in collaboration with other media outlets with information from the following sources]
