Another New York Registered Organization cannabis license will change hands as MedMen and Ascend Wellness Holdings announced a deal yesterday to end their litigation and transfer MedMen’s New York properties to Ascend for $88 million.
Ascend’s payment is $15 million more than originally agreed in February 2021. The deal calls for $11 million more to be paid immediately and another $4 million once adult use sales begin. The deal also provides Ascend with a 99.99% controlling interest in MedMen NY, whereas the companies’ previous deal would have only given Ascend 86.7% interest in the New York properties.
The settlement is an especially good deal for Ascend, considering last month another New York Registered Organization (RO) license was sold for $247 million to RIV Capital, an investment group controlled by Scotts Miracle-Gro. In February, Verano Holdings purchased an RO license as part of a package $413 million deal that also included facilities in five other states.
“While we always seek accretive deals, this transaction is particularly attractive given a recent comparable acquisition valued at $247 million.” crowed Abner Kurtin, Founder and CEO of Ascend, in a press release.
MedMen was one of New York’s ten original medical cannabis licensees, known as a Registered Organization (RO), which provides the license holder with four medical dispensaries and a cultivation site.
The state’s 2021 adult use law establishes ROs as the only vertically-integrated licenses allowed in the state, with three more adult use dispensary licenses that can be sited at the current medical dispensary locations. Other New York adult use license holders are limited to owning either just cultivation and manufacturing, or distribution and retail. No owner may own more than three dispensaries or more than one cultivator, manufacturer, or distributor license.
MedMen NY’s RO license includes medical dispensaries in Manhattan, Syracuse, Buffalo, and Long Island. The cultivation site is in Utica.
Separately, Ascend announced yesterday that its latest quarterly earnings are up 33.4% for Q1 2022, on a year-over-year basis, but down 0.8% since last quarter, with total quarterly revenue of $101.2 million.