MedMen battles to prevent NY cannabis permit revocation amid a looming $114 million debt deadline

Cannabis multistate operator (MSO) MedMen Enterprises is under pressure once again to restore its financial image. 

This time, the Los Angeles-based company is working towards meeting a debt deadline, all the while attempting to hold onto its New York facility.

Unfortunately, the debt’s looming due date is leaving MedMen which is renowned for its recent string of financial struggles with no option but to try and sell extra assets. 

News reports suggest that the globally-recognized MSO wants to issue a subpoena to New York Governor Kathy Hochul’s office. The written order urges the launch of an investigation for evidence.

Supreme Court records claim that the subpoena would highlight how Hochul’s staff failed to adequately assist Ascend Wellness in gaining the necessary regulatory approval to acquire MedMen’s medical cannabis operation. So far, Hochul’s team of staff have denied any malpractice.

About the legal case between Ascend and MedMen

MedMen and Ascend have engaged in a tough legal battle regarding the New York medical cannabis operation which, due to the state’s looming recreational market, is anticipated to be a fruitful asset.

In 2021, the two companies found a happy medium when an agreement was made for Ascend to purchase the majority of MedMen’s MMJ establishment for a price tag of $63 million. The deal was secured before lawmakers approved a sweeping recreational cannabis bill. 

Then, in early January, the agreement was abolished by MedMen, before Ascend proceeded to continue the argument in court. Under the present circumstances, MedMen is contesting Ascend’s lawsuit by saying that the company enforced “political pressure” to push the deal.

MedMen will prepay $20 million for its loan extension

Meanwhile, MedMen has certified reports that it has been awarded a six-month extension on its $114.3 million loan. Regulatory filings imply that the debt facility is connected to the New York operation.

An official news release specifies that MedMen will prepay $20 million and hand over a fee of $1 million which is set to be repaid in stock to confirm the loan extension.

“MedMen will utilize this six-month grace period to realize fair value for significant assets that are no longer core to our market strategy,” said company chief executive officer (CEO) Michael Serruya in a statement.

Based on MedMen’s annual audited financials, which were submitted to Canadian securities regulators in September 2021, the loan facility was guaranteed by MedMen’s New York cannabis facility.

In order to clarify that any and all revenue earned through the New York operation’s sale would be applied to the financing plan, amendments were made to the loan on May 11, 2021. The regulatory filing claims that MedMen coughed up a fee of $225,035 to modify the agreement.