LANSING, Mich. — One of the state's most prominent brands in recreational cannabis has been placed into a receivership, allegedly owing more than $127 million to one of its lenders.
Skymint Brands owns or operates 24 cannabis dispensaries across Michigan, employing more than 600 people.
One of its lenders, a Canadian company called Tropics, LP, filed a lawsuit against the brand's parent company, Green Peak Industries, Inc., late last week.
According to the suit, Skymint has been in default of its loan obligations since at least March of 2022.
As of March 2023, they say Skymint owes them at least $127,037,817.92.
“Given that defendants admit that they are in default of their loan obligations, the substantial amount due and owing to plaintiff, the size, scope and resulted nature of defendant's cannabis business, and because there is an imminent threat of waste to plaintiffs collateral, plaintiff seeks immediate appointment of a receiver over defendant's assets, and damages, including costs, interest and attorney fees," an attorney for Tropics, LP, wrote in the suit.
An Ingham County judge approved placing Skymint into receivership on Tuesday, March 7.
The suit outlines a number of concerns the lender has regarding their loan with the cannabis brand.
They allege that Green Peak was at risk of losing their cannabis license in November of 2022 due to overdue sales and excise taxes— prompting them to advance another $6,250,000, of which $5,841,322 was used to pay off the taxes.
“Defendant's sales and the wholesale per pound flower price have been declining at a rapid pace," the suit explains.
In December 2019, the average price for an ounce of flower was $516— in January 2023, the average price for an ounce of flower is all the way down to $81.
In addition to falling prices, Skymint's daily sales have decreased.
In April 2022, they were averaging $356,953 every day across their dispensaries.
By January 2023, they were only seeing about $184,579 each day.
The receivership went into effect on Tuesday— Skymint stores remain open and operational.
A spokesperson for Skymint Brands provided FOX 17 with the following statement:
SKYMINT BRANDS has consented to enter a receivership with our primary lender to improve our balance sheet and financial position, while maintaining day-to-day business operations and preserving long-term growth potential.
The court-approved agreement will allow us to focus on our debt obligations to address the financial challenges facing many in Michigan’s cannabis industry, including excess supply, decreasing prices, limited access to capital and the increasing cost of capital.
This was a difficult decision, but a necessary one that we believe will create the best available opportunities for our employees, other stakeholders and the company.
We have been fortunate to have a capital partner that is committed to the SKYMINT brand and mission, and believes in continued long-term growth potential.