Cannabis Industry Woes: It's Not Just Skymint, Another 4 Michigan Weed Companies Now In Receivership

Michigan's Skymint is not the only cannabis operator under the control of a receiver, according to Crain’s Detroit Business. At least another four marijuana companies are in receivership.

Skymint, which underwent rapid expansion, now employs 600 people in 24 retail dispensaries as well as three indoor grow operations.

However, a lawsuit filed at the Ingham County Circuit Court in Lansing alleges Skymint owes more than $127 million to Canadian investment firm Tropics LP, a subsidiary of Calgary-based Sundial Growers Inc.’s SNDL investment firm SunStream Bancorp Inc, which announced in Nov, 2022 that it had closed a $6.25M senior secured term loan to SKYMINT Brands.

“It’s just bad out there right now,” Doug Mains, principal and co-leader of the cannabis practice for Detroit's Honigman LLP told journalist Dustin Walsh. “Everyone is struggling to pay bills and negotiating lending extensions.

“We’re getting lots of clients calls about licensees not getting paid for the product and monitoring more and more lawsuits over licenses and money owed,” Mains said. “These are the next receivership cases to come.”

Lance Boldrey, partner at Detroit-based law firm Dykema Gossett PLLC also noted: “A lot of companies are on the edge, desperately trying to find additional capital, but costs are so extraordinarily high. Everyone thought the money was so good, they’d do anything to keep the game going. But we’re going to see the market shake out. It’s following the same pattern we saw in Colorado, Washington, and Oregon. Anywhere with unlimited licensure.”

Andrew Sereno, CEO of Glacial Farms, pointed out there is a problem of oversupply in the state and that other companies could benefit from Skymint’s fall. Skymint holds enough licenses to grow as many as 28,000 marijuana plants.

What Is A Receivership?

A receivership is a legal mechanism appointed by the court that can serve multiple purposes such as helping creditors to reclaim defaulted funds, aiding struggling companies in avoiding bankruptcy and streamlining the process for lenders to retrieve owed funds in case a borrower defaults on a loan.

The aim of a receivership is to revive financially struggling companies. This involves the appointment of a trustee, referred to as a "receiver," to assume control of the company. During the receivership period, the power of the original managers is restricted.

Meanwhile, if you happen to be looking to access global capital markets and connect the right idea with the right client at the right time, you should consider attending the Benzinga Cannabis Capital Conference being held in Miami Beach April 11-12, 2023.  

We at Benzinga have the contacts and expertise to help you find the right investors to speak to. You can attend two-days of events that will take place simultaneously on two stages at the historic Fontainebleau Hotel. Don't miss out on a chance to meet and talk to experts with worldly advice on investing in the cannabis industry. Are you ready?

Buy your tickets HERE before prices go up. Book your room HERE.

Photo by Towfiqu barbhuiya on Unsplash.